In the B2B subscription economy, we’re all well acquainted with the popular adage: it’s more expensive to acquire a new customer than it is to keep a current customer happy. And before your organization allocates resources to improving customer satisfaction, you have to start at ground zero—your customer churn rate.
According to Bill Gates, “Your most unhappy customers are your greatest source of learning.” And Mr. Microsoft has a point. When it comes to tracking and improving customer churn, it isn’t always intuitive (or fun) to measure your failures. But inside every lost account is the data you need to improve and retain future customers. To create a truly data-driven customer service analytics initiative, you must be empowered to mashup data from CRM, marketing, and financial sources to accurately track the full customer lifecycle—and make decisions about the future of your CS department based on data.
Who Stays and Who Goes?
Let’s assume that you have an annual churn rate of 8%. You have a few strategies you’d like to implement in the next quarter to bring that number down, but that number isn’t enough to justify a new initiative. With a customer success dashboard, you can visualize the composition of that churn rate by any demographic you track in your CRM. A powerful customer success dashboard will help you visualize what percentage of that annual churn is comprised of small customers vs. larger enterprise accounts. And if your customers come from a variety of industries, you can drill down past account size and into the industry make-up of that churn.
For instance, with full visibility on your data, you may realize that your 8% churn includes 40 SMBS and four larger customer accounts. On the surface, you have a harder time retaining SMBs than you do larger accounts. But with the right customer success dashboard pulling in CRM, marketing, and financial sources, your data can tell you a more detailed story. For instance, you’ll be able to see that those larger accounts are 4x as expensive for your marketing team to acquire with a sales cycle 4x longer than your average customer account. But once onboarded, they stay 5x longer and provide a customer lifetime value 20x larger than your average account. Before you proceed, you’ll need your customer success dashboard to tell you more…
Who’s Churning When—and Why?
Tracking customer success analytics over time will help you pinpoint trends in customer life expectancy and—most importantly—churn reason. Because not all churned customers should be mourned. Sometimes what a lost customer teaches you is that they (and customers like them) just aren’t quite right for you.
Let’s dig deeper into that 8% churn rate. Of the 40 SMBS you lose every year, half of them are churning much earlier than your average accounts of similar size and value. What’s more, they all come from the same industry. Drilling down, your dashboard tells you that they all churned for the same reason: lack of a product feature that isn’t part of your company’s roadmap (and never will be.) These customers have churned to teach you a valuable lesson: your marketing department and sales teams should stop allocating resources to acquiring these accounts altogether. What’s more, your CS department is wasting resources in onboarding and nurturing them.
On the other hand, your customer success analytics may tell you that those four larger accounts are perfectly happy with your product, but cite your help desk as a pain point associated with their departure. Here’s where your CS dashboard has helped you make decisions based on data. The budget you currently allocate to quick, cheap sales that aren’t a product fit can be confidently reallocated to retaining larger, longer-lasting accounts—by hiring more agents for your customer success team.
Reducing Churn Through Ongoing KPI Monitoring
You’ve determined the highest value customer segment within your annual churn rate and allocated resources to addressing their pain points. Your CS dashboard can now help you monitor the impact of additional customer success managers on your churn rate as well as additional customer satisfaction KPIs.
For instance, within two quarters, you may notice that your additional agents have brought your churn rate down by 0.75%. Success! But you’re keen to bring it down further by the end of the year. Visualizing your Net Promoter Score across your client base and lifespan is critical to preempting churn and identifying additional trends that can be addressed to reduce churn as your company scales.
Over time, what events can you correlate with lower-than-average NPS scores? You may notice that the customer success team at a new regional office is underperforming. Perhaps it’s time to rethink CS training programs as your company expands or consider incentivizing relocations for top agents who can lay strong foundations in new locations. Or maybe your dashboard is showing you a strong correlation between lower NPS scores and management turnover at customer companies. It may be a worthwhile investment to provide onsite training and enablement workshops to ensure new leadership within key accounts get the support they need through difficult transitions when the risk of churn is higher.
“The biggest barrier to customer success is CEOs not making it an important part of the culture,” says Nick Mehta, CEO at Gainsight. Your data is ready to be transformed to the actionable insights your CS team needs to slash and burn your churn rate. Will you prioritize an analytics initiative that empowers them to keep your most valuable clients happy as you grow?