Take Customer Churn Reasons at Face Value And Do Something About It
By Anna Talerico
Feb 12 2019
If you do a search for “SaaS churn reasons” you will see some great articles and pick up some useful advice about combating churn. Many articles will point to “lack of value” as the root of most churn. And they are right. In most cases if a customer doesn’t receive value, they will not continue to use a product. That’s not unique to SaaS, that’s just common sense.
When diagnosing and fixing churn issues you have to dig deep into the value you are delivering, how you are delivering it, how self-evident it is and what type of impact you are making on your customer’s lives or businesses.
But that effort isn’t a magic wand. And it’s not always the fastest path to improving your retention.
When working to improve customer retention, in addition to evaluating the overall value a product is delivering, I think it’s also important to take churn reasons at face value. I worry that industry advice is to dig into “customers getting value”, because it skips over the very obvious. Look at the reasons customers say they are churning and do something about it.
Often, when a SaaS executive shows me their churn numbers and I ask what they are doing to address the top reasons, the answer is surprising.
Surprising, because while the answer includes many worthwhile initiatives, they aren’t designed to attack the top churn reasons head on with urgency. And churn has to be solved with urgency.
Yes, customer churn can and should be solved with systemic, strategic changes. But customer churn also needs to be addressed tactically, urgently and practically, not just systemically. Otherwise, too many days (then months, then years) slip by as revenue walks out the door.
Here are a few examples of what I mean.
Customer churn reason: “Not enough time”
If you are surveying your customers when they cancel, it’s likely that a lot of them give lack of time as the reason. Customers sign up with the best of intentions, and then real life & real work get in the way, onboarding gets delayed, your product keeps moving down the list of priorities, and your customer realizes they simply don’t have enough time to use your product.
What to do: Get creative. Build a “quick start” with pre-configured options. Provide professional services and use your product on behalf of the customer, so they can still achieve the desired outcomes they want. Create shorter, smaller versions that require less time investment. No matter your product, I am pretty sure there are time-saving things you can incorporate.
Customer churn reason: “Didn’t use it”
I threw this in as is a trick reason. When you ask customers why they aren’t renewing, don’t have this be choice. You should already know they didn’t use it, and you should have been helping them to adopt from day one.
What to do: Don’t make your customers tell you they didn’t use the product—automatically surface engagement issues to your customer success team and create standard initiatives designed to get customers to adopt.
Customer churn reason: “Didn’t meet expectations”
Well, I hope you knew this before they churned, and tried to manage expectations as best you could. If you have customers churning because your product didn’t meet their expectations, take a look at who you are selling to, and the promises your sales and marketing teams are making.
What to do: Be rigorous in selling to your ideal customer profile, and in setting the appropriate expectations. Train your sales team how to side-step bad deals and maximize the good ones. Constantly reinforce your ideal customer profile to your entire company so everyone is on the same page. And teach your sales team to be honest with their prospects.
Customer churn reason: “Lost budget”
This is a hard one, because it feels like it is out of your control. “They lost budget, what could we have done?” seems to be the common refrain. Well, you could have done a lot. This one does go back to value delivered, and a whole list of other things too. If you sold to the right customer and they were using your product correctly supported by good strategy, with an active SaaS strategy, then your product should have been delivering real. apparent value to them.
What to do: Have business conversations early and often with your prospects and customers. Understand exactly what outcomes need to be achieved, what the ROI levers are, and how success will impact the customer’s business or lives. Reinforce these constantly through QBRs, marketing communications and great customer success. Also, see “lost stakeholder”…because that’s part of this one too.
Customer churn reason: “Lost stakeholder”
This reason is often put in the “uncontrollable churn” category, meaning, it was out of your control. I call BS. If your subscription retention is based on a single stakeholder you aren’t doing enough to put broader tentacles into your customer accounts.
What to do: Start an account development (customer sales) function asap and work on expanding your footprint. You shouldn’t lose a subscription customer just because you lost a stakeholder.
Customer churn reason: “Product is hard to use”
One of the most difficult things to fix can be the fundamental user experience of your product, but that doesn’t mean you need to bury your head in the sand during a 12-month redesign and watch your customer churn.
What to do: Install in-product chat, use a guided ‘walk-me’ onboarding experience, provide personalized and on-demand training, and generally just heavy-up on the customer TLC to get you through this period. You can improve customer retention even if your product is hard to use.
DON’T LET YOUR CUSTOMER RETENTION STRATEGY GET IN THE WAY OF YOUR CUSTOMER RETENTION TACTICS.
If you are spending all of your time planning, and undertaking massive initiatives to combat churn, you may be missing the low hanging fruit by just quickly solving for the actual reasons your customers say they are leaving.