3 Little-Known Techniques to Reduce Customer Churn (And Why They Work)
This article originally appeared in Inc.com.
There has been a relentless focus over the last five to 10 years on net new business and predictable revenue from new inbound and outbound leads. This has caused most of the C-suite to focus time and energy on generating new leads, while ignoring the lowest hanging fruit for rapid, predictable revenue: their current customers.
In order to stop churn and ensure you are optimizing your potential impact within an account, here are three steps you can take to dramatically move the needle in both areas, based on my experience as the CEO of a business that helps businesses generate new clients.
1. Treat account management and customer success groups the same way you treat the sales org.
We hold SDR and sales teams accountable for keeping their growth and new business goals clear, but we typically look at the account management function as maintenance — responsible for generating only a marginal amount of net new business. At Saastr Annual conference last month, David Skok from Matrix Partners laid out his core SaaS metrics in his fantastic session — and only one of the numbers really spoke to the AM function: net negative churn. Do you lose more than you upsell to make up for what you lost? So the goal is to just not lose as much business as we bring in — or have some small delta for account managers?
Seems like a pretty low bar. What if we expected a high renewal rate and 100 percent growth of key accounts year-over-year instead? This may not be possible with certain products or in certain categories, but in the days where salespeople sold and managed their accounts, their quotas year-over-year looked a lot like these equations. Account managers should act like Challengers and be treated like top salespeople to maximize success and create easier, faster predictable revenue.
2. Treat your current customers as well as new prospects.
Let’s break down the level of sophistication we have in our net new strategies — and where we lack rigor when it comes to the account management function:
- Every company has a cadence for outreach to new prospects, inbound or outbound, but few have a set, measured cadences for current clients
- We have extensive tools to reach out to and identify net new targets, but little to no technology dedicated to helping account managers grow and penetrate accounts. Most of the tools for account management are focused on predicting churn based on user behavior.
- We require the sales team to do relentless research for new business meetings, but we, many times, do not give our current clients the same respect. We aren’t getting deep enough in their business to really make a broader impact, or to strengthen ties. Instead, we keep it at a superficial level with our current contact or a small group in a big machine. We should be getting to know the business much, much better once a prospect becomes a client, not just maintaining or growing the current relationship.
This list above doesn’t even include the inbound and other marketing strategies and dollars that are also hugely tipped in favor of net “new.” Obviously, we need to bring new clients into the fold or we have no business, but if we spent even a fraction of our marketing efforts on further penetration of current accounts, we would see more results.
3. Create a perpetual sales cycle mentality within the organization. The first deal is only the beginning.
We need to think of our customers’ life cycle as a true cycle with new beginnings and endings happening throughout our relationship. We should constantly find new reasons to engage a company at different points and divisions where we can have a potential impact.
We also need to be leveraging our contacts, new and old, to find new initiatives and areas of opportunity where we might fit. This mindset forces us to start looking at the end of the sale as the beginning of that account’s growth internally. In addition, we need to have quotas in place that incentivize these behaviors to make the AM role best in class.
The best way to mediate customer churn is to stop focusing on saving the relationship, and instead concentrate on strengthening and growing it. The relationship needs to be recognized at both the company and individual levels, where our job is to understand the client’s business, and then find ways to provide expertise they need at that particular stage. Sometimes, churn is an outcome of product features and can’t be avoided, but many deficiencies also come from the partnership level. With the above three techniques you can not only prevent churn, but also grow relationships and your business like you never thought possible.