How ClassPass Retains Its Customers and other Thoughts on Retention

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quit-gym

Gyms are notorious for making it impossible to actually quit. They have an entire system built around not letting you cancel. A new company called ClassPass – allows you to easily go to classes from a bunch of gyms. They are pretty much a gym membership service that allows you to go to other gyms. It is a really cool concept, because it doesn’t tie you down to one gym. The total charge is $79/mo.

I read this Quora post on How Class Pass Retains Its Users, and one thing they do is charge you a reactivation fee, if you cancel and sign up again. This makes the user want to stay to avoid that penalty later on.

Some other thoughts on retention:

  1. HubSpot and Infusionsoft charge a setup and training fee ($3k+) when you sign up. This makes sure you are committed and if you decide to cancel later on it makes you think twice about losing that setup fee.
  2. Only allow canceling over the phone. This gives you the opportunity to figure out what the real problem is and allows you to solve it and keep the customer. Gyms, make you come into the gym to cancel and usually show you the spa and massage chairs to keep you … (totally worked on me unfortunately).
  3. Focus hard on making the customer successful. This is by far the best method. If your customers business is more successful because of you – they will never cancel. This is something Salesforce swears by. Keep investing in the customer until you get an email that says “OMG I Love Your Service and Product”
  4. Take over their main operations so if they remove your software it is really hard for their business to function without you. For example HubSpot takes over your entire website, blogging platform, analytics systems, CRM, and more. Great product and super sticky because of this. Another example is ZenDesk, they take over your entire customer service portal.
  5. Only allow yearly contracts and make it super hard to get out of them. This is something Oracle does well.

Kissmetrics had a really great blog post on SaaS retention: 8 Advanced Tips for Never Losing SaaS Customers.

Disclosure: HubSpot is a Digioh customer and HubSpot, Salesforce, and InfusionSoft are Digioh Technology Partners.

2 Comments

  1. I think #3 should be first and emphasized a lot more. I see things like being afraid to lose your setup/training fees, making it harder to cancel (have to call or, even worse, have to send snail mail), and even your last example as negative experiences for the customer (they’ll be forced to stay with you, but won’t be happy). They work, but they’re not something I’d want to rely on.

    I like #3 so much more because it forces you to create a great product and experience to keep the customer.

    • Jon – so true man. #3 is what really puts companies in growth mode. The good thing about SaaS (especially companies that don’t have longer term contracts) is they are focused on making sure customers like their product.

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