April 4, 2014
Losing customers is not a good thing, so many vendors actively try to fix churn, often by “saving” customers who have failed to renew. But churn is a downstream issue: Customers leave because they fail to find value in the products or services. Once they decide the value is not there, saving them is unlikely, even with significant financial concessions. The problem of churn is very similar to that of staff turnover: You don’t fix turnover by talking employees who are quitting into staying; you do it by creating a great place to work.
So what to do for churn? Simple idea, challenging execution: You create an environment for customers that delivers continuing value, an environment that fosters retention and, beyond retention, revenue expansion, as customers increase their use of the product, purchase more subscriptions, licenses, and products.
This is what we call an anti-churn environment. As we will see, anti-churn strategies are, or should be, corporate initiatives, as they span traditional silos, from marketing to support to engineering. What’s interesting about anti-churn is that the support organization, being close to customers, is in an ideal position to lead an anti-churn strategy. Here are seven ideas to try now.
Getting started with a new product comes with a learning curve, especially for complex or customizable products. Why let customers’ frustration build up? Traditional training solutions are often too slow and too expensive to serve all customers. Instead, design online offerings and appropriately customized programs to welcome and orient customers and ensure that they find some amount of success quickly.
Customers come to vendors because they have a problem they need to solve. Showing them how to use your product is a great idea, but what they really need is to address their issues. For instance, a CRM customer may need guidance on how to organize support workflows, or a personal-finance customer may need information on how to save for college. Expand self-serve information to include best practice recommendations in your area. (There should be plenty of experts on board, right?)
Of the seven ideas presented here, this one hews most closely to support’s traditional responsibilities: help customers with their usage questions. The anti-churn twist is to pitch a big tent: provide appropriate options for customers of all types and wallet sizes – and especially newer customers, including those on free trials.
By gathering data on customers’ problems, desires, and questions, the support organization is in a perfect position to drive the customer’s agenda within the larger organization. Use the carefully analyzed data to drive improvements that benefit existing customers.
The fact that churn cannot be tackled directly does not mean that it should not be measured. Pay careful attention to both churn (departing customers, shrinking customers, non-renewing customers) and expansion revenue (customers who purchase additional licenses, products, subscriptions). Expansion revenue is rarely captured and tracked as carefully as it deserves to be, and often no one is specifically responsible for it, as would be the case for revenue from net-new customers.
The art of anti-churn belongs here: defining “good” customer profiles and being able to foster acquiring, developing, and retaining such customers. Creating profiles takes time and a careful analysis of potentially vast amount of data. Vendors such as Scout Analytics and Totango are starting to offer ways to capture usage data, which, for cloud vendors, is a great place to start – but I believe we need to go much further to identify success profiles.
Product usage is of course important but what about using newer features of the product? Or certain, particularly “sticky” features? Investing in more training and professional services? Achieving high scores on NPS or satisfaction surveys? Contributing to online discussions? Showing up at the user conference? Serving as references? Few organizations track all these data points, and none, I will venture, tracks them in one central place where they can be compared and transformed into profiles.
I believe that good customers should be mostly left alone, but appropriate reminders, thank you’s, and special offers are appreciated if done in moderation. Again, having an integrated approach allows to determine whether customers respond positively to various types of communications. Tune accordingly.
The other side of the coin is detecting when customers are deviating from the winning profiles. Are key executives being replaced? Margins decreasing? Technical issues lingering, unresolved? Calls from account managers left unreturned? Or is product usage diminishing steadily? There is no single recipe, so it’s vital to profile your customers and draw your own conclusions.
And once you have an early-warning system in place you need to act on it. If you know that a customer in a known negative situation benefits from a call from an account manager, that call needs to happen, today, regardless of the organization where the account manager resides.
Many support organizations have implemented an account management program to accomplish many anti-churn strategies, and this is a good thing. But churn occurs at all levels, so it’s important to create systems that work for all customers, big and small.
What are you doing to create an anti-churn environment?
Francoise Tourniaire is founder and principal of FT Works, a firm that provides diagnostic and implementation assistance for customer success programs and all aspects of customer satisfaction. FT Works is a TSIA Consulting Alliance Partner.
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