Episode 47 - Preventing Early-Stage Churn

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📰  Top Story: Preventing Early-Stage B2B Churn

When it comes to churn, nothing is more critical than those first 7 days—especially day one. According to Intercom's analysis of thousands of SaaS companies, the biggest drop in user retention happens within 24 hours of signup—up to 80% for some products! What happens in those first few minutes, hours, and days dramatically boosts long-term retention rate.

Case in point, an InnerTrends study found that users who completed the initial onboarding process were 38 percent more likely to return one week later and almost three times higher after 12 weeks.

So how do we prevent early-stage churn? 

In episode 20 of this newsletter, Tom shared the Retention Hierarchy of Needs - a framework for understanding what users need to succeed with your product. Like Maslow's hierarchy, you must build from the foundation up. Let's examine how this hierarchy helps prevent early-stage churn:

1. Core Value Proposition

At its core, product adoption is about building a bridge. When customers first encounter your product, they're on one side of a chasm with their current struggles and challenges. On the other side lies their desired outcome - the success and value they hope to achieve. Your product is the bridge that connects these two points.

Understanding your Jobs-to-Be-Done (JTBD) is crucial. The JTBD framework, popularized by Clayton Christensen, focuses on what progress people are trying to make. People don't just buy products - they "hire" them to help them make progress. For example, nobody hires a drill because they want a drill - they hire it because they want a hole in their wall.

Wave Apps, for example, identified three distinct jobs their customers need to accomplish:

• Send professional invoices

• Manage business accounting

• Run employee payroll

2. Who You Attract

Most successful B2B products solve multiple jobs for different types of users. Each type of user comes with its own definition of success, unique anxieties, and specific fears to overcome. It's like building multiple bridges - some users fear heights and need extra railings, while others worry about stability and need more support beams.

Wave Apps takes this approach. When new users sign up, Wave doesn't just ask for their name and email. They ask about their primary goal. Based on their selection, Wave creates a personalised journey:

• Invoice-focused users see invoice templates and payment integration features first.

• Accounting-focused users start with bookkeeping basics and expense tracking.

• Payroll-focused users begin with employee setup and tax compliance.

This personalisation is crucial because each user type has different needs, anxieties, and measures of success. A freelancer sending their first professional invoice needs different guidance than a small business owner setting up their first proper accounting system.

3. Managing Moments of Truth

As Tom explored in episode 37 of this newsletter, every customer journey contains critical "moments of truth" - those make-or-break instances that determine success or failure. For Wave Apps, these moments include:

• First 7 seconds: Showing the right invoice templates immediately

• First value: Helping users send their first professional invoice

• Team adoption: Supporting their journey from individual user to internal champion

Like support pillars on a bridge, you need different types of assistance at each moment - from in-product guides to human support - to ensure users can successfully move from their current struggles to their desired outcomes.

Final Thoughts

Next time you look at your churn numbers, start with those early drop offs. The key to preventing early-stage churn isn't in your cancellation flow - it's in understanding what job users hired your product to do and supporting them through those critical first moments.

Quick word from Tom:

A big thank you to Ramli for penning episode 47!

Episode 2 of the Customer Retention Show podcast launches on the 16th May, where you can hear Ramli and two other B2B SAS experts talk more about the drivers of retention in that vertical. Subscribe here so you don’t miss out.

Until next week, 

Tom  

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