5 Data Points That Help You Fight Churn

5 Data Points that help you fight Churn

By Sruti Satish, Customer Success Box

Churn is inevitable if you’re in the SaaS business. The extent to which you can control the churn is what matters. It makes sense because controlling churn fuels growth in any SaaS firm. 

Tackling churn is not possible if you don’t have reliable data. One needs data because it is the only way to generate insights and take actionable steps. This pushes the firm to identify the root causes behind the customer churn.   

I’ve tried to give you a sneak peek into the various probable causes of churn. These are grouped into 5 categories of data points. Let’s try and understand them. 

Product and Service dimensions

The customers have chosen you over your competitors because of some reason. They might find the product or service better, or you provide exemplary support, or the customers find value in you. However, the product tops the list. If the subscribers find value in your product, it could be the number one churn controller.

Critical data points related to the product dimension such as the product functionality, extent of product adoption, quality, etc. can be a good place to start with. Keep track of and access real-time & reliable data related to the accuracy of service (along the customer journey), support availability, reliability of service, the competence of CSM, product knowledge, speed of service, etc. 

Choose the right CS tool which provides you with a 360-degree view of your customer’s account health. These are some of the vital data points that can break or make the growth engine of your business by controlling churn. 

Metrics to track and measure

The most important part, in the process of controlling churn, is to identify the right metrics for your business. These may vary depending on the nature of your business and your product. The metrics which are generally used by B2B SaaS businesses all around the world are:-

MRR (monthly recurring revenue)

“It is the percentage of monthly revenue loss that you’ve incurred from your churned customers. This can happen if your clients downgrade to an inexpensive product or a lower subscription pack.”

MRR churn =  Lost MRR / MRR over the previous period

Logo or customer churn

“It is a vital metric used by SaaS or subscription businesses as input to the holistic health of the business. SaaS investors are more concerned with logo(customer) churn and they rely upon the measure to analyze LTV (customer lifetime value) calculation.”

Logo churn = Number of logos (customers) lost during the period / Number of logos (customers) at the beginning of the period.

Product stickiness

The stickiness of your product can be measured by using a CS tool analytics for every account. Monitoring this metric will help you keep track of the switching costs and better utilization of product features. This is inevitable if you want to reduce the chances of your customers opting for another product. 

Roles that can help fight churn

The important thing to understand here is- it’s the responsibility of the business to reduce churn. Certain professionals in your organization can help in fighting the issue well. The professional roles that help businesses fight are:

Customer Success team

It goes without saying that the CS team should be the first point of contact for customers. The CS professionals are proactive in nature. Hence they should monitor customers’ activity and help them before the customer can ask! This will build trust between both parties and eventually help in reducing churn. CS people stay tied to their customers and to their own company’s internal stakeholders as well. They have to maintain the balance to drive accountability that pushes towards action.

Product Managers, Implementation engineers, etc.

The people responsible for the product or the service should track its features on a regular basis to improve the value the clients get. Creating or re-prioritizing a product roadmap will help in analyzing the same. The other approach to consider will be to ensure “product stickiness”. If it becomes too costly for the customer to switch to an alternative, it will automatically reduce the voluntary churn. 

The product design team can be approached to effectively build metrics that specifically depict product ROI. (eg: Saved X amount, or Saved x clicks). This metric isn’t such obvious but if customers get access to these, it can be a game-changer for the churn problem.

Customer Support professionals.

Support tickets are raised only when the customer faces any issue. It’s been, traditionally, a reactive approach to helping the customer.  It’s the responsibility of these professionals to resolve the tickets within the agreed SLA. This makes sure that the customer is happy and feels that s/he has been given priority and is important for the business. 

No support tickets do not mean the account is healthy and active. It rather means a dangerous trend and a “risk alert” that indicates customers not deriving value from your product. Hence, indicating the possibility of churn to be very high.

Marketing team

The marketing team’s role can’t be underestimated. They help in reducing churn by directing subscribers to the newly released product features and popular content. This is an educational function for marketing, and if utilized correctly can help in retaining the customers. They have the expertise in crafting a well-targeted mass communication strategy that must be optimally used. 

Customer’s Expectations

Misaligned expectations are one of the top reasons for customer churn, several studies have shown that. The value that you promise to deliver and the perceived value of the product by the customer-if different- can lead to having those dreaded and difficult conversations.  Generally, the issues arise due to a difference in perceived ease of use, ease of implementation, etc. To avoid churn happening due to this is, to be honest, and transparent. 

For example- let the customer know about any non-availability of a feature in the near term upfront. Understanding and monitoring customer expectations will ensure weeding out any unpleasant surprises. 

External factors

These factors are unavoidable. The resultant churn is unavoidable as well. Simply, because these aren’t in your control. If your customer’s business is merged or acquired with or by another company, you can’t really stop the churn from occurring. Similarly, if the external market conditions change, or you lose your champion, or if there are any customer-specific reasons, or if there are any strategic policy changes by the top management, the churn is bound to happen. 

Having said that, it’s imperative for you to understand and observe the churn. If you can predict some of the above-mentioned factors, you can reduce the intensity of the churn problem. 

Churn: Final Thoughts

Your customers might inadvertently give you some warning signals which indicate the poor health of their account. Some red flags such as fall in product adoption, decline in communication, credit card expiry, etc. should be monitored closely. Never miss an opportunity to touch base with your customers if you find something amiss. 

Being proactive is the only solution to this issue of churn. It is crucial to identify and reduce the churn rate for your business. A high churn rate leads to a slow death of the firm no matter how efficient the product is. Hence, ensure that you devise effective strategies to fight churn before it becomes too big a monster to tackle.

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