Churn as a Leaky Sink

Just like water entering a sink and then finding its way down the drain, your *aaS (SaaS, IaaS, PaaS) business will likely always have customers leaving and sales coming in.

While it doesn’t really matter too much (at least in the context of this post) whether water coming out of the faucet at high rate or low rate, what does matter is the size of the leak at the bottom… the water going out.

First of all, is the drain wide open?  If it is, your company is doing more to drive customers away than you are to acquire them.  Figure out an effective customer insights strategy and close that drain! Setup effective surveys, reporting, and a churn action committee to address the reasons why your customers are leaving.

The drain will leak. No matter what you do, you will always have a customer cancel due to death or other reasons outside your control.  Do you know how much your sink leaks?  Again an effective system of capturing data and listening to customers is important.

But, you can go one step further by simply investing in a dedicated analytics team.  Let them model churn and build predict future customers who are likely to churn. During this process, they will identify the key drivers of churn and the company can then build a proactive strategy to engaging and saving the customers that prevent your growth.

Before you know it, that sink is a little small for the water you’ve collected, so you have to upgrade to a bigger sink.  Just make sure you don’t buy a bigger drain with it.

How Your Job Effects Customer Churn

With company’s growing larger and larger and employee skillsets becoming more and more specialized, it is easy to see a workforce behind a product numbering in the hundreds or even thousands.  Yet, the customer might only come into contact with one, two, or three people that have customer facing jobs in sales, customer service and/or technical support.

But, just because you get to sit in a nice cushy office behind the scenes does not mean that your job will not effect the customer’s decision to leave your product for a competitor or alternatve solution.

If you are in Finance, make sure you do the math correctly when you calculate a customer’s bill.

If you are in Product Design, make sure you go out of your way to make sure the product is reliable, well designed and fits their needs.

If you are in Factilities, make sure you keep those bathrooms clean, those snacks well stocked and the conference rooms at the right temperature to keep company moral at high levels.

If you are in Security, smile and take pride in creating a safe and secure work environment for all employees.

You see, a product is not one person, one funtion, or one thing.  A product is team effort of functions that create a positive customer experience that prevents churn.  One part of that team that drops the ball, puts the customer experience at risk and therefore drive churn.  

How clean are your company’s conference rooms?   Are you thinking of the customer and their experience at every decision?

Interesting in reading more on customer churn, read my previous post.

How to Report and Understand Customer Churn

Understanding customer churn is essential for every SaaS, IaaS, or service company doing business in any marketplace today.   Too often companies will be so focused on what is coming in through the marketing facet that they forget to check the flow of water going down the drain.  Your sink full of customers might be draining slowly and along with it, your company’s future.

Even the smallest companies will benefit from tracking customer churn every month.  Reporting around churn will give you a lagging indicator which can tell you a lot about your company, your product, and your policies.

1) Do you have access and/or the ability to gather information on why your customers leave? 

If not, consider an exit survey and follow-up courtesy call to the customer.  Also consider setting up a data warehouse to house the information you gather so it may be linked back to customer records, usage, and campaign data.

2) Are your cancellation reasons aligned toward the company’s structure? 

Reasons/categories should be aligned along company owned churned (something your company did to cause churn) or customer owned churn (the customer churned because of something they own and is not the company’s fault).  In addition, each category should represent a function in the company. 

Price too high? Your CRM department should own that one. 

Reliability Issues? Your Product/Engineering department should be held responsible for those.

3) How do you report your churn?  Is it a single chart?  A dashboard? What time frame do you use to report it (quarter or monthly)? 

Your churn report should contain multiple views of the same data that let decision makers understand: a) who is churning, b) why they are churning, c)  trends over time, and d) the general mood of the customer as they leave (do they hate you or are they going to miss you)?

4) Is the data accessible to everyone who plays a role in decision making?  How do you know they review the data? 

Setup a recurring monthly meeting a few days after the final report is published with the stakeholders and make sure everyone is on the same page as to what the report says and what action items there. 

5) Does your churn report look better than it works?  Does it have more animation than the last banner ad you saw?

A well designed churn report is not defined by animation, color palletes or the number of charts.  A well designed churn report was built from the ground up with a firm understanding of how your business operates, a solid method of customer engagement, and well defined data viewpoints that help the decision maker understand what is dripping down the drain at a glance.

The more you can understand churn and help the decision makers understand churn, the better off your service company will be.  In fact, if you can gather enough good data, you can start predicting churn with a degree accuracy, preventing a customer from churning before it even happens.  How much better could that be?

So, what are you waiting for?  Get down and dirty with churn, get your plumbing tools and start making sure that drain doesn’t drip any more than it needs to.

Read more of my content on: Customer Experience