How To Reduce SaaS Churn With A Well-Designed User Onboarding Process

How to Reduce SaaS Churn with a Well-Designed User Onboarding Process

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Customer churn is to be expected in the SaaS business, but what you may not know is…

“40-60% of users who sign up for a free trial of your software or SaaS application will use it once and never come back…

~ Patrick MacKenzie, source.

… Ouch!

Customer Log In Rate


Only 40% of SaaS customers log in a second time.

You don’t want to be part of the statics, do you?

Churn rate impacts SaaS companies more than traditional software businesses because the revenue for the service comes over an extended period of time (the customer lifetime.)

The challenge is not only to get customers to sign up for your free trial or pay for just a couple of months of usage, but also to keep the customers around long enough so the revenue generated from a customer will exceed the investment made to acquire the customer.

Cumulative Cash Flow


The first few months of a customer’s engagement of a SaaS product often represent negative cash flow for the company.

This means you need to be constantly “selling”:

  1. 1.Acquiring the customer – e.g. get customers to sign up for your free trial
  2. 2.Turning your free-trial customers into paying customers
  3. 3.Keeping the customers for as long as possible to maximize lifetime value

Reducing churn and successful onboarding process can help maximize free-trial-to-paid conversion, and keep your customers around for longer.

Impact of Churn


Impact of reducing SaaS churn on revenue can be very significant for the bottom line.

The most important component in reducing churn is at the early days, when a customer is in the process of making a purchasing decision and has not been “hooked” onto your product, e.g. by uploading data or integrating your product into his system.

SaaS Metrics


The early phase of onboarding new customers and engagement represents the biggest opportunity for conversion and retention.

To minimize customer churn rate, especially in the early phase of engagement, most SaaS companies employ a user onboarding process with the goal of educating new users on how to use the product so they can create successful outcome.

Such user onboarding process could be the most important strategy in determining the success of a SaaS product.

Sample Onboarding Process


So, what does onboarding means?

Onboarding refers to the process of helping your newly signed-on customers succeed with your product by taking them through the necessary steps they have to complete.

Zendesk Onboarding Process


Zendesk walks its new users through a step-by-step application onboarding setup with a series of videos.

Good news: integrating a user onboarding process can be very effective in beating the odds and retaining more customers than the industry average:

Progress BarSource

By adding an onboarding process map to give users the reassurance that the process is not drawn out or complicated, Patrick McKenzie reduced churn through user onboarding and increased the number of users who made it through the “customize” step by 8%.

A progress bar also help users move along by giving them a sense of accomplishment.

Bad news: you can’t just throw together some instructional text or videos and call it a day. Getting customers to buy from you requires trust and relationship, which involves more than a bunch of “how-to’s.”

Good news again: designing an effective user onboarding process doesn’t have to be complicated…

In this article, you’ll learn 7 strategies that target these unique challenges faced by SaaS companies so you can design a user onboarding process that reduces churn and increases retention:

SaaS Business ModelSource

The goal of reducing SaaS churn rate is to get customers to stay long enough such that lifetime value exceeds acquisition cost.

1. Set well-defined goals and collect relevant data

Define what “onboarded” looks like and set success metrics

What kind of “initial success” do your customers need to achieve in order to understand the value provided by your product so they’d sign on as a long-term customer?

Understanding what outcomes your clients need to experience in this initial phase can help you optimize the free trial period and design an onboarding process that helps them achieve this “initial success”.

SaaS Desired Outcome


Desired outcome is made up of required outcome and appropriate experience.

Instead of guessing what it’d look like for your clients, ask your prospects what “successful outcome” means for them through a focused and well-designed survey.

Conduct Survey


A simple email with a couple of questions can help you find out how to improve your product.

Set achievable goals and milestones so users achieve meaningful results

Most SaaS products include a 30 to 60 days free trial period when new users sign up.

It’s not a lot of time to master every single feature included in software.

Instead of throwing everything at new users all at once, set achievable milestones and realistic expectations so they can create meaningful results quickly and experience success in using your product.

Remember that only 40% of SaaS customers would log in a second time?

It’s important to get them “hooked” when they first set up the account and are still in the mode of discovering your product.

Instead of making them click around and read walls of instructional text, give them quick wins within minutes of first engaging with your software by offering simple tasks that can be completed easily.

Canvas Onboarding Process

Provide Quick WinSource

Canva’s onboarding process takes users through a “beginner’s challenge” during which they can create their first “quick win” within a few seconds.

Analyze churn data to identify actionable trends

There’re different reasons why customers cancel a subscription. It’s important to understand this churn data so you can improve user onboarding by addressing issues and plugging “holes” in the process.

You can also identify “red flag” metrics – e.g. a user who spends much longer than average on a task and may possibly be stuck and unable to progress – so you can take action before you lose the customer.

Identify Churn Data


Here is an example of some behaviors that point to “abandonment symptoms.”

