I recently sat down with growth expert (and current director of growth at Planday) Frederic Linfjärd for two back-to-back amazing conversations.
The first was about conversion optimization (CRO) for SaaS and software. (You can find that interview here).
We followed it up with deep dive into churn. Specifically, how Fred slashed it by 50% in a previous growth role at a software company.
You can hear everything he did to reduce churn in the podcast episode or video below, including:
- Switching to FastSpring to automatically reduce involuntary churn.
- Using the cancellation email to gather feedback on why people churned.
- Setting up customized automated offers to win them back.
- And more.
But if you don’t have time to listen to the whole thing, we’ve highlighted one key topic from the interview and broke it out below.
The Win-Back Period
Here’s just one strategy Fred shared with me during our conversation:
This is the “win-back period.” It’s the time between a user canceling their subscription and when their subscription officially expires.
As Fred put it: “If a customer cancels an annual subscription — but they have six months left to access the product — that means I have six months to work on changing their mind.”
The win-back period is a sweet spot.
They still have access to the product, so you can observe their behavior and offer relevant tips and offers.
After their subscription runs out, it becomes much more difficult to win them back.
Fred’s strategy is to personalize his messaging based on how much time he has left.
The closer to the customer’s end date, the more aggressive he gets with messages and offers.
“If they have six months left, I’ll start by sending them content. But as the end date gets closer, I might be more aggressive with a discount or extra time on their subscription if they change their mind.”
Note: FastSpring helps thousands of SaaS and software companies increase revenue throughout the customer lifecycle — not just during checkout. Learn more about subscription management with FastSpring.
- SaaS Churn: Myths, Benchmarks, and Strategies to Retain More Revenue
- Lower Churn with Paused Subscriptions
Fred Linfjärd 00:09
The most valuable thing you can do when someone churns is to learn why and really optimizing that part, because the more you find out why the more you can start actually changing your product, changing your communication around it in a clarifying messaging, and all that kind of stuff that will prevent other people from not canceling.
EJ Brown 00:30
Last week, we heard from Fred Linfjärd Director of Gowth Marketing at Planday about conversion rate optimization strategies for SaaS. This week, he’s back with more strategies on creating a churn reduction engine. I’m EJ Brown, Senior Content Strategist FastSpring. We help SaaS and software companies scale around the world. And you’re listening to the Growth Stage Podcast where we share stories from global SaaS leaders that you can use to inspire new growth strategies in your own business.
Fred Linfjärd 01:00
Hi, I’m Nathan Collier. I am the Director of Content here at FastSpring. I’m joined today by Fred to talk about churn and churn prevention and how to win back customers when they leave. So Fred, you joined me on a on a previous episode. And you said something in that episode, you were talking about sort of the different areas where a subscription software business can work. So you talked about traffic he talked about, convert that traffic to trial, trial customer and then churn. And one of the things you said that I thought was really interesting that I hope we can really dive into here is, you said that churn was an area where people just don’t spend enough time where companies just don’t, they don’t think enough about churn and that’s a really big revenue opportunity for them. And you have something that you have you have said to be is like a churn prevention engine that you’ve built in the past that that is just a way of thinking about this. So first of all, welcome, Fred, thanks for joining me again, quickly introduce yourself so that people know who you are.
Fred Linfjärd 01:57
Thank you, Nathan. Yeah, my name is Frederic Linfjärd. but I usually go by Fred because everywhere I work, it’s usually English speaking, so it’s easier to pronounce. But yeah, I’m currently I work as Director of Growth Marketing at a b2b SaaS platform, dealing with workforce management and scheduling in Copenhagen, but I also work as an advisor, various companies like FastSpring, and other startups, etc. Where I work a lot with growth and subscription and whatnot,
Nathan Collier 02:31
Very cool. So I jumped straight into it. So yeah, so tell me more about churn. Like why is it that SaaS companies and you know, any company with with a subscription product in the software space — why don’t they think enough about this?
