5 Reasons Your SaaS Churn Rate Is Too High

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When businesses suffer from a high churn rate, they often consider that their prices are the problem. However, this isn’t always the case. Consumers are often more interested in other aspects than the actual price of the product.

Finding the true cause for your SaaS churn rate should always be a top priority. It is one of the most important aspects of ensuring your SaaS business is running effectively. Once you have determined the cause, you can take action to repair the problem and lower your churn rate; which will help you develop a financially stronger business.

So what are the five reasons, other than price, that might be contributing to your high churn rate?


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1. Poor Customer Service

One of the biggest concerns for customers is how their suppliers treat them. There are very few cases where consumers don’t have problems with a product. Often these can be solved with user documentation or online advice, but at other times it requires your customers to call your care team.

If they don’t receive the right treatment from your staff at this point, they may become disillusioned with your service and feel their business is not valued by you. This makes it easier for them to cut their connection with your brand and look elsewhere for the service you provide.

2. Poor Marketing

This isn’t about marketing pushing people away, but about whom your marketing is attracting. You have to carefully think about which audience segment you are attracting and whether or not they are the best clients for your products.

By attracting the wrong clients you risk high numbers of new customers leaving as soon as they realize your product doesn’t have what they want. In some cases, they could demand a refund.

At the same time, poor marketing could be about making promises that aren’t deliverable. If you do this, then people will not stick around.

3. Poor Features

Every SaaS business needs to ensure that its products have features that offer their customers the right solution to their problem. If you don’t have the right features for your product then customers aren’t going to find it useful and will look for products elsewhere.

At the same, having features that are redundant / outdated can also dissuade customers from continuing with your product.

To solve this problem, be sure that you are communicating with customers and seeking what features they are looking for. It is also best to check out your competitors and see what features they are adding / removing from their services.

RELATED: How SaaS Companies are Assessing Churn Rates

4. Poor Invoicing

Invoicing consistency is an important aspect for your business. Customers feel valued when they know they can rely on your brand offering them accurate and timely invoices. If you send invoices randomly and are not accurate, it will only create a negative barrier between you and your core group of users who will seek for other solutions to their problems.

This can easily be solved by using automated recurring billing and ensuring that billing is done on set days which are noted at the start of any contract.



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5. Poor Brand Reputation

We live in a world of influencers today. While you may have a lot of sway with your customers, there are going to be numerous other sources of influence in your customers’ lives, for example television shows, magazines or newspapers. If any of these suddenly report on your business and write negatively about it, then you might find customers will abandon you.

One example of this is Gerald Ratner who made a speech once which was heavily reported on by the press the next day. Overnight his business’ value dropped significantly and was nearly bankrupt that same year. While it is also a lesson in watching what you say, it is also a lesson in the power of the media.


Price isn’t the only factor for customer churn and with the other elements that could negatively affect it; lowering the price might not do anything positive. Instead, look at other reasons why customers might be leaving your business and make changes to keep your customers, improve their customer lifetime value and increase your SaaS business’ cash flow.

Tags: SaaS Saas Metrics Churn

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