No matter what business you’re in, you know customer churn. It can make or break your revenue goals, and it can undermine your best plans for growth. But it’s not only a largely preventable problem—the ways to get there can push you above the competitive fray and put you on a path to sustainable growth.
What’s the secret? An unforgettable customer experience. Deliver that, and your customers will fall in love with you and your product or service, which makes them 60-70% more likely to buy from you again, compared to 5-20% for new customers. We like those odds.
We call those visceral, intangible revelations Moments of Value. They’re those sparking moments when the customer realizes their purchase not only came to fruition but that you shattered their expectations by guiding them to get the most meaningful use out of your product. Think of them as emotional returns on your customers’ investments. This makes them not just thankful they’ve invested in it but highly likely to invest again. And again.
These moments are core to solving your churn problems. They’re also the raison d’etre of customer success. Customer success is no secret, but it may not be on your radar. And it is your ticket to breaking the customer churn cycle—now and in the future.
Begin by Benchmarking your Current State
A customer experience dashboard is a great way to benchmark and assess your attrition rates. You can do this in a CRM or similar tool. Include their history, level of use of and satisfaction with your product, how and how often they engage with customer support, how often and what problems they’ve reported, how quickly and well your team resolved those issues, how likely they are to leave, and why.
Create SLAs around core functions impacting customer experience, such as response times, issues resolution times and satisfaction, support best practices, and Customer Health Scores. Make it highly visible to all team members to keep it top of mind. Call out improvements in a bold way to call attention to successes and to encourage continued efforts to drive down attrition.
What are Your Churn Goals?
A lot of factors impact target churn rates, such as industry, company size, and pricing model, but a good benchmark to shoot for is below the average, which, for B2B companies, is 5%.
Aside from the Holy Grail of negative churn, try to set realistic goals. You can look at monthly or annual rates. If you’re subscription-based, monthly makes the most sense. Tracking monthly allows you to react more quickly to changing conditions; annual tracking gives you a summit view of issues likely impacting a broader swath of customers.
For example, if your goal is to reduce annual churn by 3%, look at common issues that are impacting multiple customers that might take longer to fix. Create a task force focused solely on solving those issues. If you set monthly reduction goals, home in on problems specific accounts have reported that you have the resources to fix now and assign team members to each problem. Assign all your tiger teams related time-bound KPIs.
Calling All Staff: Operation Retention
A successful retention strategy demands all-hands buy-in and cross-departmental alignment. Achieve that by creating organization-wide awareness of your retention imperative and goals. Train your teams to consider the customer in every decision they make.
Every team has the chance to impact the bottom line and a role to play in reducing churn, so aligning them around retention is critical. Pinpoint and assess your personnel, process, and infrastructure gaps that contribute to churn, such as broken feedback loops, customer response service-level agreements, or training for customer-facing staff. Identify short- and long-term goals and prioritize remedying those that are most achievable and will have the greatest impact.
Make sure each team knows its responsibilities and its opportunity to impact retention. Assign each one churn-related metrics. Don’t be afraid to establish new positions or teams, such as sales positions that focus just on cross- and upselling to existing clients or champions who shepherd customer feedback from receipt to resolution. Incentivize them as you would for acquiring a new customer (if not more).
Build a web of support around your customers, and you not only capture those at-risk before they reach the point of no return but improve their experience so they’re less likely to want to leave.
Make Yourself Indispensable
If you demonstrate and communicate their value to your company, you’ll build an enduring, mutually beneficial relationship. How do you live that out?
- Under promise and over deliver on their expectations—for your product, their engagement with you, their goals, and your relationship.
- Deliver bad news as early as possible, and conservatively estimate ROI and the likelihood of reaching their goals.
- Prioritize customer centricity over revenue or profits by making decisions based on what’s best for the customer rather than for your organization.
- Be transparent (about what you’re charging, your business practices, and your organization’s challenges as they pertain to your customer).
- Respond to all inquiries—including complaints—in a timely, complete, and thoughtful manner. Work to communicate in a way that conveys that their issues matter to you as if they were your own.
- Become their strategic advisor on things that go beyond the scope of your engagement.
- Monitor and pass along information and insights on what’s happening in and shaping their industry.
- Offer to guide them in their budgeting and planning for the upcoming fiscal year and assist them with staffing projections (which skills they should be hiring for) and staff development (where leveling up skills could be beneficial and talent gaps exist).
- Demonstrate that you understand and are intimately tied to their goals and their success, and they’ll come to trust you as an extended member of their team
Your team should feel like an extension of your customers’ team. These steps will help you become just that and foster an enduring relationship.
Mind = Blown!
Customer experience doesn’t just matter—it’s a key driver of churn. Data shows that customer dissatisfaction with the service they receive accounts for up to 68% of customer churn. And dissatisfied clients cost you future customers, as they’re certain to share their negative experience with roughly 10 others.
The table below shows the difference solid customer success makes. What did that look like for us? Proactive, consistent outreach from the customer success rep, asking whether the product is doing not just what we expected but what we need it to, sensing an account rep wasn’t a good fit and proactively replacing them before we had to mention it, seeking out and documenting our problems their product solves and empowering us to use it to its fullest potential, and responding to questions and dilemmas timely and thoroughly.