Fred Linfjärd 02:44
So I think I’m not going to be clever, because there are some some out there that are extremely talented on it. I think it’s very easy that you treat churn as an ad hoc activity. That’s something that you … ‘,Oh, we have a problem with churn.’ It’s already happened, right? We have a big problem with churn, it’s already happened. And you try to figure that out. So you do all sorts of really not so useful things like, Oh, we’re just going to get the list of all the people who returned and we’re going to send out a discount code to all of them. And check. Let’s focus on acquisition again. I think that is very easily that that can be that that can happen.
Nathan Collier 03:33
Yeah, we have heard this number gets tossed around sometimes when these conversations come up, which is 5%, meaning like 5% as a benchmark rate for churn for SaaS and software. What do you think of that number? Is that reasonable? Is that something that most SaaS companies should be aiming at? What is a good rate or a bad rate?
Fred Linfjärd 03:52
It’s hard with these numbers and benchmark numbers for different industries, because you know, you kind of have to look at your own individual category, and then your own individual business and look at, okay, this is how much churn I have. Is this acceptable? Because every time you there’s a churn, there’s a customer, that leaves you for some reason. I mean, churn is a natural part of the business, you will always have churn. But sometimes that could be a lever of growth, that working with churn is actually where you can save and make the most money by working with retention and getting customers back. I think you need to kind of treat it as, as something that you always should, you know, monitor and always actively work to prevent and find out why it’s happening.
Nathan Collier 04:44
So if you have like 10% churn, is it reasonable to say I can bring that down to 7%? Are we knew that this is the kind of stuff that has a high ROI to it, if I understand what you’re saying correctly?
Fred Linfjärd 04:56
I mean, I think so. Yeah. I mean, you can certainly start there like If you have 10% churn, but the benchmark in your category is five, that might be worth looking into that, that would be a big opportunity to there might be actually some quick wins there to actually get it down fast, because they might be churned for some stupid reason that technical glitch or that their cards doesn’t work or something like that, because there’s kind of two different types of churn, right? You have the voluntary churn with a cancel. And then you have the non voluntary churn where it’s hidden, their card got expired, or something like that.
Nathan Collier 05:33
What are some of those specific sort of tactics? What are a few things we could do if we tried to bring down the churn rate?
Fred Linfjärd 05:40
Well, so what I always do is I start with the non voluntary churn because that’s, if you come to a company, and they are not actively, you know, working with Dunning management, using kind of the tools and the ways where you can actually retain cards and you know, update card on file that are expired, etc. If I see that they’re not doing that, that’s where I would start, because it will always be a quick win. It’s hard to say quick wins, there’s never quick wins, but But it’s definitely like an area of opportunity that are easier to fix faster, and might give you a lot of good results, compared to finding out why all these people hit the cancel button and never want to use your product again. That’s kind of a different beast to tackle.
Nathan Collier 06:28
So define Dunning and Dunning management for me, so that everyone understands what you’re talking about.
Fred Linfjärd 06:35
Sure, so Dunning management: involuntary churn is everything that deals about, you know, your card failure, you know, rules that, you know, try the card several times, usually it’s in your ecommerce subscription platform, where we tried to charge the card, you know, it didn’t work, then the rule is that we’re going to charge two days, and then we’re going to charge in five days. And then we might send out another one, and then we cancel, the subscription, those types of things is really what donning management is. And all that logic is usually what you would want to find in your ecommerce platform.
Nathan Collier 07:14
It’s automated, though, right? It’s not something I’m I’m not manually having customer support reps do this.
Fred Linfjärd 07:22
No, no, that should be automated. And you know, you should have some flexibility to how it should be working. Like when the most should go out how they should look, etc. But yeah, it should be automated.
Nathan Collier 07:35
In our notes, here, you wrote this type of churn involuntary or delinquent churn is another term for you could make up 20 to 40% of a company’s overall turn. Is that Is that what you’ve seen?
