Case Study: Reducing Churn by 87.5%
SocialWOD, a workout tracking SaaS app built in-house by our team.
40% of our customers were churning out. We wanted to find out why, and reduce our churn rate.
We had a good set of qualitative data, but wanted to find out what our quantitative data told us.
More specifically, we wanted to look at what the behavioral differences were between active customers and cancelled customers. What were active customers doing to realize more value from the product that cancelled customers weren't doing?
A cohort analysis would help us figure out the difference between active and cancelled cohorts. I'd use the data from the analysis to figure out what changes to make to decrease churn.
How it Unfolded
I was stressing. We had seen 40% of our customers cancel, and it was eating me up inside.
Each of those (former) customers had:
- decided they had the problem SocialWOD solves (workout tracking for every gym member at your gym, just by snapping and emailing a photo of your results whiteboard)
- decided they needed to solve that problem
- done research on solutions that might solve their problem
- decided that SocialWOD was compelling enough to try
- decided to take out their credit card to pay SocialWOD
- used and promoted SocialWOD to their members
After investing that much mental and emotional energy, they then they decided to cancel.
We were trying to understand what the key differences were between our customers that cancelled, and our customers that didn't.
We hop on the phone every week or two to call up customers, so qualitative data was no problem.
But we wanted to see what we could learn from our quantitative data.
Enter: the Cohort Analysis
A cohort analysis helps you see how behavior varies across different cohorts, or groups, of customers.
In this case, we were interested in the behavior of the cohort of customers who had cancelled, versus the behavior of those that hadn't. What differences were there in each cohort's usage of our product, and could we steer more gyms towards doing things that would help them get more value from SocialWOD?
Pull some data
To helps us answer these questions, I wrote a large SQL query pulling out the relevant data points that might provide insight.
Here's some of the relevant data we pulled:
- The month a customer joined
- The amount a customer paid per month
- Free trial length
- The number of a gym's members that claimed their SocialWOD profiles
- The number of days between paying us and canceling
- Whether a gym uses SocialWOD to post their workouts to their gym's Facebook page
All in all, there were 51 different fields of data that we pulled.
I ran pivot tables comparing the difference between gyms that cancelled and gyms that didn't.
It turns out that customers who cancelled:
- had about half as many of their members claim a SocialWOD profile (i.e. reduced engagement with the product)
- used the "post our workout results to my gym's Facebook page" feature about half as much as gyms who remained customers
- paid about 23% more than gyms who stayed
- cancelled their subscription after 61 days on average
Square the quantitative with the qualitative
We have a spreadsheet that details cancellation reasons for every customer, and I'd estimate we'd talked to at least half of the customers who quit.
The two most common reasons we kept hearing about why gyms quit were:
- our athletes aren't using it
- it's too expensive. SocialWOD is a nice-to-have, not a must-have. On the other hand, a member CRM is essentially a must-have for a gym over a certain size. The price for a member CRM sets a strong price anchor in the mind of a customer (i.e. "I need a CRM and it costs $X. I don't need SocialWOD, and it costs $1.5X.").
Given that the quantitative data suggested high member usage and lower price were big drivers of customer retention, the qualitative and quantitative data together told a pretty strong story about what to do to cut down on cancellations.
Acting on the results
Here's what we decided to do about each finding:
Finding: A cancelled customer had about half as many of their members claim a SocialWOD profile.
Until today, our customers would tell their members to claim their SocialWOD profiles by posting an announcement about SocialWOD on their gym's Facebook page, writing on their gym's blog (read by most members), talking about SocialWOD at the gym, etc.
We figured there's nothing easier to act on than an email describing benefits and a call-to-action. So we improved our customer onboarding flow to have a gym owner send us CSV export of their members' email addresses.
Once they do, we email each member a description of how SocialWOD benefits them, along with a link to click to claim their SocialWOD profile.
Finding: A cancelled customer used the "post our workout results to my gym's Facebook page" feature about half as much as gyms who remained customers.
We improved our onboarding so that customers who haven't set up posting to Facebook receive an email detailing the benefits of doing so (along with an explanatory video), and a strong CTA to do so.
Finding: A cancelled customer paid about 23% more than gyms who stayed
We built some technology than makes processing photos cheaper for larger gyms, and passed those savings on to both our existing and new customers. Those changes enabled us to drop prices by 15-60%, depending on price plan.
Finding: A customer cancelled their subscription after 61 days on average
We haven't acted on this yet, but I can imagine sending gyms that meet some "likely to cancel" criteria an offer around day 45 of their membership to lock in for a year at a discount.
Since implementing changes #1-3 four months ago, we've seen our cancellation rate drop from 40% to 5% - an 87.5% decrease.
More importantly, that's translated directly to a large increase in monthly profits.