Top Source of Churn You Are Overlooking & 5 Tenents to Get Ahead of it.
by Emilia D’Anzica, Customer Success Strategist, and David Lahey, Advisor, Growth Molecules. Customer Success. Solved.
The science of retention is something that perplexes the best of customer success mavericks. It’s an endless chain – and you might lose customers faster than you’re acquiring them. Traditional logic says you must acquire them faster than you’re losing them – but practical application shows this is a costly affair. According to David Skok, a serial SaaS entrepreneur, VC, and author, “failure to successfully onboard the customer,” is one of the top two causes of SaaS customer churn. Clearly, onboarding is the essential first step in the customer’s journey and the beginning of the renewal and expansion conversation. It is critical to growth in the long run, as it cuts acquisition costs and builds brand loyalty and advocacy, but when done poorly it can also be one of your most significant sources of churn.
But How to Keep Customers From Failing to Launch?
Much research and strategy building has gone into churn management. Every company is busy analyzing customer behavior and transactional data to build accurate retention strategies. But in all this, they are overlooking one factor that’s been staring us right at our faces all this time. According to a customer service study by Oracle, the biggest reason why customers leave is bad customer service, which starts at implementation! The study found that 68% of customers leave because their expectations in the first few months of their engagement with the vendor are not being met (ie. budget/time/value). Dissatisfied, they begin to feel they’re not getting value for money and look elsewhere or disengage.
The customer experience starts the moment the customer commits to engaging with your company. That means the minute your sales team passes the baton to your success or services team, the customer is looking for value and the clock is ticking. If you cannot give your customer a clear and defined (as well as duration) path to value through the implementation, then you are already setting them up to churn.
A Dynamic Client Onboarding Experience is a Key to Success
So, how do you ensure a successful implementation which ultimately leads to revenue growth and happier customers who don’t churn? By implementing an effective customer success plan from the first point of contact with the customer. In fact, a badly planned onboarding implementation strategy is one of the biggest sources of churn. Most of us think we need to apply success strategies after the customer is onboarded. But actually, the first touchpoint for a customer is before they become your customers – when they are about to start their journey with you. This makes your onboarding package the most important part of the desired outcome for the customer.
At Growth Molecules, we have five tenets for successful client onboardings:
- Bring Services/Success into the sales process – Before you sign a contract with the customer, brings the team responsible for the post-sales work into the conversation. This ensures all internal teams are on the same page about the client’s needs. This not only ensures you have the bandwidth to meet the client’s expected deadlines, but it’s also an opportunity to sell confidence and premium services. They’re buying your product for some perceived value; make sure they have confidence they’re going to get it.
- Share and collaborate on a plan – We love Baton for this as they make this seamless, but Google Sheets and other tools can work here too. Make your client champion part of the conversation, and ask if the timeline aligns with their goals. Ask who on the team specifically will be responsible for technical and other tasks. This ensures you can attribute every task to the correct resource from the start.
- Never Kickoff without a plan attribution – we all do kickoff calls where we review a PowerPoint or spreadsheet, but you need to enforce good project management hygiene on this call. As mentioned in tenet 2, ensure every task has been assigned to the correct internal and external resources. Also, schedule check-in dates in advance and define how you will report progress to the client – if you don’t define a cadence and system here, you are bound to fall behind schedule.
- Keep your champion in the loop – Not to make this too much of a commercial, but platforms like Baton give our clients a real-time view of project status. It confirms that we all know who is on deck for what task next. Further, it helps ensure everyone is prepared for each update call as there is reporting that lets the client and internal teams know who’s holding what up.
- Get feedback at every milestone – As your company scales it is inevitable that you’ll be capacity constrained for periods of time. It’s important to have feedback at every milestone on how your internal team did (example: on time and on a budget?), and if they did not do so hot, what tasks went off the rails. This also helps you as a leader be able to make a more informed case for the budget to ensure problems don’t continually arise over time.
