EPISODE SUMMARY
Software as a Service (SaaS) is a dynamic industry where success hinges on understanding customers, managing churn, and fostering growth.
In the recent episode of Scale Your SaaS, host and B2B SaaS Sales Coach Matt Wolach and Baird Hall, Co-Founder of Churnkey, shed light on pivotal strategies driving SaaS companies toward profitability and sustainability. Read more to learn how to navigate the SaaS industry and reduce churn.
PODCAST-AT-A-GLANCE
Podcast: Scale Your SaaS with Matt Wolach
Episode: Episode No. 297, “How to Reduce Churn and Get More Lost Customers Back – with Baird Hall”
Host: Matt Wolach, a B2B SaaS Sales Coach, Entrepreneur, and Investor
TOP TIPS FROM THIS EPISODE
Understanding the SaaS Journey
The episode started with Baird, co-founder of Churnkey, sharing insights into their mission to fortify customer retention, minimize churn, and drive growth. Focusing on high-volume subscription businesses, leveraging innovative solutions to enhance customer experiences and recover failed payments while fostering sustainable growth. Their story teaches software founders to avoid taking churn for granted in SaaS and focus on strategies to improve the situation.
Strategies for Churn Mitigation
Baird highlighted key strategies in churn management, emphasizing personalized cancellation flows to retain customers on the verge of canceling. Therefore, they realized that up to 40% of canceling customers could be retained with the right approach by segmenting customers, personalizing cancellation processes, and offering tailored solutions.
Metrics Driving Subscription Health
Baird emphasized the significance of tracking reactivation rates—an often overlooked metric critical to understanding the health of a subscription base. Reactivating previously churned customers could be a game-changer, which prompts the development of innovative AI-driven solutions targeting the users.
EPISODE HIGHLIGHTS
Lessons from the SaaS Journey
Drawing from diverse experiences across B2C, prosumer, and B2B companies, Baird underscored the stark differences in running various business models. The transition to B2B SaaS highlighted the need for personalized software sales approaches, implementation support, and a distinct playbook for success.
The Power of Customer Education
Customer education emerged as a pivotal factor, especially for early cancellations. Leveraging video content within the product and cancellation flows proved to be a remarkable success in re-engaging users who still needed to activate their subscriptions fully.
Nuggets of Entrepreneurial Wisdom
In sharing advice for budding software founders, Baird emphasized the power of trustworthy co-founders and the invaluable support garnered through peer interaction. Engaging with other founders navigating similar journeys provided solutions, reassurance, and camaraderie amid entrepreneurial challenges.
TOP QUOTES
Baird Hall
[08:34] “The first thing to understand is that the customer you’re selling to, B2B individuals, different types of businesses, the person who you’re selling to, and your pricing model and pricing point, all three of those things come together to determine really generally where your churn range is going to fall.”
[17:48] “Understanding that when customers are canceling, a good portion of those that don’t actually want to cancel, they would prefer to find a different arrangement. But because they can’t, they will just cancel the product.”
[21:05] “Segment your customers visiting or canceling; give them the right flow. Personalize the cancellation process, remind them why they came, and remind them of the value or the future they were trying to get to with your product. And then, based on why they say they’re canceling, give them the right offer.”
Matt Wolach
[14:22] “Reactivations is the one untapped metric for subscription health that many SaaS businesses aren’t tapping into.”
[20:12] “A lot of times, you talk to other founders, and you realize that your problems are not super unique, and your world’s actually not falling apart, and things aren’t as bad as you think they are.”
LEARN MORE
To learn more about Churnkey, visit: https://churnkey.co/
You can also find Baird Hall on LinkedIn: https://www.linkedin.com/in/bairdhall/
For more about how Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com.
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Check out the whole transcript of the episode here:
Matt Wolach
Hello and welcome to Scale Your SaaS. I am Matt, I’m your host, and we’re here to help you understand how to make your company so much better, generate more leads, grow those deals, get more deals in the door, scale your team, whatever it is, so that you can get to those awesome goals and dreams that you’ve come up with for your company. If you want to do those things, definitely subscribe to the show. Hit the subscribe button right now. That way you’ll get all of our tips, tricks, ways of doing great stuff, and meeting all of the awesome people around the SaaS world. Like who I have here with me today Baird Hall is with us Baird How you doing?
Baird Hall
Hey Matt, I’m good. I’ve got fresh cold brew here and talking scaling SaaS, SaaS is one of my favorite things. So I’m, I’m pumped.