In this case study, Groove reduced churn by 71% when they studied “red flag” metrics and reached out to customers:

Reach out to Users


This email was sent to users who spent less than 2 minutes on their first session, as well as to those who (regardless of first session time) logged in fewer than 2 times a day in their first 10 days. It got a 26% response rate; and more than 40% of the users who walked through their signup remained customers after 30 days.

2.Identify critical moments in the onboarding process

Find the “A-Ha” Moment

At what point do your ideal customers “click” with your product, get into the habit of using it and therefore build a high level of loyalty?

What action do they need to take to get there?

When you analyze your retention metrics, you can identify these “aha moments” and design your onboarding process to get users to take those “core” actions as soon as possible.

E.g. Twitter determined that “once a user follows 30 people, they’re more or less active forever.” When they onboard new users, they’d make suggestions and encourage users to import and follow their contact so they start following 30 people as soon as possible:

Twitter Onboarding


Metric shows that once users follow 30 people, they’d stay on.

Suggestions For You


By suggesting people to follow, the onboarding process gets users to follow 30 people as quickly as possible.

Design content to reduce friction points

After you’ve determined the critical path for users to achieve success, then you need to “unclog” the process by removing friction points.

You can conduct usability testing to uncover where users may get stuck, and create content to help them navigate through these steps.

Design Content To Reduce Friction Point


Use usability testing software to conduct remote usability testing.

3. Let users experience the product in its entirety

Use walkthrough/demo videos to showcase capability and possibilities

Users may need to perform certain tasks during the onboarding process to experience “initial success.”

However, those tasks may only represent a small subset of your software’s capability.

You may need to demonstrate a wider range of your product’s capabilities so customers can make an informed purchasing decision.

To do so, you can create simple demo videos or a product tour to showcase these features to inspire users to stay on, without making them feel overwhelmed.

You can also manage user expectations on what your product can and cannot do by giving them an overview of your products capabilities.

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4. Create content that adds value and builds trust & relationship

Focus communication on customer satisfaction

What can you provide your customers that will add value to their onboarding experience?

Often times, to build trust and relationship, you need to go beyond “technical” onboarding by offering valuable and relevant resources and information.

Focus communication on customer satisfaction


Training on related topic adds value for users. MailChimp has a large number of free eBooks available to all of its users, covering best practices and tips in email marketing.

Create content relevant to users’ progress

Different users progress through your onboarding process at different pace.

To increase the relevance of your content, make sure the communications users receive are mapped to their progress and based on their actual experience of your product. Such content can be delivered via lifecycle emails, in-app messaging or phone calls.

Instead of serving up materials based on the number of days they’ve signed up, tie your customer or prospect communication to their progress – or lack thereof – through success milestones.

You can also analyze your retention data to map out different stages of retention, and design content to help achieve the goals in each stage.

E.g. Initial phase: get users to use the product more than once. Mid-term: establish a pattern of usage. Long-term: turn your product into an indispensable tool.

Create content relevant to users’ progress


By understanding why users don’t return to use the product during the first week, Sidekick was able to design an onboarding process that significantly increased customer retention in this stage.

Align onboarding materials with your brand voice

Orchestrate the transition from the onboarding process to regular communication as seamless as possible as any disconnect can erode trust.

Add personality to your customer onboarding strategy. Make your content engaging and conversational to continue nurturing relationship with your customers.

Communicate with team


Slack employs a simple user onboarding process that also communicates its brand personality.

5. Design a simple and engaging experience

Get users to “practice” using your product

Create a hands-on experience in which the user is in control while learning how your app works.

E.g. guides users through a series of simple tasks by using the various tools in the software to create graphics so they can experience the app without reading pages after pages of instructional text:

Get users to “practice” using your product


Canva has a seamless and simple onboard process that engages users from the get-go.

Keep it simple

If your product is rather intuitive, don’t complicate things and make it look harder than it is by loading up your onboarding process with an excessive amount of content and videos.

Dropbox is a great example: When a user sets up an account there is a 4-page PDF file in the folder that shows how to get set up and communicates more information about the product.

Keep It Simple

Dropbox’s “get started” PDF is a simple 4-page guide that makes onboarding fast and painless.

Get the right feedback

Getting users’ feedback is an effective way to create more buy-in.

To get the right kind of feedback so you can improve the product, make sure you ask clear questions that target different aspects of users’ experience:

Simplify transition to paid service


Clear questions get you quality answers.

6. Optimize Free Trial-to-Paid conversion

Simplify transition to paid service

The more seamless the process of transitioning from free trial to paid service, the more customers you’d retain.

Besides a simple and unencumbered user experience to reduce friction, limit the number of options to a handful of choices with clear feature and pricing comparison so customers don’t get confused and abandon the process altogether.


Shopify’s pricing and feature comparison chart helps users make purchasing decision.

Offer an attractive package with added value

If you identify “value” as a risk of churn in your data analysis, you can single out those users and offer them a more attractive package – either by creative discounting or offering more value (e.g. an upgrade.)

