<< Chapter 6: Thriving in the Long, Slow, SaaS Grind

Churn is the biggest threat to a new Micro-SaaS business. Perhaps the toughest challenge of running a SaaS business by yourself is consistently retaining customers. However, keeping happy customers with a high retention rate makes every other part of running a Micro-SaaS progressively easier so it is critical to get your support and retention strategy dialed in early on.

If I had to point to a single thing that has so far made Storemapper a success it would be its incredibly low churn rate. Successful SaaS businesses of all types – bootstrapped or funded, large or small – will typically see monthly churn of 5% – 8%. Churn much higher than that will usually kill a SaaS business. Storemapper’s churn rate through five years of growth has consistently stayed around 1-2% per month with a substantial number of months showing negative net churn, where additional revenue from existing customers (upgrades) bring in more money than the loss from churn.

In this chapter, we’ll take a look at all the ways high retention and low churn makes every other challenge of Micro-SaaS easier. Hopefully, I’ll convince you of its importance. We’ll look at the attitudes and opportunities when handling support as a single founder and how to balance support with your other priorities. I’ll dive into my favorite tools and introduce the idea of automating empathy: a series of tactics I use for effective, automated, proactive support.

Lastly, we’ll look at a few tips for staying sane through what can be one of the most stressful parts of building a Micro-SaaS business. So let’s get started with perhaps the most important chapter in the book.

Why retention is so important

A larger organization might break down certain aspects of support into separate responsibilities like pre-sales, onboarding, inbound support requests, and tracking bugs. In a Micro-SaaS, with just one person or a small team, all these aspects are grouped under the broader topic of support. Improvements in one area will cause associated improvements in other areas. Great support (using my broad definition) has a direct effect on a number of key business metrics.

Conversion from free trial to paid users: An intuitive onboarding process and fast, useful answers to common questions will maximize the percentage of your free trials that decide to become paying customers. This is particularly important if you have competitors that they might be evaluating concurrently. A single unsolved support ticket during the free trial can be enough to tip a potential customer toward a competing app, even if it would be a worse option for them in the long run.

Churn: Repeatedly frustrating customer support interactions are a great way to increase the number of customers canceling each month. At Storemapper the primary reason customers would cancel their subscription is that they themselves were closing their business.

Expansion Revenue: Great support includes surfacing various features of your app at the right moment of need. Getting this process dialed can also be a great way to upsell existing customers to premium plans and increase the revenue from existing customers (called Expansion MRR). As an example, we do our best at Storemapper to make the process of uploading a CSV file as easy as possible; but it’s a notoriously difficult UI across all SaaS apps. Right there on the page is a small but convenient pitch for our “sync from Google Drive” premium feature for any customers who find the process too frustrating. This has the double effect of providing a solution at a common point of friction and increasing our Expansion Revenue for the customers who decide to upgrade at that point.

High retention rate and great support also have indirect effects on almost every other key metric for your business. Happy customers stay customers for longer, increasing your lifetime value (LTV). Keeping more of your free trial customers for longer reduced your customer acquisition cost (CAC) allowing you to confidently invest more time or money on each new free trial customer. Customers who have just had a spectacular support interaction with you are substantially more likely to provide referrals to other customers.

High retention means you can justify growing more slowly because you’re not putting new customers into a leaky bucket. There’s less pressure to constantly add customers. You can justify high touch “concierge” onboarding for new customers because you know it’s unlikely that effort will be wasted. Strong retention means that once your business matures, your revenue becomes more predictable month to month and you can rely more on that revenue to pay your own bills or employee salaries.

Have I gotten your attention yet? Support is important.

Customer Support as a Solo Founder is hard

Support is a difficult but important gig. There is a reason startups have begun upgrading the title (customer success, customer happiness guru) and trying to attract higher quality talent to these positions. Good support is critical to onboarding and retaining paying customers.

It can be challenging to balance providing great support to existing customers with further developing the product to attract new customers. If you did a minimum viable product (MVP) launch correctly, your product currently lacks a ton of features and has more than a few bugs. You will be getting a lot of bug reports and feature requests (and occaissional feature demands) from customers who are at times frustrated and confused. If you launched really well, the backlog will be much more than you can reasonably handle.

Navigating support as a solo founder can be a minefield and it’s important to have a strategy before frantically wading into the queue of emails and tickets.

The Guiding Principle: Every support ticket is an opportunity

But there’s hope. It’s too easy to view support tickets in a negative light. It’s a long task list that you need to check off before getting back to work on product. It’s a stream of grumpy users who can’t even read the dang instructions you so clearly wrote out inside the app.

But this is completely the wrong mentality because the reality is that every support ticket is a massive opportunity. Your worst customer is not the one sending you a support email every day for two weeks, your worst customer is the one who signs up for your app, then cancels without ever giving you a word of feedback. Customers who take the time and energy to write you a support email have now taken a vested interest in getting your app to work for them. It’s important to listen to them, ask follow-up questions and not just view the goal as getting the customer from A to B as quickly as possible.