Matt Wolach
love it. I love it. I’m pumped as well, and everybody out there. I’ve used Baird’s products in the past. He is awesome at what he does building software companies. He’s done a great job of it building very profitable companies. And you’re gonna hear a lot about how to do that. And I want to make sure everybody knows who you are bear so bear and he’s the co-founder of Churnkey, Curnkey is a comprehensive solution that enhances customer retention by providing personalized cancelled flows and recovering failed payments, all while driving customer driven product development to optimize company growth. Baird is dedicated. And his passion for launching and growing SaaS companies is awesome. In fact, he relishes the creative challenges that come with entrepreneurship. He collaborates with subscription business owners and operators to minimize churn and enhance their business’s vitality. He’s also the co founder and Zubtitle by the way, this is a product that if you follow me for a while you’ve seen because we use it, it’s subtitles on your videos really simply. And it automatically adds these captions. So it’s used by all kinds of people definitely use it if you haven’t yet, but Baird thanks for coming on the show.
Baird Hall
yeah, likewise.
Matt Wolach
So tell me what’s going on with you lately? What’s coming up.
Baird Hall
I’m spending most of my time running our sales and customer success teams at turnkey. We’ve been around for about three years now. And we work primarily with high volume subscription businesses, which as of late has been a lot of AI companies were been signing on a lot of high growth AI companies, just because they have so much inbound right now. And as a result, they have a lot of churn. So we’ve been working closely with them, and building a sales team building a customer success team. And for the first time in five companies, learning the whole b2b playbook, everything from long sales cycles to renewals and customer success. This is all new to us. And we’re learning it. We’re having a lot of fun, though.
Matt Wolach
So cool. I love it. So by the way, turnkey is amazing. But how did you come up with the idea for that?
Baird Hall
it started with tools that we built internally for our previous company. So we started a podcast marketing software called wave that would create audio grams and take audio clips from mp3 and turn them into Instagram posts. We started when there’s about 200,000 podcasts out there. And now there’s what last I checked, it was like over two and a half million, probably more now. And so we just Right Place Right Time with that product and took off and grew that and then we were the first ones to do automated video captioning was subtitle. And we’re really good at inbound marketing in growth driven by freemium models, which meant a lot of inbound, a lot of customers coming in and signing up for low dollar price points. And so we just spent all of our time fighting churn, we would have 1215 18%, churn and some of our different cohorts. And we actually wanted to sell one of those businesses. And every time that we took it to market, our turn was the biggest black eye on the valuation. So we just said, Let’s take take a whole year and do nothing but focus on term. And so the long story short here is we built a lot of these tools that you see with turnkey, we built them for previous businesses, we sold those companies decided to take those different tools packaged them up into one retention platform. And that’s how turnkey was born. And it’s been about three years now we’re a little over two and our companies and growing fast month over month, it was a pretty painful year hitting product market fit but once we did that, it’s been it’s been good. It’s been a fun year and a half since then. And we’re kind of off to the races now. I love it.
Matt Wolach
It’s it is definitely a struggle sometimes getting to that product market fit point. But once you do now it becomes super fun. And like you said off to the races that’s been in several situations like that. It’s always a good time. I want to know though, you’re right. A lot of people experienced bad churn. It’s really frustrating. Can you share some strategies that are pretty innovative on on how we can improve that that churn rate and make it better so that we have more retention?
