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SaaS

Reducing SaaS Churn with Integrations

By
Peter Jung
July 19, 2024
•
3
minute read
Summary
Churn is at an all-time high in SaaS, but building native app integrations can be the silver bullet you need to tackle it. This article will walk you through the reasons why.

Why Churn Matters

Losing a customer hurts more than losing a deal because it undermines the benefits of a recurring revenue model (ARR). Profitwell reported an 18% increase in churn in April 2023 compared to the previous year. This trend is exacerbated as companies tighten budgets, prompting teams to scrutinize their SaaS spend and cut non-essential tools. Even if your sales team excels at acquiring new customers, an uncontrolled churn rate can still threaten your business.

The Impact of Churn

A 5% monthly churn rate will result in losing 46.1% of your existing customer base by year-end. Product decisions made today can help reduce churn, focusing on three objectives:

  • Increase product usage
  • Create product value multipliers
  • Build product dependencies

Native app integrations can effectively address all three.

The ROI Framework

Customers will discuss your product's ROI when considering renewals. Improving their perception of return is crucial. Use this framework to illustrate:

Value Transfer = Usage × Product Value

Value Transfer is key because value must be experienced to be perceived. Thus, increasing usage and the maximum possible value your product provides is essential.

Increasing Product Usage

A product not used delivers no value. Customers prefer working out of a few core platforms and rely on integrations for the rest. Integrations enhance visibility and reduce friction, driving up usage. For instance, integrating Hubspot with Slack centralized project communications, significantly increasing my usage of Hubspot.

Creating Value Multipliers

Integrations can drive additional product value by unlocking new use cases. For example, SWIT.io ’s CRM integration doubles the value derived from its team collaboration product by arming sales teams with critical insights for upsells or identifying at-risk customers.

Building Dependencies

Integrations embed your product into customers’ workflows, creating dependencies. This makes it difficult for customers to replace your product, as they risk breaking business-critical processes, face the challenge of improvising workarounds, and endure the cost and effort of onboarding a replacement.

Data-Backed Proof

Market leaders like HubSpot, Slack, and Intercom invest in hundreds of integrations to improve churn. Here are some insights:

  • Rollworks found customers with four or more integrations are 35% less likely to churn.
  • Crossbeam’s survey indicated users with integrations are 58% less likely to churn.
  • Profitwell’s study revealed products with at least one integration have 10-15% higher retention, and those with four or more integrations see an 18-22% increase.
Tracking Integration Impact on Churn

To measure the impact of integrations on churn:

  1. Use a CDP to track integration-related events.
  2. Ensure your CRM can receive and segment customers based on integration usage.
  3. Calculate churn rates for each segment to identify patterns.
Final Thoughts

Integrations are a powerful tool for reducing churn by increasing product usage, unlocking new value, and building dependencies. However, developing and maintaining integrations can be challenging. That's why Interactor offers an Integration-Platform-as-a-Service (iPaaS), allowing you to ship dozens of integrations in a few days, significantly reducing the engineering effort required.

If you’re convinced that integrations can reduce churn for your product, book a demo with Interactor to see how we can help you achieve this faster.

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