May 30, 2022

Understanding and reducing churn on your Shopify App

Reduce your Shopify App's churn with some proven SaaS churn reducing techniques. Understand churn by asking the right questions first, then improve aspects of your App and business to reduce churn.

Adhithya Vijai
Adhithya Vijai
Understanding and reducing churn on your Shopify App
“To ask the right question is already half the solution of a problem.” — Carl Jung

Before we dive right into how to reduce churn, let’s ask some questions:

  • What is churn and why is it important to understand it?
  • How to calculate churn?
  • Why do customers churn?
  • What type of stores are churning?
  • When do customers churn?
  • Where do customers churn?

What is churn and why is it important to understand it?

Churn in its simplest form is when your customer stops using your app. There are two ways we can say a user has churned:

  1. When there are no more sessions being recorded (user stops logging in)
  2. When a user uninstalls your app

It’s important that all products need to analyse churn to improve various aspects of their products - pricing, user experience, adding new features, etc. Every product encounters churn. Before you try to solve it, understand why it's happening in the first place.

How to calculate churn?

First, set a period of time. Then, you’re going to calculate the number of users at the start of the period and the number of users at the end of the period. Subtract the users at the end of the period from the start of the period, you’ll get the number of users that churned.

Once you have the number of users that churned, divide it by the number of users at the start of the period and multiply it by 100 to get the Customer Churned Rate.

User Churn vs Revenue Churn

While the above example is for the number of users that uninstalled (User Churn). Similarly, you can check how much revenue you’ve lost (Revenue Churn) during the same period.

Why do customers churn?

There may be many reasons why churn happens, we must understand that it’s not a one and done method to fix churn. It’s constantly iterating over a long period of time. Some of the reasons why customers churn may be:

  • Customer no longer wants your product
  • The App is too expensive
  • They found an alternative product
  • Poor user experience
  • Encountering too many Bugs or technical issues
  • They aren’t an ideal customer

When a user uninstalls your app, they’re asked to leave a reason on why they’ve uninstalled. This is a great way to understand why users are uninstalling. Shopify doesn’t allow you to download this as a CSV.

However, you can take the following steps to make it happen:

  1. Create an API key on Shopify partner Account
  2. Make an API call to Shopify using “…” request
  3. Do this for every uninstalled Shop

Once you have the data in a CSV, and you translate all the reasons (in Other). You can run an analysis on the different types of Stores and the reasons for uninstallation.

What type of stores are churning?

Shopify has many plans to offer. There's the Basic Plan, Shopify Plan, Advanced Plan and Shopify Plus. The total number of stores on Shopify from each plan is different. With the Basic Plan being the highest number and Shopify Plus being the lowest.

It’s important to define who your ideal customer is. Say you’re an inventory optimisation app or a shipping app. You observe a high churn with Basic Plan stores, which are drop-shippers. Of course, you would see churn with Basic Plan stores.

Many Basic Plan stores are figuring out how to get their first few customers. They may install many apps to see what helps them. So, if you have a high volume of Basic Plan stores churning it might not be that big of a deal. But, if you have Shopify Plus stores that are churning, that may be a cause for concern.

When do customers churn?

Same day uninstalls and under 10 min uninstalls

This type of churn is very immediate. If you check the distribution of uninstalls in 24 hours, you may observe a high churn rate in the first one hour or first 10 minutes. As mentioned earlier, a lot of Basic Plan stores are just exploring apps. So, you may see a high volume of churn within these durations.

You need to look out for your ideal customers, if your ideal customers are uninstalling within the first 10 minutes, then these could be some of the issues with your app:

  1. Users are just exploring your app, they uninstall it because it doesn’t fit their needs.
  2. Users are not able to understand what your app does.
  3. Onboarding is too long and frustrating.
  4. No clear action on what to do next when they land on an empty dashboard.
  5. They find your app very confusing and difficult to use.
  6. They try to contact customer support but got no response.

Trial plans that don’t convert (before 7 or 14 days)

Users tend to uninstall faster when they’re on a trial. Once their money is on the table, they’re looking to get results fast. The same fear of losing out (FOMO), drives users to take their money back for something they don’t like or can’t understand.