Baird Hall
Yeah, I mean, you can we could talk for, you know, a long time just on churn in general, but from the highest level, I think what I see a lot as subscription businesses Miss because now I’m talking a handful every day is just the first thing to understand is that the customer, you’re selling to b2b individuals, different types of businesses, the person you know who you’re selling to, and your pricing model and pricing point, all three of those things come together to determine really generally where your churn range is going to fall. So a good example is, you know, if you’re b2c, you’re selling to individuals, you know, call it a wellness app, or diet tracking app or something like that, you’re probably gonna be seeing, you know, double digit churn ranges. And so I think the first thing is understanding like looking at benchmark data and figuring out where you think your churn rate should be where you fall on that scale. That’s probably step one. And then, you know, as far as turnkey goes, what we really uncovered that ope that started the company and is still driving it as our flagship product is understanding that when customers are cancelling, there’s a good portion of those that don’t actually want to cancel, they would prefer to find a different arrangement. But because they can’t, they’re just going to cancel the product. So that’s really where Turkey all started was the aha moment was, we realized about 40% of our canceling customers didn’t actually want to cancel, they needed a they needed a month off, they needed a discount, they needed customer support, they needed something something was missing. And because we weren’t offering that they would go ahead and cancel. So it really depends on your segment. But generally, somewhere between 15 and 40% of canceling customers will actually stay if you give them the right offer. And kind of the just give up, give the playbook away here on recovering canceling customers, there’s kind of three pillars of doing it very well. One is segmenting. So making sure that you’re giving the right cancellation flow to the right customer. Good example, if somebody has been with you for six years, and they’ve spent 1000s of dollars, you don’t want to treat them like somebody that signed up six days ago, you want to talk you want to treat and offer these customers very different things. So that’s that’s step one segment your segment your customers as they’re canceling, give them the right flow. The second is you personalize the cancellation process, you remind them why they came, remind them of the value or that future they were trying to get to with your product. So say you sell. So sales enablement tool, remind them of how many sales they’ve made, or how many emails they’ve sent out and bring them into the present moment of why they’re cancelling. And then based on why they say they’re canceling, give them the right offer. And when you can have all three of those things come together, you can save a high number of customers, Customer Success teams have known this for a long time. And they do this by picking up the phone and talking to customers when you know the price point is worth it in, they have a customer success manager assigned. But when you’re selling, you know 1015 $30 subscriptions, the economics don’t work out. So you need to have automated systems that basically replicate the customer success playbook in a very quick fashion. In the cancellation flow. So that’s kind of the highest slide if I could like distill our philosophy down into kind of one answer, that’s probably the, the shortest I can do. I think a lot of people also don’t think about the psychology of why customers are canceling. And it’s think we always assume that customers are like running logic in their head of saying like, Oh, okay, here’s how many times I’ve used it. Here’s the price point, here’s how much time I’ve spent. They’re not canceling it, you know, unless you’re selling a higher dollar b2b product. And you have, you know, annual contract renewals. If you’re on a monthly subscription customers are generally like autonom, they’re reacting to a gut level of emotion in the, for example, they see the credit card bill, they remember that they’re going on vacation for three weeks, and they say, Why am I paying for this, I’m gonna go cancel. If you don’t interrupt that process and like, try to intervene, they’re just gonna cancel and not think about it, when really, they maybe would have stayed if you give them the right opportunity. So anyway, yeah, we can talk a lot about canceling customers, because that’s been our flagship product for a few years now.
Matt Wolach
I love it, I can tell you’re passionate about it. And I love talking with experts like yourself, and how detailed they get, like you said, Let’s segment these people, let’s treat them differently. And this is something that on the sales process side that I help people with, we really focus on it because you should be treating people based on where they came from and who they are and the size and all that stuff. And similar like you said, if they’ve been with you for three years, versus they’ve been with you for three days, that’s quite a difference. And I love how how you can identify that and make sure that we’re giving the right message and the right handling to the right people. And you also mentioned some of the reasons why they might cancel. Do you feel like customer education is one of those reasons? And if so, what are what are you doing what’s been effective to help those customers understand a little bit more about maybe why they should stick around?
Baird Hall
Definitely and it’s generally most prevalent with the cohort of canceling customers that are canceling in a very short window. So within 714 30 days of signing up, they’re canceling. It’s usually because they didn’t have the education to get activated. And our most sophisticated customers that have this issue with a video has really been, I mean, aside from picking up the phone, and actually, you know, doing a zoom call, that’s the best. But at scale, you can’t do that. And so one of our largest AI companies, that just grew insanely fast, they had a big issue with this because their product you did, you kind of needed to step through a little bit of tutorials to really fully activate. And what they did is actually they embedded videos within the product and within their cancellation flows. And then targeted those customers that hadn’t achieved a certain number of actions or watched a certain number of videos, and gave them different offers to get them back into a video content, like kind of elearning course, in that that was really effective. So that’s probably the best way that we’ve seen quickly at scale to educate user base is, is what video
Matt Wolach
mana. Yeah, that sounds amazing. I definitely something that I can see would be really effective. Let me ask you what metrics you mentioned a couple earlier and metrics that you felt like were very frustrating for you for your own company. But what types of churn metrics should people be aiming for depending on the type of business they are?