Fred Linfjärd 07:46
Yeah, I’ve seen that. I mean, I think, certainly, in my experience, you know, those were some very big gains, especially if you, if you’re using an something non flexible, maybe a home built, where, you know, you don’t have those levers to pay, you simply just don’t have the functionalities that are best in class subscription management platform, offers you things like understanding why the card is failing, and then also being able to, in some cases, actually change the card to like, actually contact the bank and get the new card. If the card was expired. Yeah, there’s quite a lot of work or technology that that has been done in that area. I think, yeah, it’s got a lot of way a lot of technology has happened in that area.
Nathan Collier 08:39
Right. And so if you’re doing it well, like, you shouldn’t really have to think about this, right? It’s the kind of stuff that should be handled through that platform once you get it set up.
Fred Linfjärd 08:47
Absolutely. I mean, that’s why it’s probably always better to buy versus build your platform, like, especially if you’re in a growth stage, where what you should be focused on is understanding why are people not want to use my product anymore, and hit Cancel. You want to spend all your time on that, instead of looking at reports where it says that it’s insufficient funds on the cards, and you know, I have this big red bar every month with credit card failures, etc. That’s not what you want to focus on you. You want to automate all that stuff.
Nathan Collier 09:24
That brings us to voluntary churn, and you have some systems that you’ve built in some of your previous roles to try to understand why it is that the people who click Cancel like try to understand why they’re clicking Cancel and then begin to mitigate that begin to win some of those customers back. I’d love to hear. Love to hear more about that.
Fred Linfjärd 09:44
Yeah, so I mean, the way my reasoning is, if you can automate systemize your qualitative feedback collection, and in this case, why they leave you so typically an exit survey that you would send out to someone who cancels right either via an email, or maybe it’s even when they hit the cancel button. If you can automate that collection, that’s going to continuously get you feedback. So you don’t have to think about. For instance, when I joined Capture One, we kind of sent out the survey and as customers on an ad hoc basis, first pulling all the everyone who churned and we sent out the survey, very long survey and fraction answered. And it’s like, it wasn’t very useful. But if you could find a way where you can collect that continuously when it happens, that’s going to be very valuable, because you can actually use that information, taking action on that insights in in various different ways that can be very valuable. So how did you do that? Well, the one thing, before I answer that question is, the most valuable thing you can do when someone churns is to learn why you’re not going to maybe be able to win them back, you can certainly try in different ways. And I have some methods for that. But the thing that you want to do is, you at least should try to work on finding out why the left you in the best way and really optimizing that part. Because the more you find out why the more you can start actually doing things, changing your product, changing your communication around it in a clarifying messaging, and all that kind of stuff that will prevent other people from not …
Nathan Collier 11:30
Fred Linfjärd 11:32
Nathan Collier 11:32
What kinds of things have you learned from surveys like this?
Fred Linfjärd 11:36
It’s actually really, really interesting. So well, I can just tell you a really cool thing Capture One was that first of all, the churn collection, where do I get it from? Well, we’re using FastSpring, right? So we automatically or FastSpring, automatically sends out a transactional email, when you hit the cancel button, you know, a receipt, that what many people don’t know is that you can actually use that transactional email as the vehicle to ask them why they left you. So you can put the survey in that email, right, you can optimize how that survey should look. So if you’re doing that, since FastSpring, is doing the first work or the ecommerce platform, they send out that transaction, email, automatically use put the survey in there and try to collect it and try to optimize you collecting the right things, you know, it might not be best in the beginning, but you’re starting to kind of the more you do it, the more you can fine tune it. So you’re asking exactly the right questions to get them to give you that information.
Nathan Collier 12:40
So you’re talking about the email that I get if I cancel service, and it says this has been cancelled, it’s just the confirmation email.
Fred Linfjärd 12:46
Nathan Collier 12:47
Cancel a service. And now you’re talking about using that as a way to gather insights.
Fred Linfjärd 12:52
Absolutely, because there’s so many benefits with that. I mean, it’s really, people are not using transactional emails nearly enough. Because there’s no like, you don’t have to ask for permission, you don’t have to get marketing consent, right. So you can hit everyone on it, the delivery rate on their on it is perfect. Because if you have a platform like FastSpring, that has to work, right, it’s built in, it will always go out, it most likely always reach the person. So when I went from, hey, we’re going to send out the churn or exit survey to people in our marketing automation or email marketing system. And there’s like a fraction that answers to doing it this approach. This is night and day, right system increase the response rate went out the roof, I mean, you know, the open rate of the email, but then also you being able to actually work on the surveys, it becomes you know, shorter and, and cleaner. So I was just getting all this insight into that. And that is really the most important step. Because once you have the insights, then you can do the next step, which is even part you can try to get that insight and put that insight into the system where you can take action. So let’s say Nathan, you cancel my subscription, and you get the survey, and then you answers it. If I can take that information, and then send that back into our marketing automation system. So basically putting it on the timeline, you usually have an event timeline, why you left? I can launch different workflows, for instance, I can start seeing trends on this call to data. How many are canceling because we’re missing a feature, how many people are canceling because it was too expensive, et cetera, which is super, super valuable. Because once I have that in there, I can for instance, Alright, I’m gonna send the data to our product managers about the features. So they actually start seeing these people. We’re seeing a trend that more and more people are canceling because we used to have that feature anymore. Where’s the People that are you know, they might be canceling because it was too expensive or you know, maybe it was doing COVID I could actually launch like a windbag program where I can say, hey, you know, I know you want to cancel, but would you want to reconsider if we pause your subscription and give you a free billing, because they really don’t want to cancel. It’s just like, well might not need it now. And it’s COVID. So I have to prioritize. And you can do that automatically. Once you put that insight into your automation system. It’s quite cool. Okay, cool.
Nathan Collier 15:27
So why were people canceling? Like, what are some of the things that you were like, discovered that you weren’t expecting?
Fred Linfjärd 15:34
Oh, yeah. So one thing, though, that I didn’t expect was that there was actually a lot of people that weren’t real churn. So at Capture One, we kind of had two different types of products. It’s a desktop subscription for dating software, you could buy a perpetual license, or you could buy a subscription, right? So you would have people that would use, yeah, I would cancel my subscription. And then I would go buy a perpetual is that, but they are not the churn customer. It’s only the subscription, right? That is churn. So being able to actually crossing off like a bunch of churn is just that, right? These types of things was, was really interesting, or people that were just wanted to move between subscription plans, there was a confused meant that they had to, they would cancel their capture one for Sony subscription, and then they would buy a capture one for Fujifilm, because we have a stack of different plans. But they were still they still had an active subscription that led us to kind of look at the churn more. And again, you kind of have to look at customer churn and subscription churn. So hey, if a customer has an active subscription, or perpetual license, whatever, then they’re not turned. Right. So that’s an interesting thing that would that I learned.
Nathan Collier 16:54
So you gather all this data … What kinds of things were you able to do, either on the product side, or on the marketing side, to either win back customers or to lower churn? Like, what are some of the things that this gave you?
Fred Linfjärd 17:07
Well, I think the most part we did was in the Insight collection process, working on continuously getting that survey in the transaction, email, and then getting that encoded insight into the marketing automation system. So that was like a big part. That kind of opened up a lot of opportunities on what we can do. So I think we what I played around with was sending out Winback, offers to or pausing the subscription automatically by a COVID. So we run some tests on that now I then I actually left capture one at that time. But I think in the there were so many tests that I wanted to continue running, for instance, I wanted to, you know, send the feature data into our Product Hunt. So the PMs can get that I wanted to try to work on the wind back period. And for you guys who don’t know what the wind back period is, I don’t know if I made it up or something. But it’s basically when when you cancel your subscription, right, and let’s say you’re on a yearly plan, so for you cancel it, you have four months left on it, so you’ve paid for it, that means that even if you cancel your subscription, it will run for four months, you can use it. But then of the four months, it’s deactivated, so it’s killed, right? That means that you have various sort of wind back periods where you can actually take action, you can actually work with changing their mind. So let’s say I cancel it, and I have six months left, you know, maybe I won’t start with sending out an offer to them, I would probably start by sending out content to them. Hey, you know, have you thought about this? You know, maybe there’s something that they think the product can’t do. But it’s actually as they don’t know how to do it. So you need to educate them. And then once it gets closer, you might be more aggressive. And do you know, hey, get free billings or a discount if you change your mind.
