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Do you know why customers are churning?

 

Churn is your customer giving up on their subscription, and hence a mission critical KPI to track. Understanding churn and customers abandoning your subscriptions is top of mind for all CEOs running a SaaS, XaaS or a consumer-based subscription business.

When customers bail out of their subscriptions, it is usually based on 3 situations that drive the decision:

  1. The customer got a non-fitting subscription and see no value in it (anymore)
  2. During the onboarding and usage of the subscription the customer is not confident in your interaction with them (negative engagement)
  3. Competitors offer a better deal than you do 

In general churn is different when you segment by type of subscription, you cannot always generalise between B2C box subscriptions or memberships and B2B SaaS. However, churn is still based on the perception that a customer does not see a future in receiving your subscription.

If your customer is experiencing strong ROI, they are more likely to remain loyal and less likely to lapse.

 

3 actions you can take to prevent churn:

 

#1 — Understanding the opinion of the customer using a Net Promoter Score (NPS)

To stay close to your customer and not rely solely on your customer services team feedback, a great and simple data point you can introduce is NPS. After you send a subscription invoice or when you collect a payment, trigger an automation to send a survey to the customer you would like to get the feedback from. Ensuring strong data management for customer contacts is of course instrumental. Usually, the average NPS survey response rate is between 10-30%. You could consider sending reminders and making the survey attractive to fill in by rewarding the contact. Once you have collected the data you can measure and validate the feedback to understand customer experiences. The less customer satisfaction, the higher your churn will be.

#2 — Follow service or product telemetry and usage

Another digital indication that helps prevent churn is monitoring the use of your subscription services. Depending on the services or products you offer, you can apply remote monitoring, IoT connection or simply check deliveries. Based on the use of the subscription services and products, you can benchmark the customer in terms of what you had expected they would use. If they are far under expected use, you might need to dive in and validate reasons of diminished usage. The less your customer scores on the expected versus actual usage, the more likely they will churn.

#3 — Apply a ‘customer is king’ approach

Ensuring timely renewal and preventing churn are not tied to specific dates. They happen throughout the customer subscription cycle and are affected by the overall customer experience. It is crucial that you carefully track customer behaviour day-to-day, week-to-week. Your customer success platform should pull in information from a variety of sources and analyse this data to produce understandings that guide your customer engagements. To scale your customer success efforts, the platform should include an early-warning system you can customise to alert you to any significant changes in customer health and satisfaction. The most successful way to reduce churn is to stay advised of customer behaviour. If you are informed of any harmful trends early on, you will be in a much better position to proactively connect to your customer. Observing customer success best practices will help reduce your churn rate. Churn occurs when value declines. Keep your focus on delivering real business value and you will have a loyal customer for years.

 

The churn management strategies outlined above are effective because they increase the value your company brings to your customer. If your customer is experiencing strong ROI, they are more likely to remain loyal and less likely to lapse.

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