4 Ways to Reduce SaaS Churn and Enhance Retention With AI

Dhruv Mehta
Dhruv Mehta
Digital Marketing, Acquire

Everybody knows that acquiring a new customer is much more expensive than retaining an existing one. Besides, a small percentage of loyal customers often contribute the most to your company’s bottom line and spread the good word, which supplements your acquisition strategy. Unsurprisingly, customer retention is a primary growth strategy for any company, including subscription-based business models that face tremendous competition.

Customer Churn in the SaaS Market

Today, most companies opt for subscription-based services, as it is easier to switch vendors without any long-term commitment. Of course, a small percentage of customer churn is natural for every business, but anything higher can seriously impede your growth or even risk shutdown. 

Here’s some food for thought from McKinsey – According to data, a software company growing at an annual rate of 60% has no better chances than 50-50 of becoming a multibillion-dollar giant. Also, a software company growing at a rate of 20% has a 92% chance of shutting down within a span of a few years!

If you are thinking about what’s normal – some studies have indicated that an average churn rate of 5% for subscription-based business models is standard. However, the larger the size of the businesses that you target, the lower should be your churn rate, as the market gets smaller with increasing client value.

Reducing Churn with AI

Retaining customers requires you to address customer churn, that is, identify why some customers stopped buying from you and prevent this from happening with your remaining customer base. In the next few lines, we will share some practical tips to reduce your customer churn using Artificial Intelligence (AI) and Machine Learning (ML):

1. Leverage AI-enabled Chatbots for a Personalized Experience

Chatbots have revolutionized customer service by handling up to 80% of straightforward or repetitive customer queries. This improves customer experience through instant response and resolution and reduces the burden on your support staff – freeing them to handle more complicated user queries.

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The best part about AI-enabled chatbots is that they learn by experience, and the more you use them, the better they become. Besides, with NLP technology, chatbots can understand and answer questions contextually, making conversations more human-like and personal. Apart from customer service, chatbots can also be used for proactive communication by offering help to site visitors who may seem to linger on a specific page for some time. 

Chatbots can also send personalized offers and discounts to on-site visitors based on their browsing history, share links to educational content on the site, or even ask for quick feedback if a visitor is exiting your website.


2. Use Predictive Analytics to Prevent Churn 

One of the best ways of preventing churn is by identifying users likely to churn and taking actions accordingly. To do this, it is imperative to take a closer look at the customers’ data that have churned in the past. By employing predictive analytics, you can gauge patterns like the steps customers usually take before they stop buying to build a predictive churn model based on user behavior.

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American Express, a leader in the financial services industry, has created a machine learning model to forecast potential churn. The model uses 115 variables to define customer behavior and identify up to 24% of accounts that will close in the next four months, helping the company take appropriate marketing measures to retain these customers.

Here’s some of the information that you need to understand your customers better:

  • Demographics (gender, area, occupation, etc.)
  • What kind of products do they buy?
  • How often do they purchase, and what payment methods do they prefer?
  • Any complaints or customer service interactions?
  • Do they read your newsletter or interact with other educational content?

Once you have sizable data, you can apply artificial intelligence to assess this data to identify customers who are likely to churn and take appropriate action like sending them emails, offers, or requesting a call in an attempt to retain them.


Apteo, a no-code analytics tool, helps measure churn by assisting teams in connecting, analyzing, and predicting their data with no coding skills required. 

Using the tool’s predictive features, users can quickly ascertain which patterns in their data are most associated with increased churn. 

With the help of the data deciphered from the tool, marketers can effortlessly attract and retain customers. 

Here are some of the benefits that you can derive from this useful tool:

  • This innovative tool helps you easily connect your existing data and get full visibility into your marketing funnel. 
  • It gives you the chance to identify the customers that are likely to churn, ascertain the reasons as to why, and then determine the best ways to retain them for a long time. 

All this without requiring you to learn any coding language. Isn't that amazing?

3. Using Behavioral Analytics to Serve Customers Better

Companies that continuously monitor customer engagement, collect feedback, and provide responsive customer service are usually more successful in retaining their clients and building mutually beneficial client relations. 

With machine learning, it is possible to analyze and predict customer behavior to gauge what they like or dislike. You can predict what your users may buy next (like the suggested items while shopping on Amazon.com), making it possible to upsell and cross-sell to existing customers

You can also use AI to personalize your marketing campaigns or launch loyalty programs tailored to your customers’ preferences to improve retention and brand experience, which will automatically reduce churn. 

4. Share Intelligent Content To Minimize Churn

Building a great product is not enough; your users should also be able to gain the promised benefits from your product or service within a matter of a small window of time, which can be ensured through a thoughtful onboarding process and intelligent content. Besides curating an exceptional onboarding experience, you can get some great results by investing time in a regular newsletter that shares product recommendations, discounts, company news, etc., with your customers and interested site visitors. 

But wait – it’s not as easy as it sounds. Nobody likes useless information, which means your newsletters must be customized according to your users, especially in terms of product recommendations and offers. To achieve this, you can rely on AI to analyze customer preferences based on their location, demographics, browsing history, etc. Based on this information, you can segment your users into identical groups and also determine the best time to reach out to them for maximum views. 


Customer churn can eat away your growing business unless it is addressed proactively. Due to more choice, a retroactive approach to churn isn’t effective anymore. Thus, brands that wish to be successful must invest in predictive technologies to identify unhappy customers and take timely action to prevent them from switching. By leveraging AI, businesses can eliminate guesswork to build a definitive, data-driven customer retention strategy focussed on customer success to prevent churn.

About the Author

Dhruv Mehta
Dhruv Mehta
Digital Marketing, Acquire

Dhruv Mehta is a Digital Marketing Professional who works at Acquire and provides solutions in the digital era. In his free time, he loves to write on tech and marketing. He is a frequent contributor to Tweak Your Biz. Connect with him on Twitter or LinkedIn

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