You are not powerless in the face of churn.
There are almost always indicators that a customer is going to churn, which means that if identified early, a good Customer Success team can mitigate the risk and execute a successful recovery plan. Some churn is inevitable no matter what business model you employ, but it does not just occur randomly. Think of churn like a risk that can be negotiated like any other.
Churn is usually a result of the customer experience—and you can improve the customer experience in your everyday customer success efforts. Before we dive into key churn management strategies, it is important to understand the impact of customer turnover and principal reasons why customers leave.
Why Churn Matters
Obviously, no one wants to lose customers. The digitization of business, however, has made renewals even more important. Today’s customers are more likely to seek more flexible, subscription-based agreements that empower them to walk away if they are unhappy. As such, enterprises need to prioritize cultivating long-term customer relationships that foster continual, mutual growth.
Retaining your current customers is now as valuable as recruiting new ones. In this customer-centered economy, a lapsed customer could represent years of lost renewal opportunities.
Why Customers Churn
There are many reasons why customers churn, ranging from internal financial pressures that are largely beyond your control to customer success decisions that fail to highlight the value of your product to factors that are squarely within your control. Good organizations take the opportunity to examine why customers leave, learn from it, and iterate.
The four most common causes of churn do stem from factors well within your control:
- Value is Not Clear: Customers that do not recognize business value from your product/service are unlikely to feel it is worth further commitment.
- Experience of Value is Delayed: The customer-centered economy means that customers can leave if they do not see a clear path to value early in the relationship.
- Escalations Go Unresolved: Customers become frustrated if they feel their complaints are going unheard and are unlikely to renew.
- Lack of Customer Engagement: Enterprises should provide frequent, helpful, personalized engagements throughout the customer journey. Customers who do not get the support they need will lose interest.
These risk factors can be avoided if you employ practical, outcome-based churn management strategies.
7 Effective Churn Management Strategies
The customer success practices you use to generate value for your customers also combat churn. Your customer partnered with you to meet specific business goals. If you continually work to achieve these goals, you will build an enduring relationship.
Here are seven of the best ways to reduce churn:
- Track Customer Behavior
Constantly tracking customer behavior is an effective way to gauge their satisfaction. You should look at customer metrics that link directly to the successful use of your product, such as product usage rates, feature adoption, license utilization, number of escalations, and Voice of Customer feedback and ensuring you have the necessary systems and solutions to do so at scale.
- Set and Celebrate Goals
Establishing milestones helps customers see their progress. You should set goals around specific events, such as the timely completion of onboarding, and unique outcomes, such as utilization of a feature you know is particularly useful to a customer. Regularly acknowledging the achievement of these goals lets your customers know you are invested in their success.
- Accelerate Onboarding
Onboarding is a critical phase in the customer journey. Focus on rapidly advancing your customer to the point where they can independently incorporate your product into their daily workflows. The sooner your customer can use your product, the sooner they will see ROI. Be careful not to overload your customer with information and answer any questions they raise.
- Acknowledge Any Problems
When customers encounter problems, they look to you for solutions. The first step in relieving these frustrations is to accept responsibility for the problem and provide additional training to address whatever went wrong. Acknowledge their concern with personalized messaging and give the customer a clear path forward.
- Share Customer Data Across Your Enterprise
Your customers should feel surrounded by personalized support any time they engage with a member of your team. Every piece of customer information needs to be gathered, stored, and shared with access for all. This way, the customer never needs to repeat themselves and every staff member is empowered to provide an informed solution.
- Identify Changes in Customer Operations
By staying in close contact with customers, you should be aware of any significant changes to team size, structure, or key personnel. Consider how you will proactively engage a customer when these changes occur. Will you repeat elements of your onboarding program? Will you focus on previous success? Will you stage additional training seminars or make new information available?
- Use a Customer Success Platform
Decisions around renewal and churn are not tied to specific dates; rather, they occur throughout the customer journey and are heavily influenced by the overall customer experience. As such, it is vital that you closely track customer behavior day-to-day, week-to-week. Your customer success platform should draw in information from a range of sources and analyze this data to produce insights that guide your customer engagements. In order to scale your customer success efforts, the platform should include an early-warning system you can customize to alert you of any significant changes in customer health. It should also provide direction from the management or executive team on how to proceed.
The most effective way to reduce churn is to stay informed of customer behavior. If you are aware of any negative trends early on, you will be in a much better position to proactively engage your customer.
Churn Management Strategies that Work
The churn management strategies outlined above are effective because they increase the value your company brings to your customer. If your customer is experiencing strong ROI, they are more likely to remain loyal and less likely to lapse.
Following customer success best practices will help reduce your attrition rate. Churn occurs when value declines. Keep your focus on delivering real business value and you will have a loyal customer for years.
Totango offers a customer success platform that helps you increase retention. If you explore Spark you will find a customizable solution that lets you scale customer success without sacrificing personalization. Request a demo to start reducing churn today.