HR 101

How HR Systems Can Prevent Customer Churn

Pat Brothwell
Pat Brothwell
HR Solution professionals discuss ways to prevent customer churn.

Churn is a top concern in the SaaS industry, including HR Solutions.

Customer churn is the percentage of customers that end the use of your company’s products or services during a set period. You calculate customer churn by dividing the number of customers you lost in a defined timeframe by the number of total customers (new or not) you had at the start of the period. 

Reducing churn is a high priority for any SaaS solution—a 5% increase in customer retention can increase profits between 25-95%. Staying with a vendor long-term is also beneficial for your customers. Your customers don’t want to churn. The 2022 HRIS Report found, on average, that it takes customers 15 weeks to pick an HR system. That’s a lot of time, resources, and thought put into a partnership. Customers are doing the legwork, hoping for a long-lasting relationship. 

Providing them with an optimal experience will keep them around and turn them into the kind of brand advocates that will help your HR system generate new leads and revenue! Let’s examine five ways HR systems can proactively combat customer churn.

Table of Contents

Analyze the Reasons for Your Churn

The first step to combatting customer churn is to analyze why your customers aren’t renewing your HR system services. 

How Can You Calculate Customer Churn?

You’ll need to know how to calculate customer churn before analyzing. While there are many methodologies for calculating churn, the following formula is the most basic and comes from HubSpot. We recommend utilizing this formula to calculate your churn for a month, quarter, or year (and we’d recommend tracking all three of these timeframes to get the most precise picture of what’s working and what isn’t.). 

CHURN RATE  = (Lost Customers ÷ Total Customers at the Start of a Period) x 100

So, if your HR system lost 85 accounts during March, but began March with 1,000 active customers, your monthly churn rate for March would be 8.5%.

Is Any Customer Churn Ok?

You should always expect some churn—even happy customers can close shop, get beset by budget cuts, or get bought out. However, suppose your churn rates spike or are far higher than your competitors. In that case, this could indicate a problem with your solution, product, pricing, or customer experience, and it warrants immediate attention.

How to Analyze Customer Churn

Churn percentages tell you what customers conduct repeat business and how many leave, but it doesn’t explain why customers are leaving or staying.  Once you calculate churn, compile a list of the customers that have churned, and ask yourself the following questions: 

  1. Which customers are churning?
  2. Why are customers churning? 
Which Customers are Churning?

Segment out the churning customers to the best of your ability. Are they a specific type of customer? Are they primarily in the same industry? Area? What commonalities can you find? 

If, for example, it’s your newer customers churning, maybe you need to work on strengthening your onboarding process or create collateral geared towards new users. If it’s customers from California, did they enact any new HR-centric laws your product isn’t compliant with? Comparing who’s churning can help you figure out the story. 

Why are they Churning?

Reach out to the customers who’ve left and ask them why they left. What did they like and not like? What could you have done differently to make them stay? What specific reasons caused them not to renew your services? You can also look at data usage for clues.

Once you have the answers to these two questions, you can start leveraging this data to predict which customers are in danger of churning and start strategizing ways to combat future churn and retention efforts. HubSpot has a great Customer Churn Analysis Template if you haven’t yet automated your customer management.

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Utilize Your CRM

Customer relationship management software (CRM) has been shown to improve customer retention by 27%.  They help organize contact data, segment customers, and document engagement and interactions with customer support/success. CRMs also monitor and analyze the entire customer acquisition process and lifecycle between a customer and an organization.  While 87% of SaaS organizations utilize a CRM, not all are used to their full potential. So many organizations have all this data from their CRM yet never dig in.

We recommend using your CRM to organize and identify potentially at-risk customers, tailor internal marketing campaigns, and take onboarding notation. It’s pertinent, too, for CRMs to properly organize your data that you come up with a standardized way to enter data and ensure everyone on your team is trained on how to do this properly. Cleaning up your CRM might seem like a daunting task, but it will ensure the data you’re collecting about your customers is organized and accurate. 