In this case study, the average subscription value was increased by 33% through the use of strategic discount by studying actual usage during trial period and offering customers a package that delivers more value with a slightly higher price tag.

7. Post onboarding communication

Continue communication after customer onboarding

To keep your customers, you need to keep them coming back to your app. If they don’t use it and get value from it, they’ll eventually leave.

Here’re a few ways to continue engagement:

    • Retention Hooks: what features would keep users coming back? E.g. LinkedIn’s emails to their users saying, “Who’s viewed your profile” has proven to be successful retention hooks.

Continue communicating after onboarding


LinkedIn’s “people are looking at your profile” email makes user go back to the site regularly.

  • Reactivate lost users: remind inactive users the value delivered by your products to entice them to come back.

    Remphasize Values


Evernote gets users to come back over time by reemphasizing the value of the product. This causes users to re-download the app any time they switch devices, creating the smile graph.

  • Push notification: encourage users to turn on push notification on their apps to get regular updates and communications.

Announce improvements and new features

When there’s a product upgrade, such as feature tweaks, new capabilities, improved user experience, streamlined workflow etc., take the time to communicate the value added so customers know that they’re getting their money’s worth and know that you’re constantly paying attention to quality and customer satisfaction.

If you’ve a user interface overhaul or roll out a major update, consider creating a mini-onboarding process for your existing customers to help ease the transition.

Continue to add value

Regularly provide relevant and exclusive customer-only content and resources to continue nurturing the trust and relationship built during your client onboarding process.

These could be delivered in the form of a resource library of PDFs and/or videos, or weekly training webinars.

Continue to add value


Raven Tools holds weekly training webinars for users to help them make the best use of the product.

Reconnect with your churned customers

Some customers left because it’s not the right time to utilize your software, or they were looking for a feature that you didn’t have but are now adding.

Communicate to your churned customers periodically about product updates. If data such as open rate, click through rate etc. shows that they may be interested, you can offer some strategic discounting to entice them to come back.

Reconnect with your churned customers


Tools like Intercom allow you to communicate with users based on their activity.
A well-designed user onboarding process that helps reduce SaaS churn focuses on paying attention to users’ needs and behaviors, delivering the most relevant communication at the appropriate time during the experience and helping them achieve tangible results from the get-go.

Over to you – what would you add to your user onboarding process to make it more effective as an acquisition and retention tool?

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10 Responses

  • 5 Things You Didn’t Consider in Your User Onboarding Process - Hammad Akbar May 13, 2016 at 9:35 am

    […] How do they use it? What are the actions they take most? These examples and other customer success metrics will help you measure your customer’s success as well as your own to reduce SaaS churn. […]

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    […] 1. Set achievable goals with tangible outcomes that customers find valuable, then device a process to take them to the “aha” moment as quickly as possible. […]

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  • 15 Key Elements For Successful SaaS Customer Onboarding - Hammad Akbar June 30, 2016 at 10:42 am

    […] I’ve talked about the “Aha” moment before, so let’s review: Also known as the “WOW” or “Magic” moment, the “Aha” moment is the point during which a user knows how your product or service can help them. It’s not necessarily a feature that wows them, but what the feature does to make a task easier for them. […]

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    […] is Customer Churn? Customer Churn is basically the loss of your customers or clients during a time period. It is when your customers stop using your product or service any […]

  • 5 Things You Didn’t Consider in Your User Onboarding Process - Hiring | Upwork June 5, 2017 at 2:39 pm

    […] Before you even consider developing your product, you should fully research your customers, their needs, and their success. This will lay the foundation for your product development. Sometimes the simplest steps are the best. Like asking your potential customers why they would sign up for your product or conducting surveys. Or watching someone go through the tutorial on your product. How do they use it? What are the actions they take most? These examples and other customer success metrics will help you measure your customer’s success as well as your own to reduce SaaS churn. […]

  • 6 Extremely Effective Tips to Improve Your SaaS Conversions - Hiring | Upwork June 6, 2017 at 7:04 pm

    […] next best thing you can do to have more conversions and reduce churn rate is to provide your visitors with a good navigation at your site. Very often, customers run away […]

  • How To Reduce SaaS Churn With A Well-Designed User Onboarding Process - Hiring | Upwork December 14, 2017 at 5:03 pm

    […] article was submitted by Hammad Akbar and originally appeared on Hammad Akbar Blog. It has been republished with permission and does not constitute the views or opinions of Upwork. […]

  • 15 Key Elements For Successful SaaS Customer Onboarding - Hiring | Upwork December 18, 2017 at 6:02 pm

    […] I’ve talked about the “Aha” moment before, so let’s review: Also known as the “WOW” or “Magic” moment, the “Aha” moment is the point during which a user knows how your product or service can help them. It’s not necessarily a feature that wows them, but what the feature does to make a task easier for them. […]

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