}

How to reduce customer churn?

Last updated
July 24, 2024

Understanding Customer Churn: Perception vs. Reality

Why We Think Customers Churn:

  1. CSM Wasn't Proactive Enough:
    • Lack of regular engagement and follow-ups from the Customer Success Manager (CSM) can leave customers feeling unsupported.
  2. Price Was Too High:
    • Customers may perceive the product as not providing enough value to justify its cost.
  3. Customer Went Out of Business:
    • External factors such as a customer’s business failure lead to churn.
  4. Champion Left:
    • The internal advocate for your product within the customer's organization departed, leading to loss of interest or support.
  5. Didn't Use It Enough:
    • Low usage can indicate that the product is not integral to the customer's operations, leading to discontinuation.

Why Customers Actually Churn:

  1. They Weren't the Right Customer in the First Place:
    • Misalignment between the product and the customer's needs or business model leads to dissatisfaction and eventual churn.
  2. They Were Oversold on the Initial Deal:
    • Promising more than the product can deliver results in unmet expectations and disappointment.
  3. They Failed to Launch Effectively:
    • Poor onboarding processes can prevent customers from seeing the value and benefits of the product early on.
  4. They Never Adopted Sticky Features/Integrations:
    • Lack of engagement with key features or integrations that enhance the product's value and stickiness.
  5. They Only Adopted for a Single Use Case or Project:
    • Narrow use of the product limits its perceived value and reduces dependency on it.
  6. They Didn't Know All That They Could Do With the Product:
    • Insufficient education and communication about the product's full capabilities lead to underutilization.
  7. Because of the Above, Decision Makers Couldn't Justify Renewing:
    • When key decision-makers do not see the value or ROI, they are less likely to approve continued use.

Addressing Churn: A Holistic Approach

Key Insights:

  • Churn is a Business Problem:
    • Churn is not solely the responsibility of the Customer Success team but a broader business issue that involves every department.

Roles and Responsibilities:

  1. Sales:
    • Ensure accurate customer profiling and avoid overselling. Align customer expectations with what the product can deliver.
  2. Marketing:
    • Communicate the product’s value proposition clearly and continuously educate potential and existing customers about its full capabilities.
  3. Product Development:
    • Focus on customer feedback to improve product features and usability. Ensure that the product evolves to meet customer needs.
  4. Customer Success:
    • Develop robust onboarding processes and proactive engagement strategies. Monitor usage patterns to identify at-risk customers early.
  5. Support:
    • Provide efficient and effective customer support to resolve issues quickly and maintain customer satisfaction.
  6. Leadership:
    • Foster a customer-centric culture across the organization, emphasizing the importance of customer retention and satisfaction.

Strategies to Mitigate Churn:

  1. Proper Customer Segmentation:
    • Identify the ideal customer profile and target efforts towards acquiring and retaining these customers.
  2. Realistic Selling Practices:
    • Set achievable expectations during the sales process to build trust and satisfaction.
  3. Effective Onboarding:
    • Develop comprehensive onboarding programs to ensure customers understand how to use the product and see immediate value.
  4. Feature Adoption Campaigns:
    • Educate customers on how to utilize all features and integrations, highlighting their benefits and use cases.
  5. Continuous Engagement:
    • Maintain regular check-ins and provide value-added resources to help customers get the most out of the product.
  6. Feedback Loop:
    • Implement mechanisms to gather and act on customer feedback to continuously improve the product and customer experience.

By understanding the real reasons behind customer churn and addressing it as a comprehensive business issue, organizations can significantly improve customer retention and satisfaction.

Written on:
July 24, 2024
Reviewed by:
Mejo Kuriachan

About Author

Mejo Kuriachan

Co-Founder and Brand Strategist

Mejo Kuriachan

Co-Founder and Brand Strategist

Mejo puts the 'Everything' in 'Everything Flow, Design, and Motion'—an engineer first, strategist and design manager next.

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