The Significance of Churn to Your Customer Success Program
What’s the objective of your customer success program?
We’ll let you answer that in a bit… let’s take a detour into the basics of customer success.
Now, almost every marketer seriously advocates for the use of the customer funnel, if you run a simple Google search on the term ‘Customer Funnel’, the search would return with hits for millions of results, in different variations. Basically, they’re all saying the same (but very important) thing — Attract, Acquire and Retain — customers. But where does customer churn come in?
Another detour — this time we look at Maslow’s Theory on the Hierarchy of Needs. Many have tried to disprove or elaborate this theory over the years; but while we understand that it has its flaws, the underlying message remains very strong. We’ve all got needs, though they might vary in importance, they exist!
Maslow believed that for a human being to actually be motivated to do more, he/she needs to have some basic fundamentals in check and readily available. Else, he/she won’t get to that ‘pinnacle of self- actualization’ or achieve anything significant for that matter.
“Individuals must satisfy lower level deficit needs before progressing on to meet higher level growth need”.
The list below highlights the blocks in Maslow’s hierarchy of needs:
- Biological and physiological needs — air, food, drink, shelter, warmth, sex, sleep, etc.
- Safety needs — protection from elements, security, order, law, stability, etc.
- Love and ‘belongingness’ needs — friendship, intimacy, trust, and acceptance, receiving and giving affection and love.
- Esteem needs — classified into two categories: (i) esteem for oneself (dignity, achievement, mastery, independence) and (ii) the desire for reputation or respect from others (e.g., status, prestige).
- Cognitive needs — knowledge and understanding, curiosity, exploration, need for meaning and predictability.
- Self-actualization needs — realizing personal potential, self-fulfillment, seeking personal growth and peak experiences.
Detour 2 over.
Just like the Hierarchy of needs, there are different levels in achieving customer success, we previously covered some of them here, but here’s a short outline:
- Marketing: Where you help your customers find you
- Onboarding /Initial Sale: Where you are able to get users/customers to first subscribe to your products
- User adoption: The point where users begin to actively use your products
- Advocacy: Where they tell others about the product/service/
- Renewal: Where they renew/upgrade their subscription to your service
From the list above, there’s one stage that doesn’t get as much spotlight as the others. This stage is called Customer churn and it can happen anywhere and at any given time.
Customer churn, sometimes called customer attrition, occurs when customers or subscribers stop doing business with a company or service. Usually, it is less expensive to retain old customers than it is to acquire new customers, and this makes customer churn a very important factor/metric to measure. Now, the higher your customer churn rate, the lower your chances of scaling up your business and improving your bottom line, especially if you are bleeding customers at a very high rate.
We established previously that every person has a hierarchy of needs and this is still relevant in the choice of online products and services. Once a product no longer meets a need in the life/business of a customer, the probability of exiting the “ideal” customer journey/funnel becomes so high as humans will do anything to ensure that their needs are met adequately.
There, we’ve told you the problem, we’ll now share some of the steps that we believe would help improve your customer experience, so you can reduce the churn rate in your customer journey:
Put the customer’s needs first:
We understand that it’s a pretty competitive world in business and so product updates can quickly become driven by “what others are doing”. An ex-Google employee shared that his main reason for choosing Grab over the bigger companies was because, he felt they were not as customer-focused as they should be. While, competitor analysis should not be overlooked, one should always remember that it is the customers that use the product and so it must serve their needs, it is not about the competition.
Have a strong customer success strategy and team:
You have to be clear about your business goals and needs, so you can develop a strategy that works at each stage of the customer journey. Consequently, you will be able to make data-driven decisions in the future, seeing that you started out with a strong strategy.
Your customer success team can also negatively impact your churn rate. To combat this, hire resilient people who can adapt to changes, spot areas that need to be improved, and most importantly, who have some sort of experience working with people/customers.
Be open to feedback:
At Formplus, we do this thing where our co-founder occasionally calls some of our users to ask about their pain points. From these calls we have been able to receive insightful feedback, because users tell us how we have helped their business as well as suggest improvements/features that could improve their user experience.
Asides these calls, we send out feedback forms to our users and this helps us stay one step ahead in anticipating their pain points.
Side note: If you have any issues/suggestions for Formplus, or the Formplus team, please fill out this form to schedule a call with our co-founder.
Learn to prioritize feature requests:
If a user requests for a particular feature and still uses your product despite the fact that you don’t have that feature, you should not take their loyalty for granted.
Each time you receive a request for a feature, log it on your Project management board so that once it reaches a threshold, you can pitch to the team. At Formplus, we do this because it helps us to monitor the frequency of the requests, work more productively and keep track of actionable changes.
Showcase beautiful customer stories:
Each customer understands their reasons for using your products and showcasing their use cases is another way to help improve your customer retention. Using case studies, you can motivate non-users or unconvinced users to use your products, and also upsell product features in a cool way.
Ensure you have the right tools:
You also need the right tools to discover where customer churn occurs in your product life cycle. Tools such as Intercom, FullStory, Formplus among others are some tools that help track customers, so you can know when and where your customers stop loving your product/service.
Conduct Exit interviews/ surveys
While we understand that customer churn is a sad thing (Hello, bottom line speaking!), even when you do all the right things to keep customers, some would end up leaving. This could be for different reasons and you have to be prepared for it because, it would still come no matter how much they love your product.
One way to prepare for this is to have an Exit Survey ready so you can understand, acknowledge and address the customer’s pain points. Keep the exit survey simple but ensure that it captures all the information you need.
Detour 1 over.
Regalix Research published a report on the state of customer success in 2018. They found out that different organizations use varying metrics to measure customer success: 68% mentioned ‘renewals’ while 55% chose ‘customer churn rate’. You see why it’s important to measure your customer churn rate: that’s one way to know if you’re doing something right.
Are you building a strong team? Click here to read the top HR challenges of 2018 and solutions to each of them.