Baird Hall
I think it all starts with the ARPU. So your average revenue per user, that’s going to drive a lot of what’s going to happen with churn just from the nature of how people buy and cancel products. So that’s probably the first place to start. You know, the basics are low churn versus revenue churn, and then breaking your turn into different cohorts. And, you know, doing churn analysis based on the different plans that you offer, also annual versus monthly, we’re starting to see customers get more sophisticated with billing and do more like quarterly and seasonal billing, which is kind of interesting. I wouldn’t say I’m becoming an expert on that. But I’m seeing that more, which is kind of unique. But if I had to pick one metric that gets overlooked by customers, when they’re thinking about just not just churn, but their customers there, we call it customer subscription health, just the overall health of your subscription base is reactivations. It’s the one number that nobody ever knows when I asked him that was, hey, what’s your reactivation rate out of the customers that cancel? How many of them come back. And if you’re seeing a 1015 20 plus percent reactivation rate, those, it’s interesting to think that like, those customers didn’t really turn they took a break. And that’s a very different way to think about your bet, part of your customer base and how you want to treat them. And this is what we’ve been focusing on lately at turnkey is the concept of reactivating previously churned customers, and which a lot of SaaS businesses in the past, it’s just been kind of a marketing email, right? Okay, these people cancelled six months later, let’s hit him with a newsletter, let’s keep them in the newsletter, keep them in our drip campaign. But what we’ve been looking at, and was the new products launching next Thursday, podcasts might be out by then, or reactivations product. And what we’re doing is actually taking all this data that customers put in when they cancelled, why they canceled how much they use the product, what plan they were on, how many invoices have they paid. And then we use that data, we run a on AI on it on the back end to give them a score. And then that determines when we email the customer and what offer we give them to have them come back. Because we think reactivations is really kind of the one untapped kind of metric when it comes to subscription help that customer that a lot of SAS businesses aren’t tapping into, which we’re really excited about. So that’s probably the one that really jumps out. If you don’t know your reactivation rate just go in if you’re using Stripe, you can see it’s kind of very down on the billing metrics chart, but it’s down there. And you can see the number of customers that come back.
Matt Wolach
That’s amazing. I can tell you just working with a lot of sass companies, very few people are tracking that. But it’s absolutely powerful. And I can see that you can put some process and some steps in place to make sure that that rate goes up. So you start getting more people coming back. I love that. And I think it’s super cool that you’ve been able to share that I love hearing about metrics that not a lot of people are tracking like that the regular bus metrics. So thank you for for sharing that. I want to ask you now, since you’re kind of a serial entrepreneur, you’re creating all these companies. Have you found that there’s similarities in what you need to do and what you can do to grow a company or how they all kind of been different experiences and it hasn’t been something where you have to kind of relearn each time.
Baird Hall
So that’s a great question. And I love talking about this because I was so surprised with how different a B2B company is to run versus a company that sells to prosumers versus B2C. I think I’m unique in the fact that I’ve done one of each I’ve had two failed B2C mobile app company, then we sold to prosumer. So they weren’t businesses, these like freelancers, content creators. And then now we’re doing a b2b company. And I mean, there’s a lot of general foundational principles like give listen to your customer or pricing is always hard. Sales is always hard. The sales really translates through all of them. But I bet we lost a whole year trying to run our playbook from previous companies trying to build Cherokee and not understanding why it wasn’t working. Because Cherokee is that traditional b2b. We tried to automate the onboarding, we tried to use inbound marketing to drive sales, we tried. Freemium, we tried launching multiple products, when at the end of the day, we had to, we needed to do traditional b2b, get on the phone, pick up the phone, and have phone calls and do traditional b2b sales. And that’s what works really well, because we have multiple stakeholders in a general sale. There’s also an implementation process. Now we’re having to learn, we actually need like an implementation. Somebody leading implementations to make sure customers get successful, we’re that was just not part of our world before this. So yeah, I would say like, the thing that really sticks out is just how different b2b is from other types of subscription businesses that you build. That’s it was just for me personally, it was really eye opening.
Matt Wolach
Yeah and I can see that as well, with a lot of people who come to me and need help growing, there are often people who have experience outside of b2b. And they’re very frustrated, because they’ve tried it with their company, I’ve tried to do this or that, and it just hasn’t worked. And you’re right, it is very different when you get into a b2b scenario, and it just doesn’t quite work with some of the other things that you might have done before. So I definitely echo that, from what I’ve heard myself. So tell me turnkey, you got in, start growing it, what were some of the best things that you guys did in your early days that helped you get that early success?
