When and how to “celebrate” churn
Exploring the concept of successful churn
Last week my team at ProfitWell welcomed our client to consider the cases in which customer churn should actually be considered a “win” for their business.
Naturally, it’s against a subscription company’s ethos to “celebrate” churn. As we’ve written before at ProfitWell, churn is the silent killer of a subscription business. A high churn rate fundamentally threatens a subscription company’s existence.
But is there such a thing as good churn? Is it ever appropriate for a subscription company to actually celebrate certain cases of churn?
In the case of outcome-driven services, we think so.
- As the world continues to embrace subscriptions, more and more businesses are adopting the subscription model in an effort to develop stronger on-going relationships with customers.
- As a result, subscription businesses today have a clearer understanding of the outcomes their customers are hoping to achieve than ever before.
- We argue that customer churn caused from the successful delivery of value to a customer isn’t something that should be wholly demonized, and that measuring, monitoring, and analyzing successful churn is critical for businesses — especially for those offering outcome-driven services.
- There are strong growth opportunities associated with successful churn (read on for these below)…
Defining ‘successful churn’
When a service is designed to drive users toward a discrete outcome, and the outcome is achieved
If a customer churns with a glowing recommendation of your business (e.g., positive reviews, intent to return as a customer should the problem the service solves arises again), then a business ought to celebrate. The product/service delivered the value it promised the customer!
- Completion of a degree/discipline on an online learning platform (e.g., Pluralsight, Udacity, Codecademy)
- Start of a long-term relationship on an online dating platform (e.g., Bumble, Tinder, Hinge)
- Being hired into a new job/career (e.g., LinkedIn Premium, Enhancv)
Growth opportunities associated with successful churn
It’s no secret that churn, whether it’s good or bad, hurts a subscription company’s bottom line. If revenue from net new customers does not offset your ability to retain revenue from existing customers, you’re dealing with a leaky bucket of a business that’s bound to become totally parched. And you cannot rely on the positive morale of your happily churned customers alone to save your business.
So what steps can your subscription company take if you’re successfully churning customers?
Acquisition | Continued engagement
Despite the fact that your customer churned, if they were ultimately happy with the service then you should make an effort to continue to engage them.
But not through enrolling them into drip email campaigns. It’s important to not think of churned customers like leads, because they aren’t. They are more like old friends who you can trust will rely on your service again should the problem you solve arise again in their lives.
Instead, keep them informed with how you’ve been improving the service. Give them the opportunity to inform you about how your service helped them achieve their desired outcome. Welcome their thoughts on how their lives have benefited from the experience using your service.
Continued engagement with happily churned customers can benefit your business in a couple of ways:
- Product Marketing: Having a rich understanding of your happily churned customer’s success stories provides great product marketing fodder, which should help from a customer acquisition perspective.
- Buyer Persona Development: Hearing critical feedback from your happily churned customers about how their experience could’ve been better will be more impactful than hearing from unhappily churned customers. After all, they represent your ideal customers. Improving their experience will ultimately help your subscription business more than aggregating the wide range of critical feedback you’ll hear from unhappy customers who may not have been a great fit for your service in the first place.
Monetization | Identify opportunities for expansionary revenue
While successful churn means the product “did its job”, measuring and monitoring a successful customer’s experience may illuminate opportunities for cross-sell or up-sell to additional products or services.
Related questions to think about that may help drive strategic planning and product development:
- After a customer achieves the intended outcome, do they adopt an adjacent product or service?
- What’s the next product on their greater journey?
- Are we thinking too small in terms of the outcome we’re helping customers achieve? Or is there a bigger, better outcome our customers are driving toward?
Conclusion | Your TL;DR
Subscription executives face tremendous pressure to track and manage customer churn as it represents arguably the most important lever of growth for their businesses.
And in a world where outcome-driven services continue to gain market share and businesses continue to develop a richer understanding of their customers’ desired outcomes, we challenge subscription executives to:
A) celebrate when you successfully deliver the value you promised to customer;
B) broaden the scope of the outcome you’re helping your customers achieve or discover adjacent outcomes you can help your customers achieve;
C) strive for an even better understanding of happily churned customers and try to acquire more of them.
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