Nathan Collier 18:54
We triggering these based on the time that they had left? I assume that you had this automated somehow.
Fred Linfjärd 19:00
Yeah, yeah. And I don’t want to go ultra technical here. But yeah, all that information is kind of cool, because I would pass it along in the transactional email, right? So once they hit the survey, in the testimonials, I would actually take how long their subscription, there was a left of it, what product it was, and you know, some different types of IDs that were I would probably have to use in order to on cancel it or programmatically change things. So I would take that from FastSpring. It came through the transaction emailed and I put that into the survey. So once they you know, submit on that one, it’s stored in there, and then a web hook would go out back to the automation system with all that information. So I just had it on the timeline. And then I could just do different cool things
Nathan Collier 19:47
Very cool. Like normally like when we think about sequences, they trigger on a certain date and they go out and be built one that’s triggered in reverse meaning it’s sort of looking at a date in the future and then setting emails that lead up to it. That’s a really creative use of that one. So I may steal that one from you, Fred, for something I have going on.
Fred Linfjärd 20:11
Absolutely. Yeah, absolutely do it.
Nathan Collier 20:14
What what seemed to work with win-backs? Like, was it giving them discount? What types of things seemed to catch the people to bring them back?
Fred Linfjärd 20:24
Well, in the survey, you know, if they answered that the price was too expensive, obviously, if I send out that I’m gonna get them a discount for the next billing or whatever. Yeah, that could work to get them back. But probably short term, because then I mean, you can’t lower the price forever for because they think it’s too expensive. So the thing then is like, Okay, if I got them back, I can’t just stop there, then I need to kind of figure out a way, okay, I want them back. But I need to also figured out how I can increase the perceived value of the product. So it’s actually worth and then it kind of what I figured out on some of these, when I you know, dig into the data to qualitative data is that, you know, some of the people were using Capture One, not daily. So they were using it in periods, or something. So yeah, so I could understand that. Yeah, it doesn’t make sense maybe to have a, you know, subscription plan, if I only use periods of time. So I mean, I think, you know, a lot of the ideas that I wrote down that I wanted to try out was, you know, even as bold of, hey, can we create, like a plan or something that you pay for consumption? So like, all these different ideas came up? You know, obviously, we never got to that point, but it kind of gave you all these very, very valuable insights, which you then make certain decisions of.
Nathan Collier 21:40
Okay, cool. So if we were to summarize, you’ve broken churn into two pieces, right? There’s involuntary churn first, that should largely be automated through your payments, platform, whatever, whatever that is. And in order for it to work, so that you’re not thinking about, like, why are these credit cards cancelled? Because you should be spending your time worrying about the actual like, product, and all that kind of stuff? And then the thing for voluntary turn, it seems like and tell me if this is accurate? It seems like you’re saying that, really, the collection of insights is the key that unlocks a whole bunch of other options for what you can do on the voluntary turn side. Is that fair?
Fred Linfjärd 22:22
Yeah, absolutely. It is. An you see some really smart players out there, really working hard, I’m sure if you’ve tried to cancel like an Amazon subscription or something, you need to go through like a couple of splash screens where they, and there’s a like a logic behind it, where they like trying to get you but in the end, you know, they can’t get you the you know, they’re going to collect the insight on it. And it’s all automatically, it’s just a machine that just tries to win you back, if not, tries to learn why. And then they take that into the loop and starts improving various things to prevent it to, you know, for future people, right?
