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COVID-19 churn prevention: Your customers are cutting costs. Don't just let them cancel.

COVID-19 churn prevention: Your customers are cutting costs. Don't just let them cancel.

Everyone is looking to cut costs. They’re making lists of software and services deemed nonessential, and sending them to the chopping block.

Is your company on the list of software or service your customers are planning to cut loose?

This is the reality right now: We’re in a crisis situation, and many (if not all) companies are looking for ways to cut costs. Even here at Close, we’ve gone through every department and asked what tools or services we can remove or negotiate a lower price for.

Especially in a SaaS business, how can you avoid being on the chopping block?

First, it’s important to remember that you can’t stop every customer from canceling your service or software.

But that doesn’t mean you have no options to stop (or at least slow) the bleeding.

We’re going to discuss how to be proactive in communicating with your customers, as well as 5 simple steps that other SaaS businesses are doing to ease the pain of their customers and avoid getting cut.

The playbook to being proactive in times of crisis

Unfortunately, our first reaction in a time of crisis is to retreat and run away from difficult conversations. Many sales reps are too anxious to be communicating effectively with customers during this time.

But this is not the time to hide away, especially from your customers. During a crisis, you cannot be purely reactive: you must communicate proactively.

Here’s the three-step playbook to continuing communication with your customers through this difficult time:

1. Do continuous competitor research

Start by doing your homework, and answer these important questions:

During a crisis, it makes sense to do competitive research. These people serve the same customer base, so you need to know how they’re adapting to this situation.

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From this research, you might glean ideas or learn some lessons in what not to do. But most importantly, you’ll know what you’re up against right now (not what you were up against last month or last year).

Keep yourself up to date with your competitors by conducting regular research. Do this every week throughout the crisis, and you’ll have a good handle on what the industry is doing right now.

2. Figure out your viable strategies

Some of the ideas you gleaned from the competition will be viable strategies for your business: others won’t be. Every company is different, so you can’t just copy and paste their strategies on your business. It’s important to know what they’re doing, but it’s also important to understand your viable options.

Ask yourself:

What is within our means to help and support our customers?

For example, we’ve reached out to some companies to try and lower the price, and they just told us outright that they couldn’t do anything for us right now. They don’t have the profit margin to give out huge discounts, so they can’t do it. On the other hand, some companies will let you keep using their product without making you pay at all.

You need to dig into the metrics, understand your profit margin, and figure out what kind of help you can sustainably give your customers over the next few months without going bankrupt.

3. Get proactive

Most companies prefer to wait until their customers reach out to them, and then try to decide how to handle cost-cutting on a case-by-case basis.

But remember this: Just because your customers haven’t reached out to you yet, doesn’t mean you’re not on their list of things to cancel. Right now, your customers might be considering whether or not your software is essential. Your name may be on a list of services and software they’re planning to cut within the next days or weeks.

Your customers’ silence doesn’t negate the value of communicating with them.

Use lists to start proactive communication

Start by separating your customers into two lists:

First, list your most important clients and customers. These need one-on-one attention from your company leadership. They may be your biggest customers, or they may have strategic importance.

With the customers on this list, schedule a time to talk even if they haven’t asked for it.

During this discussion, find out what’s going on in their world, how they’re dealing with the pressures, and how you can help. Try to understand how they think of your software within the landscape of essential and nonessential tools they’re currently paying for.

There is never a better time to have this kind of intimacy with your customers.

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Second, make a list of all your other customers. With these, you can use one-to-many communication. Maybe you can send an email with some resources or blog posts to help them. Or, maybe you can do a customer webinar. Whatever you do, do this in a scalable way.

When you create segments of different types of customers, you can come up with a plan to reach out to them proactively.

Don’t wait for customers to contact you: by then, it’s too late. Reach out before they do and offer to help, to care, and to show them what options are available to them to reduce the costs of your service or software.

But, how exactly can you help them reduce costs?

5 ways to help customers reduce costs without leaving you outright

1. Offer to downgrade their plan

Many SaaS companies have multi-tiered pricing plans. So, why not reach out and offer to downgrade their plan to save costs?

For example, some customers might be able to work with the features and reduced functionality of your lower pricing plan. Or, on a case-by-case basis, you might be able to offer the same features and functionality on a lower-priced plan or even use the same flat rate for everyone.

Either way, they can downgrade instead of canceling.

2. Show them how to export data they’re not using

Some SaaS companies charge by the amount of data used. This could this is email addresses, leads, customer data, or any other kind of information that’s stored in your system.

If that’s the case, many of your customers probably have data lying around in your system that they’re not actually using. So, why not offer to help them clean up their data and thus reduce costs? Maybe you can give them a framework or a tool to do this, or maybe you can offer this service to them proactively.

3. Remove inactive seats

In many companies, multiple workers and teams have access to software they don’t actually use.

If you charge your customers per seat, take a look at their usage data and find users who haven’t accessed your platform in a long time. Then, reach out to those customers and offer to remove these seats and thus lower the price of your software.

4. Offer to skip or postpone payment

As an example, I recently got a message from my gym. They’re going to keep charging me for now, but for every month I pay without being able to use that membership, they extend my membership for another month for free.

We’ve seen this same model being used in SaaS. A similar option many companies are offering is postponing payments. Tell your customers that, if they’re really hurting with this crisis, they can choose to postpone the payment by 15 or 30 days.

This allows customers to keep their contract with you, but without forcing them to pay you now.

5. Give them the option to pause

Like we said above, you can’t stop every customer from canceling your service or software. But before they cut you out completely, give them the option to pause your service instead.

There’s a reason these customers decided to pay for and use your software. Chances are, they’re still using it now, even as they’re thinking about getting rid of it.

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Right now, they’re in a state of panic and they need to lower costs. No one knows how long this situation is going to last, and that’s making them even more anxious.

So, instead of forcing them to cancel their subscription and delete all of their data, offer them the option to hit the pause button. They’ll stop using your service and stop paying for now. But down the road, when things are more stable for them,  they’ll be able to easily resume your service and start paying again.

That way, they don’t have to cancel: They can just pause.

Add friction to your cancellation flow

Many people will disagree with this, and I get it. It's also not something we at Close are doing ourselves. But it's an option you should at least consider: Make it harder for your customers to cancel.

Instead of allowing customers to cancel by just clicking a cancel button, require them to send you an email.

This way, it'll be easier to engage them in a conversation and discover opportunities to retain them.

This is not something I would usually advise you to do. But these are unusual times, and the thing you have to prioritize above all else is the survival of your company.

Get your proactive communication game plan in place

Now is not the time to bury your head in the sand.

At this point, you may already have customers reaching out, asking to cancel their subscription or reduce costs.

My final piece of advice to you: Respond quickly.

Don’t let these emails sit there for days on end. You need to have a game plan in place to respond quickly, even if that response is just to let them know you got their email and you’ll get back to them by end of day tomorrow with a plan that benefits both parties.

Be proactive. Help your customers cut costs without having to cut your service or software from their list entirely.

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