How Will You Market Your New Offering?
A premium onboarding package could be the key differentiator to set you apart from your competition. Examples of premium onboarding include paid high-touch (extra hours per week) vs. free tech-touch (no dedicated CSM rep), extra progress reporting with consultative content – leveraging a tech platform like mentioned in our five tenants to bring added transparency, an expedited experience, VIP access to a private Slack channel. “Work with marketing teams to create branding that highlights and sells the value and then market to internal teams as well as customers,” says Donna Weber, consumer onboarding expert. Couldn’t agree more! As Jeanne Bliss, customer experience pioneer and founder of Customer Bliss, says, “Relationships between brands and consumers begin when a customer has faith in a company and that trust must be constantly earned—it cannot be bought and can be easily lost.” It’s critical for your sales team to be able to sell premium onboarding effectively by identifying the value it delivers.
This is why we believe the services/success team needs to be part of every late-stage sales conversation. It’s the perfect time to sell your prospect on why premium onboarding is needed to meet their expectations. If your product’s value is known, a premium implementation’s value should also be. It’s also a lot harder to say no, once you’ve met the team and know the difference between the packages.
Should Customers be Charged for Onboarding?
Customer loyalty statistics show that there’s only a 10% chance that a customer will turn loyal if it does happen within the first 90 days. This means a brand must make an irresistible offer to the customer to hook him right at the beginning. Donna suggests going to the customer with a cracking market plan for premium onboarding packages. Instead of expecting a customer to discover all your services, go to him at the pre-sales stage with all the premium products and services you have.
This will let your prospect choose the most desirable journey with you, adding value to your offerings. This pre-sales conversation will expose customer maturity as well. While your internal plan could be about the delivery mechanisms and the resources needed for it, your plan for the customer could include:
- The right messaging about the product – stating its competitive advantage
- The resources needed for the customer and how you can help
- The design and development cycles of your service/product
- The impact onboarding will achieve for the customer
- How it will be delivered and customer service
- Pricing options
Actions to Take Now to Prevent Churn
It’s clear that customers churn for a culmination of reasons, but the easiest churn reason to avoid is failing to launch – or when a customer signs a contract but never actually launches your product. This is easily mitigated by a well-planned and orchestrated onboarding/implementation process. As outlined above one of the ways to ensure you have thought through this plan is to offer premium services and delineate what you offer for free to all customers and then what is premium? We have found by doing this exercise, companies better understand the process of the implementation of their product and can offer additional services to smooth over that friction (ie, highly technical configurations require a technical support rep, perhaps that comes at a premium, whereas general onboarding gets a well-documented wiki and a normal CSM), and uncover areas they can improve or offer additional services for. They then begin to see onboarding as not just time till revenue but also a new source of revenue for the company.
About the Authors:
Emilia D’Anzica, Founder, Author, Growth Molecules™
Emilia has personally onboarded 1000s of customers in her 20+ year career and is an early Customer Success Manager in SaaS. She has held every title in customer success ranging from Support Manager to Chief Customer Officer. She believes that customer onboarding sets the trajectory for churn or growth. After helping companies like WalkMe experience exponential growth, she is now helping companies build teams, processes, and systems to scale. Emilia holds an MBA from Saint Mary’s College of California and a dual BA from the University of British Columbia. She is also PMP, and Scrum certified. She is the co-author of Pressing ON as a Tech Mom.
David Lahey, Go-To-Market Advisor
A software executive with extensive domestic and international experience in SaaS platform delivery, ERP software development, and channel sales. An energetic professional with a solid history and proven track record of success in startups, turnarounds, and business expansion. Experienced in building and managing high-performance, cross-functional teams that contribute to the organization’s strategic success. Accomplished coach and mentor who motivates and inspires employees, partners, and stakeholders around executing on the mission and achieving the goals of the organization. Keynote speaker at Gainsight Pulse 2014 and Totango Summit 2016.