Our Experience with Two Technology Vendors
|Proactively provides product implementation assistance
|Anticipates unspoken needs
|Is in tune with your use cases and helps you apply the product to address them
|Makes you feel consistently valued and supported
|Responds to all communications quickly and thoroughly
|Sees problems of any size through to timely, satisfactory resolution
|Makes you feel like a priority
|Instills confidence that they understand and care about your needs and goals and is invested in helping you reach them
|Consistently provides timely assistance when asked
|Inspires trust that they’ll be there for you when you’re in a bind
|Helps you realize promised product outcomes
By doing these things, rather than simply following a templated path, Vendor 2 makes us feel like the program is fully customized to meet OUR needs.
Customer expectations for your product matter. They shape their experience. Does your product live up to its promises? Can they realistically realize the outcomes they want from it? Is it priced to convey its value? Are you leaving product or service value on the table?
Customers are usually willing to pay more for a product with more features and better service. Evaluate your pricing strategy and make sure it’s in tune with and aligned to industry trends, the competitive landscape, customer demands, and the economic climate.
Be Their Voice
A core role of customer success is to advocate for your customer. The most constructive way to build actionable advocacy on behalf of your customers is to organize and flag categories of common requests, issues, challenges, and wins in a spreadsheet, your CRM, or a customer success platform. Next, prioritize and rank your organization’s resources and activities available to address each of these by cost, strategic accounts, value, and results. By attaching quantitative data to subjective customer feedback, you can compartmentalize qualitative and emotional bias that might hinder progress.
Secure executive leadership buy-in and sponsorship for recognizing and incorporating customer feedback. You’ll need internal cross-functional feedback channels to process positive and negative feedback, which will require periodic meetings between departmental stakeholders. A shared technology platform or tool can help keep internal stakeholders on the same page.
Create a Voice of the Customer program with a feedback loop. Synthesize the feedback, document it, and map out all the ways you can both address it and drive additional customer value. From this, create a collaborative developmental plan that includes a roadmap of how you’ll implement improvements.
For more mature customer success programs, formal customer advocacy boards or groups can be effective tools and a natural next step in building and maintaining your Voice of the Customer program.
Attract the Customers you Want
Your retention reality is being shaped before you gain a single customer. Look at, and if needed, realign Examine your customer acquisition strategies for opportunities to minimize attracting customers who might not be a good fit. Are you screening prospects them by the right criteria at the top of the funnel? Are you asking them the right questions? Marketing your product use cases rather than features is one way to give them a realistic view of your product and decide whether it’s right for them.
It may seem counterintuitive, but customers may be leaving because you were never suited for each other. Perhaps your product has changed but your target customer never did. Re-examine your ideal customer profile. Update it to reflect both major product changes and the feedback you’ve collected from departed customers.
If customer + product or customer + provider mismatches aren’t big problems for you, look at the feedback your exit interviews surface (for tips on building an effective offboarding process, read our blog, 11 Strategies to Stop Churn Now). Track and tally the issues so you can see how frequent each issue is and determine whether simple procedural fixes will address them or if you have a more systemic problem that’s hurting many relationships.
If the latter, designate tiger teams with a point person to tackle each issue. Product-related issues are probably best addressed by the product team; infrastructure issues by operations or IT; personnel or training issues by the sales team; support issues by customer success or customer support. Set KPIs for each team and incentivize them to create a plan and to resolve their issues. Hold regular, cross-departmental report-ins for each team to share their progress and communicate how the changes will impact other teams and the broader organization.
Face the Customer Engagement Music
If you construct them carefully, customer health scores can provide meaningful insight into how likely your customers are to churn. There is no set formula, but plan to use no more than five metrics, such as frequency (how often users are in the product, breadth (how many users in a given account are using the product, and depth (how many of the product’s features the account is using) so you don’t dilute the value and vision behind the issue(s) and create a false sense of the customer’s health and status.
Some customer success platforms are overly prescriptive about how to calculate a customer health score. If you use an out-of-the-box health score aggregator, make sure it allows you the flexibility to iterate and evolve it over time. And make sure it’s actionable. Draw a line from the metrics that comprise the score to actions that are relevant to and drive value for your customers.
In addition to health scores, look at how and how often they reach out through direct channels like your customer support functions—live chat, help desk emails or calls, support tickets. Look at the number of times and how often they’ve logged in to your customer portal and/or training platforms. Be sure to include indirect channels such as commentary on social media platforms and customer reviews. Chances are you’ll come across unfiltered feedback you might not otherwise gain. Log the data in a simple spreadsheet or your CRM.
From there, enter the scores into your customer experience dashboard, and make it visible across your organization. Next, funnel the actions into playbooks that trigger certain actions if a customer’s health score changes.
Leave Them Wanting More
Some churn is inevitable, but a significant portion is preventable. Rather than waiting until customers are on their way out, why not pour your resources and energies into giving them such a stellar experience that they don’t want to leave—can’t pry themselves away? Rally your organization around helping your clients win, and suddenly, low churn becomes possible.
Well before customers get to the point of no (or unlikely) return, assign your A-team and bring your A-game. Become part of their team. Be so tuned in to them that you know when they’re unhappy or whether it’s time to offer them other products or services that might benefit them. Learn how they’re using your product, and which features matter to them most.
Learn where your product can solve their problems and guide them to use it in those ways. Take time to ask about their goals and dreams, their most stubborn pain points, and what keeps them up at night. Anticipate their needs and wants. Constantly seek their feedback, be as transparent as possible, and try to close every loop with every issue they raise. Become a trusted advisor who offers them support and insights they can’t easily get anywhere else. They’ll recognize and reward you for leading them to success. After all, isn’t that why you’re here?
Our blog, Your Ultimate Guide to Improve Renewals: The Four Pillars of Customer Success, offers insights into how to build or shore up your customer success program and help your customers win.