If a user isn’t able to reach the Aha! moment, (which is when they find value in paying for your product) they will not convert into a paid user. Ensure the path to finding the Aha! moment has the least friction.

After a few month/s

This would happen with your ideal customers, the product that serves a type of store(s) plans the best. Several factors need to be considered before understanding why paid users have uninstalled.

  • Did Shopify make any changes or launch new features that caused problems with your app?
  • Did your competitor launch a discount or feature?
  • Was there a critical bug that caused problems for your merchant?
  • Did you recently update your pricing?
  • Did the merchant complain several times about a specific issue and nothing was done about it?

While there may be many reasons, it’s hard to know why. The best way to understand why is by reaching out to your customers to understand where you can improve.

Where do customers churn?

In order to understand where your customers churn. You need to know your customer’s journey of how they use your app from installation to becoming a paid user. If you’re not aware of the steps that your customers take to reach a particular point in your product, it will be hard for you to optimise your app to ensure that customers have a smooth experience.

The best way to do this is to use a common design practice known as Customer Journey Mapping. We will look at how to create a Customer Journey Map later on in the article.

How do we know which flow is better?

There are several tools like Mixpanel, Amplitude, etc. that allow you to set up these flows to understand the conversion rate. You can add each screen as a step and measure the drop-off rate (percentage of users that are exiting before the flow is completed). This way you’ll know if your new flow has a better conversion rate.

Taken from Mixpanel Sample Set

This method can be used by apps that have found Product-Market Fit and are looking to optimize and scale. As a beginner App Developer, you can focus on the Customer Journey Mapping method to improve your product.

How do we reduce Churn?

Now that we understand the basics of what churn is, let’s dive into reducing churn. It's important to understand that reducing churn is a team effort. It can’t only reduce with a good product. Everyone needs to play their role, from support, sales to design & engineering.

As mentioned earlier, there are so many points in a customer’s journey that they may churn out. Consider a customer’s timeline from signing up to becoming a loyal customer. They need to go through several steps to become a loyal customer.

Here, we’ve divided the timeline of a New User becoming a Loyal Customer into 3 phases. Phase 1 would be at the time of sign up and phase 3 would be when the user has converted to a recurring paying customer.

Note: There is no strict order in which the following points should be implemented.

Phase 1: Understanding

Think of the time when you were learning how to drive a car. With no prior instructions, the instructor asks you to start driving on the highway. A little terrifying isn’t it? We can’t expect new users to understand our product right off the bat. This leads us to the first phase, helping users understand your product.

This Phase is the most critical, not everyone has the time to understand your product. You could lose a lot of your potential customers within 10 minutes of installation if you don’t fix this phase.

Create a Smooth Onboarding (The Aha moment)

You may have heard of the Aha! moment. It’s the moment a user realises the value of your product. For example, the Aha! moment of an Email App would be to see the email they sent out in their inbox.

Let’s draw the Customer Journey Map from a user installing an Email App to Sending an Email. It’s simple, map out each step from when your customer finds your product, to installing it, to reaching the Aha! moment. In this case, the first step is How the user discovers the app and the Aha! moment is Receiving an email in their inbox.

In the first image, from installing the app to the Aha! moment is 10 step process. We aren’t even counting the number of clicks that a user needs to go through. Now that we’ve drawn the journey we understand the problem. In the second image, we’ve managed to reduce the number of steps to 4. Users will understand the app’s value faster. Giving them more confidence to become paid users.

Longer and unoptimised customer journey
Shorter and optimised customer journey

30 min onboarding calls for Shopify Plus Stores

If you have a usage-based pricing where Shopify Plus stores tend to pay you more than other stores. Then make sure you start to build a relationship with your customers right from the get-go. Set up a 30-minute onboarding call with them. Understand their goals, are they evaluating other competitors? What are must-have features for them and how it will help their need.

Trials and Money back options

A 14-day or 7-day trial will help users check the full extent of your app. It makes the decision process much easier for them. Users who sign up for a trial will be looking to get value out of the product as soon as possible. Ensure the onboarding helps them find the Aha! moment as fast as possible.

