One of the biggest killers of modern software companies is failing to overcome a high SaaS churn rate.
You put so much effort into engineering, marketing, selling, and onboarding, but if engagement is low and customers don’t fully implement your product, they’ll soon walk away, taking recurring revenue with them.
Aggregated data from industry reports suggests:
- The average churn rate for SaaS is typically 10-14% annually.
- < 5% is considered the benchmark for a ‘good’ annual SaaS churn rate.
- However, it’s estimated that 60-70% of SaaS companies fail to hit this benchmark, so there’s wide-scale room for improvement.
As product lines mature and profitability comes into sharp focus, it’s never been more important to monitor churn risk and proactively drive retention, which is why usage insights are key to sustaining growth.
Monitoring Your SaaS Churn Rate
The 2025 Monetization Monitor reveals the vast majority of software producers employ multiple methods to identify churn risk, with periodic customer surveys the most common approach:
While Customer Satisfaction (CSAT) and Net Promoter Score (NPS) surveys can provide great insights, they have significant drawbacks when it comes to identifying churn risk, such as:
1. Lack of Behavioral Data
- Limitation: These surveys measure sentiment, not actual usage patterns. A customer might express satisfaction but still churn if they aren’t actively using the product.
- Why it matters: Churn risk is often more accurately predicted by low product engagement or reduced feature adoption, which CSAT and NPS do not capture.
2. Delayed or Infrequent Feedback
- Limitation: Surveys are usually conducted periodically (quarterly or annually), missing real-time signals of dissatisfaction.
- Why it matters: By the time poor scores surface, churn risk may already be critical, leaving little time for intervention.
3. Response Bias and Narrow Insights
- Limitation: Responses often come from engaged customers, while disengaged or unhappy users may ignore surveys altogether.
- Why it matters: This bias, combined with a lack of contextual data, can obscure churn risk signals.
To strategically reduce your SaaS churn rate, it’s advisable to blend surveys with granular customer data analysis to uncover early warning signs, identify at-risk accounts, and create targeted retention plans that encourage long-term loyalty.
This echoes the sentiment expressed by Steve Jobs, the legendary Co-Founder of Apple who believed understanding customer needs – often before they do – is the key to lasting success.
So, how do you get close enough to your customers to anticipate their needs and prevent churn before it starts?
The answer lies in Monetization Analytics, offering clear visibility into account health and enabling automated alerts to notify Customer Success Managers when intervention is required.
Churn Analytics: Prediction and Prevention
Revenera’s FlexNet Operations is an entitlement management tool that provides software producers with actionable data to drive renewals, prevent churn, and reveal expansion opportunities.
The key reports for cutting SaaS churn rates are:
License Server Usage and Denials
This report shows how customers engage with specific features over time. By identifying underutilized features, you can pinpoint areas of concern and educate customers on the benefits they’re missing out on. Consumption trends also highlight cross-sell or upsell opportunities that can strengthen retention.
Fulfillment
This report shows what has been activated compared to what customers have bought. With this insight, you can quickly identify gaps, allowing you to tailor targeted engagement strategies. Recognizing these trends early can help Customer Success Managers drive outreach activities.
Renewals
This report tracks upcoming expirations by region, providing immediate visibility into the renewal position of each customer. By setting automated alerts for entitlements due to expire within a specified timeframe, Customer Success teams can proactively engage at-risk accounts.
Setting Alerts to Drive Retention
The notification system within FlexNet Operations allows you to customize and automate alerts that directly support SaaS churn rate prevention.
Conditional Notifications can be configured to alert account managers about upcoming expirations, low utilization levels that signal churn, or service denials that indicate upsell opportunities.
By streamlining these processes and keeping your teams informed, you can address potential churn before it’s too late.
Reducing Your SaaS Churn Rate with Data
Tackling your SaaS churn rate starts with understanding usage. Data-driven insights from dedicated entitlement management software can provide clear visibility into customer behavior, enabling proactive steps to boost engagement.
By continuously monitoring customer activity, SaaS providers can identify early warning signs – such as declining usage or missed renewals – and take action before churn becomes a reality. Real-time visibility helps you prioritize critical accounts while also uncovering new opportunities for growth.
When teams have access to timely, accurate data, they can respond quickly. Whether it’s addressing signs of disengagement or reinforcing value through personalized outreach, evidence-based insights are key to improving retention.
With the right analytics in place, you can minimize your SaaS churn rate, strengthen customer relationships, and drive long-term revenue growth.
Sign up for the webinar to discover more:
How to Drive Renewals and Reduce Churn with Monetization Analytics
March 18, 2025
11 AM ET / 15:00 GMT / 16:00 CET
REGISTER NOW
You can learn more about Revenera’s software monetization services here:
