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

What Do You Know When You Don’t?

Knowing something is half the battle.  Communicating that something is the other half, but that is the subject of another post.

Knowing how your customers use your product and how they want to interact with you is a great thing.  Two major steps toward becoming customer oriented.

But then you realize that what you know, might not be what you know.  You see signs that your data may be incomplete or inaccurately measured.  What do you know now?

1) You need to stop and reevaluate what you know.
2) Depending on the issue, you might be realizing that what you know, might be valid to some degree.
3) On the other-hand, you might be realizing that an entire rebuild of the data warehouse is in order.
4) You start making a mind map of the situation to visualize the scope of the problem.
5) You start counting the knowns, the unknowns, the could-be’s and the what-if’s.
6) You then start to think that maybe if you ignore it, it might, with a one in a trillion chance, actually fix itself.

Then you realize you just reconstructed the famous Donald Rumsfeld speech:
There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.” – Donald Rumsfeld (more Rumsfeld quotes)

In the end you may know much more than when you started.  But the process of determining what you don’t know and what you do know is a great one!  It is called validation. 

Everyone should have a process of validation.

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