Offer options like ‘60 days Money Back, No Questions Asked’, this shows customers 2 things.

  1. You’re very confident that your app performs really well.
  2. Puts the user at ease that they won’t be losing their money on something that isn’t useful to them.

Provide World Class Customer Support

  1. However good your onboarding is, there will always be questions. Make sure you have chat support available for at least 12-18 hours. Tools like Intercom, Crips, Freshdesk, etc. allow you to resolve queries in real-time.
  2. It’s critical that you have Live Chat in place. Chats are the best way for you to build relationships with your users and also to get reviews for your app. Read more about how PushOwl managed to get 2000+ 5 star reviews by using Chat Support on their App.

Documentation and Video Tutorials

  1. Give a step by step walkthrough of every feature on your platform in your documentation. Resolve queries faster by sharing documentation links with users.
  2. Make sure you have a Video Tutorial for every feature on your platform. Users will understand your product without having to reach for support for everything.

Email communication

Send Welcome emails to newly signed up merchants. Share updates on new feature launches. this way merchants understand there are always improvements happening on the platform. It makes them feel that they’re getting more value for their money.

Phase 2: Build trust and credibility

This phase is about showing your customers how reliable your product is. Shipping new features, making sure you don’t have downtime, the app is always improving. This builds trust and gives merchants value for their money. While this increases retention for your app, the number of referrals also increases.

  1. Improve Load Time and Resolve Bugs
  2. Make time to improve load times and fix bugs on your Apps. For active customers, it can grow increasingly frustrating if they need to use your App on a daily basis. At some point, customers will not tolerate it and wouldn’t mind uninstalling your App or moving to a competitor.

Improve User Experience Design

On average, Shopify Stores download 6 apps. Not every merchant is going to be extremely invested in your app. Make sure that they can get their work done as fast as possible on your app. Help them save time, rather than having to spend more time.

Some apps measure their success by trying to increase the user’s session time. It’s important to understand that this is not the case for all apps. For social media, collaboration, and video conferencing apps it makes sense, but not for all types of apps.

You can do this by:

  1. Improving your Customer Journey for each feature.
  2. Creating features that automate tasks based on some logic. E.g, schedule feature on email app, or drip campaigns.

Remind the value that your product provides

Remind merchants of the value that your product provides by sharing monthly updates or milestones that they’ve achieved on the platform

Listen to your customers

Everyone wants to be heard. When merchants complain about bugs or requests for features, it’s important to keep track of them. Tools like Canny, Feedback Fish and Olvy will allow you to track how frequently you get the same feature requests.

This will aid you in your feature development process to build the right features for your customers.

Phase 3: Building Relationships

In phase one, they were users, in phase 2 they became customers. Now convert them to loyal customers. It’s important to have loyal customers to bring repeatable business, increase revenue, build word of mouth, make it harder for competition to take customers away from your app and to get valuable feedback to build better products.

Account Managers

For your Shopify Plus stores, make sure you have a call with them once in a month or once in a quarter. Shopify Plus stores generally have a larger team.

Flexible pricing for Loyal Customers

Once customers know they will be using your app for the foreseeable future, you can increase user retention by asking them to subscribe to an Annual plan. Provide a 15% - 20% to those customers who commit to being with your app for a year.

There are organisations that own multiple stores. You may see Shopify organisations that have 10+ stores. Get them to install your product on many or all of their stores and offer them discounts for doing the same.

Partnerships & integrations

As you collect feedback, you’ll understand that your customers want to integrate with other Apps. Reach out to fellow app developers and see if you can build an integration with their apps.

Integrations play a key role in acquiring new customers and also retaining old ones. Imagine your customer is considering another product. The other product doesn’t have a few integrations that you have which are vital to your customer. The customer will find it difficult to choose their app over yours.

Observe your customers

Early indicators of churn will show when your customers stop logging into your platform for several weeks, or they downgrade their plan from a paid one to a free one. Monitor your highest-paying customers.

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