Nathan Collier 23:00
So where should someone start with this? Where would you recommend somebody start if they want to lower their overall churn rate?
Fred Linfjärd 23:07
Well, first, you know, I would start with the non-voluntary, if you haven’t done that, and you see that you have a lot of payment failures, I think it will be worth exploring that and make sure that you have a solid, you know, subscription management systems, I think that you can decrease that as much as you can, I would start there, right? Make sure that this works. And then you go over to the voluntary insurance, what you really need to do is like, if you have a 10% churn, and you have established that, you know, this is not acceptable, you know, there’s something wrong with the product that they are leaving, right, so we need to work on it, then you need to kind of segment where this is happening. So yeah, we’re 10% churn, but it’s 80% of those 10% Is that part of the people that are on the monthly or on the anvil is that the people that are on the gold plan or on the silver plan, so you need to kind of dial down and see where it is, and then you take it from there where to start improving?
Nathan Collier 24:07
Cool. And then the way to do that is, first and foremost through, at least in your system is using that transactional email to start gathering insights. Otherwise, you don’t have anything to work with, right?
Fred Linfjärd 24:19
Well, actually, that starts with the quantitative data. So I’m kind of before I’m going into the qualitative here. So yes, you need to absolutely set up the qualitative insight collection system, right to get to the why. But first, you need to look at your quantitative data. So your analytics, whatnot, you can see it in your ecommerce platform to understand where it’s happening. Where is this trend happening? Is it on the silver plan? Is it on that and you can get that data through your system fairly fast that this gives you a way where to start working to improve right?
Nathan Collier 24:53
Find what part of the car is broken and fix it.
Fred Linfjärd 24:56
Exactly, but you’ll never understand why unless you start doing the qualitative insighting and creating a good process, an automated way for collecting all that insight?
Nathan Collier 25:06
Is it possible to cut churn half? Have you done that in your career?
Fred Linfjärd 25:11
I think we’re combining at Capture One, we definitely cut it in half. And a big part of it was the non voluntary because I mean, we moved as we were very well, no, you know, we went from homebuilt one, and you just put in Fastspring. That took away a lot of the churn, right? And gave us more opportunities, technical opportunities, capabilities, to work on the voluntary churn part. You know, with the transactional emails. With all those things combined? Yeah, you can definitely cut your churn in half. If you have a churn problem, right. So I mean, it’s probably harder to go from, you know, once you’ve done all these big, dense, big things, then it’s going to be harder and harder and harder to cut it down. Right? So and that’s when you might be focusing on working on something else, because you’ve kind of done the big things there. But continuously, are systemising those things, so you can work on other things, also.
Nathan Collier 26:11
10% to 5% is in the going from 5% to two and a half is, is a lot more difficult.
Fred Linfjärd 26:18
Yeah, it’s gonna be a lot harder. Yeah. So
Nathan Collier 26:21
I guess the takeaway there is like, if you’ve never really focused on churn, that might be an opportunity to cut that in half. And then to get back to what we started with at the beginning. So those four areas being traffic, convert to trial, trial to customer, churn … that there are other places to start working on to improve conversions and retention across the funnel. Once you’ve gotten that turned into control, it seems like.
Fred Linfjärd 26:45
Yeah, definitely, yeah. There’s a lot of different parameters and even more than those that you when it comes to product lead growth, you might want to throw in referral there. How do we get other people to refer other people, you know that.
Nathan Collier 26:58
It’s part of traffic. So it’s acquisition is a big, big category called acquisition, which has this a lot that you can do there. So echo, we will talk about that. And another timeframe. Back it talks about the acquisition strategies. Right. Thanks you so much for spending the time I think this was this was great. We will. We’ll link to your LinkedIn in the notes somewhere around this video. Or if you’re listening to it on audio, it should be in the show notes. Thanks again, Fred.
Fred Linfjärd 27:25
Thank you so much, Nathan.