It’s time to face it. Your customer churn is too high.
You’ve watched it creep up as businesses tighten their belts, hoping that the strategies you’ve put in place will work. But until you know exactly why your customers are leaving, your strategies won’t work.
Putting in place consistent and clear churn reasons, (or fixing the broken ones you have!) is the first step to getting churn under control.
These are the top 5 common problems I see with churn reasons:
Too many churn reasons!
Lack of clear ownership of each churn reason
Lack of defined actions
Inconsistency in churn reason data collection
Analyzing and reporting trends is manual, irregular, or fails to connect $ impact
Here are 5 tips for improving your churn reasons.
#1: Less is more – Simplify your churn reasons
Limit your churn reasons to a 2-tier structure. Going deeper to 3 or 4 tiers dilutes accountability and makes actions difficult to pin down. Each churn reason should be less than 5 words. This makes it easy to display on an executive report.
Note: Selecting some churn reasons may require prompting for additional information. For example, when “Product is difficult to use” is selected it may be helpful to know which product, sub product, or product area was cited as being difficult to use.
#2: Pick one, and only one, owner per churn reason
The whole purpose of tracking churn reasons is to TAKE ACTION to reduce churn over time. The most successful companies identify clear owners for each churn reason. The purpose of identifying owners is not to point fingers or assign blame. It is to create clarity. Clear is kind. Owners should be named individuals (or titles) who have autonomy to effect change and should not be delegated to managers or individual contributors.
#3: Commit to action, and then follow up
It’s time to go DEEP. Taking action requires that you fully understand the actual problem that resulted in churn. For example, if “lack of proactive engagement” surfaced as a top churn reason the Leader of CSM will need to go deep. Cut out the middle people and go straight to the source. Identify the top customers by churn, read the notes in your CRM, review any loss reports or customer surveys, check out their latest NPS comments, and PICK UP THE PHONE and talk to the customers who left. Some customers may not be willing to talk, but many will. Especially if the leader responsible is reaching out.
Once you fully understand the problem, identify 1-3 actions. Don’t take on more than you can deliver, but deliver well on the actions you commit to. Then take ownership to proactively follow up with your leadership team on the progress of your actions. Don’t wait until you are asked.
#4: Train your teams for consistency
Garbage in, garbage out. Identify the role responsible for selecting the right churn reason. This should be the person who is closest to the customer, or the person responsible for conducting an exit interview. Reinforce a culture of non-blaming and remove fear of selecting a churn reason that implicates a specific team. This is about accurate data collection. Ensure that the people responsible know what each reason means, and when to select it. Calibrate this in team meetings by showing a loss report and asking each person on the team to select the appropriate churn reason.
Now here’s the hard part. Customers often churn due to a number of compounding reasons. It can be difficult to pick a single, primary churn reason. Some companies use a primary and secondary churn reason, but in my experience this dilutes ownership and action. Most of the time there is a primary reason the customer churned, and then other compounding reasons that followed.
Put in place a process to audit churn reasons and provide feedback and re-training. Depending on the scale of your business you may want to read every loss report, or select a random sample that gives you enough signal to be confident.
#5: Create regular rituals and reporting
The frequency that you analyze churn reasons will depend on the scale and type of business. For public companies, quarterly reporting to the board is a great forcing function. For monthly subscription businesses, reporting monthly may be more appropriate.
Prior to reporting out the churn reasons broadly, I recommend sharing it with the owners of the top 3 churn reasons. Allow them time to identify actions. Then when you share the report it is viewed as collaborative, and non-blaming. It also highlights the actions the business commits to take and will naturally force accountability.
Reporting should include lost $, as well as a percent of total. I like to compare the last period to a trailing 6 or 12 months prior.