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Get Sticky

HR professionals use employee data in new ways now more than ever and expect to transport that data across systems, workflows, and devices. Increasingly, they find this transfer of information isn’t always seamless.

A top frustration among HR professionals is the inability of the HR software they use to integrate employee data to other systems they’re using. This is frustrating for the HR professionals who utilize your system.

Easily integrative products are known in SaaS as sticky products. Increased stickiness leads to churn reduction and increase, upsell/cross-sell opportunities, increases in customer lifetime value, and customer ROI. 

Sticky products deliver consistent value, engage the customer to use them regularly, and are so integrated and entrenched into the other products and workflows your customers use that it becomes more of a pain to get rid of them than it’s worth looking for another product. Strong integration adds value to your product by adding more pathways to and from the product. If your system is sticky, customers are more likely to reach out to you for help or suggestions regarding new functionalities instead of searching for new products.

Make Yourself Stickier By Private Labeling New Solutions for Your HR Solution

59% of businesses outsource in some capacity to cut costs and save the time it takes to develop new solutions. Many HR systems will partner with other SaaS companies to expand their unique offerings and, as just suggested, add more pathways to and from their product. There’s nothing wrong with outsourcing, but this can add to customer frustrations if the added solutions don’t integrate with your primary functionalities and make data transfer a bulkier process.

Private labeling new solutions is a way to integrate outside solutions seamlessly into your system, making it that much stickier. 

Private label software is purchased by a company from a SaaS provider and customized with the branding and bespoke workflows the purchaser requires. Since end-users aren’t aware of this partnership, it strengthens the brand and scope of the private label purchaser’s product offerings. Private label purchasers work with private label providers to ensure seamless integration between platforms, further delighting your customers.

HiringThing’s private label applicant tracking system (ATS) is recruiting software many HR systems have private labeled to enhance their services. Read our post, Why All HR Solutions Benefit from a Private Label ATS to learn more. 

Benefits for HR Solutions

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Put a Premium on Customer Service

84% of customers say their customer-service experience is as important as product functionalities and results. Today’s SaaS customers have more options than ever, so won’t stick around if they aren’t getting fantastic customer service.

86% of customers are willing to pay more for a great customer experience! 

Prioritize Proactive Customer Service

If you wait for your customers to get frustrated, you’re often too late. Be proactive with identifying pain points in your product, services, or pricing. If a customer points out a pain point, identify a solution and communicate it to customers. This shows you’re proactively making their experience better. 

Ask for Feedback Often

Asking for feedback regularly and often in questionnaires, surveys, and discussions with key customer stakeholders can help you take temperature checks on what’s working and not working for customers. You can compare what customers are saying across the board and use this to strategically provide unrivaled proactive customer service.

Personalize Features and Functionalities

Today’s customers expect top brands to create new features or products with their needs in mind. Use the feedback you’ve mined from your customers to work on perfecting and unveiling new features and functionalities.

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Solve Challenges

Customers partner with HR Solutions to solve their common HR challenges. If customers view your problem-solving services as invaluable, they’re not going to be looking around at competitors. 

So, what HR challenges are customers looking for you to solve in 2022? 

  • Prioritizing wellness and mental health initiatives. 
  • Keeping employees engaged. 
  • Recruiting faster, more strategically, and higher quality employees. 
  • Recruitment marketing. 
  • Helping retain their employees and prioritizing the employee experience. 
  • Helping diversify their workforce and making processes more equitable. 
  • Providing meaningful training and development. 
  • Upskilling employees.
  • Ensuring the workforce is adaptable to change.

HiringThing’s CEO and cofounder Joshua Siler shared what he believes are the biggest challenges facing recruiting talent in the report Talent Migration 2022: The New Recruiting Reality. 

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Related Resources

About HiringThing

HiringThing is a modern recruiting and employee onboarding platform as a service that creates seamless talent experiences. Our white label solutions and open API enable technology and service providers to offer hiring and onboarding to their clients. Approachable and adaptable, the platform empowers anyone, anywhere to build their dream team.

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