“In this world, you’re either growing or you’re dying, so get in motion and grow.” – Lou Holtz
Words of wisdom from a Hall of Fame football coach, while also a sentiment shared by many investors as they evaluate companies, particularly in the B2B tech industry. Many cloud companies are growing at startling rates; with valuations through the roof and excitement seemingly contagious, business could not be better. Unfortunately, the one challenge that many of these companies have yet to conquer is profitability. The reality is that growth has been a constant, while customer churn analysis has also been a hallmark of these very same companies.
It is estimated that a new customer is 10x more expensive than keeping an existing one, so it’s no wonder that rapid-growth organizations continue to operate in the red. New customers are important, but retaining them accelerates profitable growth.
Fortunately, the churn issue is a solvable one if companies start leveraging the information they are already collecting and analyze and act on it effectively.
Analyzing Churn Types
When it comes to B2B turnover, companies that lose customers aren’t just losing one person, they’re losing a partnership or an entire team. Though understanding overall churn rate is critical, the key is understanding the cause. There are several categories of partner attrition that may happen along the customer journey. A few of the most common examples include:
- Onboarding Churn – This happens in a customer’s first 90 days as they are starting to assess a company’s product, solution or services against their needs.
- Product Churn – If a product, solution or service doesn’t solve for the customer’s desired outcome, you can bet they’ll walk away disappointed. What’s worse, they may share their negative experience with others.
- Champion Churn – This happens when the customer champion leaves or is replaced with someone new who may want to use a different product, solution or service.
So how do B2B companies use customer churn analysis to create raving, profitable fans? The answer is both simple and complex: Businesses must prioritize the customer experience for revenue retention.
Using Data to Improve the Customer Experience
Improving the customer experience begins with monitoring through usage data how effectively an end customer adopts a product. Has implementation been properly completed? Are they using all of the features? These basic questions were difficult to answer before the advent of the cloud. In fairness, the importance of knowing these answers was also less important in the days of large capital outlays and product lifecycles of 5-8 years. Those days are gone and have been replaced with low switching costs and 12 month (or less) commitments. This is why churn has become such an important metric and why usage data is the key to keeping churn low, customers happy and costs down.
At ServiceSource, we study the customer experience by tracking sales propensity, usage, and health throughout the customer journey. We leverage our Customer Success organization, Predictive Relationship Intelligence and Sales Management (PRISM) platform, and our nearly 20 years of experience innovating and refining customer growth and management processes to minimize or reduce churn on behalf of our partners. We do this by focusing on customer touchpoints from onboarding and adoption, upsell and cross-sell opportunities, issue resolution, advocacy, and retention.
ServiceSource’s ability to deliver rich insights and early indicators of account health to our clients drives churn down and enhances their customer engagement.
Technology aside, our Customer Success teams make the real difference; with more than 3,000 employees speaking 35+ languages in 11 locations globally, our people become the teams of our partners’ and ensure customer-centricity is core to their daily work. As an example, a multinational open-source software provider saw a 20-percentage point increase in their customer renewal rates and stronger customer engagement through a predictive model and proactive renewal programs utilizing ServiceSource’s Customer Success solution.
The root of churn comes down to customers not attaining their desired outcomes. Leveraging usage data throughout the customer’s journey with customer churn analysis provides a giant first step forward for companies that are struggling with churn. This alone, however, will not fix the problem. While being able to understand and even predict, with a high degree of certainty, what the end customer is likely to do, having the right Customer Success team to engage the customers at the right time with the right message is the key to executing an effective churn reduction strategy.
Learn more about ServiceSource’s Customer Success solution and how our nearly 20 years’ experience in improving customer experiences and growing revenue for hundreds of B2B market leaders can help you grow.