6 Signs that Customer Churn Might be a Problem

November 15, 2019
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Fast growing Enterprise SaaS companies often measure success by the number of new clients acquired and growth of ARR.  It’s quantifiable, easy to track, and looks great at the monthly all-hands meetings.  But Chief Customer Officers and Customer Success leaders recognize that as a company grows, small changes in the customer retention rate can start to have much more impact on long term revenue growth.   

Many companies don’t even recognize they have a retention problem until it’s too late as more and more clients start to churn.  The CFO starts to question the Customer Success leader’s understanding of the business as they miss their forecast.  The CEO starts to dig deeper into why the clients that they personally helped bring in are now leaving.  Stress level goes up as retention rates go down.  Sound familiar?   

Here are 6 questions to ask that may drive urgency for you to take action to retain your customers:

1. Are your teams reactive when customers are struggling?

Maybe it starts with a few cases sent your tech support team.  Then the marketing team is sending emails to key stakeholders that aren’t getting opened.  Later, the CSM reaches out to prepare for the upcoming renewal discussion and doesn’t hear back after a few reach outs.  Finally, you get on a call and the customer says they are not seeing enough value from the solution.  Really?  Now you tell me?   Many Customer Success organizations often find themselves waiting for customers to explicitly tell them they are struggling.  Instead, your teams need to proactively listen for the signals, anticipate potential problems and take action proactively.  Plus it demonstrates to your customers that you are looking out for them.   

2. Can you identify your at-risk customers and know why they are at-risk?

It is reasonable to expect that a certain number of your customers will choose to leave you each year.  In fact, the number might be surprisingly predictable over time.  But there is likely a much larger set of customers that on the fence and might consider leaving you if things don’t get better.  It is important to set up a process to identify characteristics of customers who might be at-risk of churn and flag these at-risk clients for some special attention.  Most CRMs make it easy to create fields for monitoring account health, at-risk reason codes, and documentation of activities you are taking to turn customers around.  You can then turn these into reports and dashboards that give you visibility to your at-risk clients and actions being taken to save them.  

3. Are you surprised when customers tell you they are going to a competitor?

Even when companies have CSMs or Account Managers assigned to oversee the ongoing relationship with clients, there can be gaps in communication, documentation, account monitoring and accountability.  The needs of customers are constantly changing as they have may have new competitors, decision-makers, and priorities.  Monitoring the ongoing account health and understanding how potential changes impact your relationship requires accountability and thoughtful process design to prevent surprises.  

4. Are your retention rates heading in the wrong direction year-over-year?

This probably never happens to you, but picture a situation where your finance analyst finally gets around to doing some analysis of your customer retention rates.  They have completed their sales forecasting, CAC calculations, quarterly board presentations, and monthly close.  Now they are getting to the nice-to-have items on their priority list.  The data comes back that you are losing more customers than you did the previous year.  The questions come quickly from finance and soon your CEO.  Why are customers leaving?  Why don’t know you?  Why weren’t you aware of these trends?  What are you doing about it?  It is important for Customer Success leaders to maintain visibility to their retention rates at all times and monitor trends.  You want to have reports and dashboards that constantly give you access to your retention rates and the top reasons your customers churn.  Having this data at your fingertips enables you to identify trends quickly and put together an action plan to improve.  

5. Are your relationships with key decision-makers weak or non-existent?

Building and maintaining relationships with your key stakeholders is an important factor that increases your chances of retaining that client over time.  Depending on your business model, you may have either a high-touch customer interaction model or an automated-touch model, or something in between.  Whatever your model, your teams can be designing experiences and interactions that engage your stakeholders in a repeated, high-value way.  If your post-sale teams have personal interactions with customers, they should be tracking the status of those discussions and any concerns that come up so that they can be addressed efficiently.  If your interactions are more automated, you may want to capture data about the interactions and use analysis to predict the quality of the relationship based on the data you capture.   The most important takeaway is to know what’s most important to your customers and track how you are delivering against those goals.  

6. Are your CSMs or Account Managers on their own with an at-risk customer?

Most companies have a common set of reasons why customers leave.  Ideally, you are tracking your loss reasons somewhere in your CRM system.  Top reasons often include unclear ROI, new decision-makers, not using enough of the product, changing business strategies, feature gaps, pricing vs. competitors, or companies that go out of business.  If most of your customers leave for a relatively small number of reasons, do you have a “save play” in place for when you identify an at-risk customer that is going through one of these common situations.  If you are like most businesses, you unfortunately don’t and this is costing you customers.  This then leaves your CSMs or Account Managers in a situation where they have to come up with their own save-play on the fly.  No best practices.  No learning from what works for others.  Everyone on their own.  

What to Do Next

If you answered “No” to any of these questions, you have an opportunity to improve your retention rates and provide a better experience to your customers.  They appreciate when you proactively anticipate their needs and have a well thought out plan when certain situations come up.  Plus you will be prepared with data for your conversations with your CEO and other executives.  

HelloCCO partners with CEOs, executive teams and Customer Success leaders to accelerate revenue growth, increase retention rates, expand product adoption, and delight customers.  They bring decades of experience at leading customer-focused companies including Marketo, RingCentral and Intuit. Setup a 30 minute free action-oriented consultation if you answered “No” to any of these questions.  

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