Baird Hall
Yeah, we started with our cancel floor product, which we had a hard time with, because we didn’t understand what the sales process needed and what that looked like. But as as we were the one thing that really changed the company, and yeah, the thing that really changed the company is when we launch our failed payment product. So we’re talking to a lot of businesses, pitching them or cancel flow is trying to explain them how much revenue they could save and the return on investment from the pricing, you would go through the whole sales pitch. And then they would say, Well, you know, I’m already using something else for failed payment notifications, which is a different side of churn, it’s usually smaller than voluntary. So for those that aren’t aware, voluntary churn is when a customer voluntarily goes to click the Cancel button. In volunteers, when their payment fails, subscription gets cancelled, and they turn that way. So finally, we decided, well, let’s just build a quick fill payment product that can send emails out. And we kind of added some some features that were better than what stripe had. And then once we added that, customers started buying our Cancel for product more, because they could then do everything from one place. And so that’s what really sparked this whole idea of we need to build a platform that has all everything you need to fight churn, all in one place. Ever since we’ve done that, and the more products we add on top, or I should say to the side of our cancellation flow product, just the the better signals we’re getting from the market. And so reactivations is launching next week. We also have a customer health tool that runs AI machine learning models on your billing and product data to predict churn before it happens. And then we also have precision retries, which is a competing product to stripes, auto retries, which is kind of a little different variation on that. So that’s probably the one realization that made things really start clicking for us and start growing.
Matt Wolach
A lot. It sounds like the products loaded to amazing stuff. I want to make sure everybody gets information on how to get set up with turnkey in a second. But before we do that, what advice do you have for other software founders who are starting out and want to get some of that success you’ve seen?
Baird Hall
What are the most valuable things? I would say? Two things one is I could have never and I usually like to preface this before I even start talking about podcast could not have done any of this without my co founders I’ve had every company has been a little bit different of a cap table over the years. But there’s always been connected threads of co founders from one to the next and just having a group of co founders is and we all complement each other and we all trust each other and we take these risks together in I think like having the right co founder can make the world a difference in I think a lot of people say that the the quickest way to kill a company is to have a bad co founder fit from the get go So that’s one thing. And then also, I’ve never really had many mentors, I’ve had a few, which I, you know, wouldn’t want to leave out, you know, but having peers other, talking to other founders that are going through it. And not just on message boards, I mean, like going to lunch, hopefully, if you’re in a place with other software founders, and every quarter, I tried to meet up with a handful of different SAS founders in my, in my area here in Charleston, South Carolina, and just having peers where you go through because a lot of times you talk to other founders, and you realize that the problems that you have are not super unique, and your worlds actually not falling apart, and things aren’t as bad as you think they are. So a lot of times, that can just be really therapeutic. So I would say those two, you know, not very tactical SAS company building advice, but more just entrepreneurial support kind of ideas.
Matt Wolach
I think that’s critical. And that’s something that a lot of people are looking for. And in fact, you know, we run a SAS roundtable where just like you said, b2b leaders, they get together and they share ideas, they share challenges, and you’re right, a lot of them realize it’s not very unique. And it’s not something that the world is not falling down. And it’s it’s really powerful when you can feel the same types of things that others are feeling and get through it together. So that’s, that’s great advice for sure. I really appreciate you sharing that. I want to make sure everybody understands how they can learn more about turnkey and yourself bear what’s the best way for them to do that.
Baird Hall
So if you want to find me the easiest way I’m, as of last week, I’m the only beard haul on LinkedIn. So if you search me on LinkedIn, I will pop up, which is kind of a nice little feature for right now. But you can also get a turnkey.co. So turnkey.co, you can go learn about everything that we offer. And we have a lot of guy free guides and resources on our website, we have case studies and use cases, you can we have some people that will just consult on how to build some of the advice that we give, and they’ll just implement it themselves. So there’s a lot of good stuff you can get from our site or track me down in the LinkedIn, say hi, I do some angel investing as well. So if there’s any, if anybody wants to reach out about that would love to connect, or if you just want to talk SAS or retention, um, I’m usually hanging out on LinkedIn.
Matt Wolach
Very cool. We’ll put all that in the show notes. So if you’re listening, you can grab it all there. But Baird, this has been awesome. Thanks so much for coming on and sharing your wisdom. Appreciate it.
Baird Hall
Thanks for having me.
Matt Wolach
Absolutely. And thank you all for being here. Really appreciate it. Again, make sure you’re subscribed to the show. You don’t want to miss any other amazing guests like Baird, where they share their expertise as well. So thank you very much for coming and we’ll see you next time. Take care
