Why AI SaaS churn is so high (and the one simple hack that dropped mine by 36%)

Hey everyone — I’m Axel.

In 2024, I exited my SaaS, Tugan.ai, after scaling it to 60,000 users.

It was a wild ride, but one problem kept haunting us the entire way: churn.

At our peak, we were losing over 20% of our MRR every single month.

And what’s crazy is... it wasn’t just us.

Every AI SaaS founder I spoke with was facing the same issue.

So… why do AI SaaS companies bleed users like this?

1. Curiosity > Commitment

AI is everywhere — and everyone feels like they have to try new tools or risk being left behind (FOMO, Fear Of Missing Out). So they test everything.

But after a week or two, they move on to the next shiny thing.

Most AI tools today get a flood of curious, non-committed users who are here to “try it out.”

2. You're selling to budget-conscious individuals

Most AI tools aren’t adopted by companies as a whole. They’re adopted by individuals working inside companies.

• A content marketer might sign up for an AI writer.
• A video editor might use an AI repurposing tool.
• A salesperson might test out AI emails.

These users don’t want to transform workflows — they just want to do their job faster (or with less effort).

Which is fine — but…

• They’re price-sensitive
• They don’t want long-term commitment
• They don’t integrate the tool deeply
• They churn fast

So how did we reduce TuganAI’s churn from 22% → 14% almost overnight?

❌ We didn’t rebuild our onboarding.

❌ We didn’t overhaul our UI.

❌ We didn’t even launch a new feature.

We simply added a smart cancellation flow when users click on ‘cancel plan’.

And it worked like crazy. Here’s exactly what it looked like…

Our smart cancellation flow

Step 0: User clicks “Cancel my plan”

Step 1: Offer to pause their plan (up to 3 months)

Step 2: Offer a 50% discount for 3 months if they stay

Step 3: Trigger a smart survey (with conditional logic)

• “Too expensive” → Offer 1 free month
• “Technical issues” → Offerdirect access to technical support
• “I prefer ChatGPT” → Ask follow-up: “What do you find better?”
• “Missing features” → Suggest switching to another plan
• “Other” → Ask a follow-up to understand why

Step 4: Remind the user what they’ll lose: saved content, credits, history, etc.

This simple 4-step flow reduced our churn by 36% overnight (22% → 14%).

It saved us thousands in monthly revenue — with no product changes.

Why cancellation flows work

When users click “cancel,” they’re not always 100% sure. Many just need:

• A better plan
• A small nudge
• A moment to rethink
• A reminder of what they’re giving up

But most SaaS companies just let them walk out with a “Sorry to see you go” and a form. Which is crazy to me.

We spend so much money acquiring users — but we let them cancel in 2 clicks?

TL;DR – What You Can Do Today

If you run an AI SaaS (or any SaaS with churn over 10%) here’s the quickest win I’ve found: Install a smart cancellation flow.

• Offer pauses
• Offer discounts
• Use dynamic surveys with logic-based responses
• Remind users what they’ll lose

That one change can reduce your monthly churn by 20-40%.

It’s what worked for us, and I’ve now seen it work for 10+ other founders.

After seeing how much churn dropped with one smart cancellation flow, I knew more SaaS teams needed an easy way to do this.

That’s why I’m building dontchurn.io — a tool that lets you set up powerful, optimized cancellation flows in 30 minutes or less to slash churn.

If churn’s a problem for you, book a demo or start your free trial here.