High Customer Churn Rate? Change These Four Things
Minimizing customer churn rate is just about the most important activity your subscription business can carry out. Although bringing on new customers is vital for growing your business, it’s more cost-effective to maximize retention. In fact, it costs nine times more to acquire a new customer as it does to retain an existing one—and retention is led more by customer experience and interaction, rather than price sensitivity. This is especially true if you’re selling to larger businesses and enterprise customers and you want to lower your B2B churn rate.
That means when customer churn rates are rising and retention’s falling, you’ll need to talk to your customer success team, dig into the data, and create an action plan to bring things under control. Here’s our recommendation for four initiatives you can kick off right now to boost retention across four areas—people, resources, analysis, and tools.
People—Maximize Employee Experience in the Customer Success and Sales Teams
Your sales and customer success teams are already working hard to boost retention, so you’ll want to ensure they have the right reinforcement and support. This means enhancing the employee experience by focusing on a positive company culture and avoiding blame or finger-pointing. Try the following:
- Ensure that you’re building a strong sales team from the ground up—we’ve got an excellent guide to help you create motivated, engaged salespeople.
- When sales are down, work hard to maintain employee engagement and morale. Our guide, “How to motivate a sales team when sales are down” is a great place to start.
- Encourage your supervisors and managers to give your salespeople and customer success employees more autonomy to tweak retention techniques to see if they can reduce churn rates.
- Identify employees with high retention rates and ask them to share their best practices, skills, and approaches to create a stronger retention attitude in your teams. Analyze how they spend their time working with prospects and existing customers.
- Create formal mentor/mentee relationships and informal buddy systems so that less experienced staff can ask questions and get support from sales team members.
- Invest in sales and customer success skills training.
Resources—Give Your Customer Success Team the Resources They Need
Your customer success team is your most important tool for increasing retention rates. They’re responsible for enhancing the customer experience by sharing insights, guides, and other resources that demonstrate how your software is the ideal solution. You can reduce churn by boosting customer engagement—here’s how:
- Stay consistently engaged with your customers so you can get early warning of negative situations in time to turn things around, as well as leverage positive sentiment as opportunities for upsell and cross-sell.
- Ask your customer success team about the current approach and resources they use with customers—what works well and what could be improved?
- Identify gaps in your resources—are there guides or media that your team needs but they don’t have?
- Establish a good relationship management routine—is your team communicating with potential lapsing customers at the right time?
- Link across your development, sales, and retention areas—is your customer success team sharing the latest features and benefits for your subscription product?
You can use the answers to take action—try tweaking one or two areas at a time and seeing how it boosts retention rates, so you can focus on continual improvement with your tools, guides, and people.
Analysis—Dig Into Customer Interactions and Information to Get Engagement Insights
It’s likely that you’ll find the most promising areas for boosting retention by digging into customer data. Your CRM or customer success software should ideally record all of the interactions between your employees and your customers. Mining this data for insights can help you balance the instincts of your sales team with business intelligence to identify the root of churn rates problems and true areas of improvement. Try answering the following questions:
- How often is a member of your customer success team getting in touch with clients?
- What guides and resources are being shared with clients?
- Are there particular types of clients that churn more often? For example, in B2B churn rates, you might look at sector, industry, business type, and marketplace trends.
- How good is your team at predicting “at-risk-of-churn” clients?
- Does the type of communication make a difference to churn rates?
- Is your customer success team sharing information on benefits and new features in the most effective way?
- Do issues with the software or interactions with customer service (not customer success) influence retention rates?
- What activities do your most successful retention team members carry out to reduce churn rates?
Ideally, you should measure each of these areas closely and establish what a good baseline looks like, then you can measure variations to the baseline to get early warnings of issues in the future. For example:
- Measure the level of value each customer is realizing from using your product and how use of certain features correlates with renewals, expansions and cross-sells.
- Compare how often different customers are communicated with and the communication channels used to identify the most effective frequency and methods.
- Look at how often customers are using guides after they are shared to see if customer success outreach is spreading the right information.
- Segment your data by business size, industry, sector, and other demographics to identify risk factors.
- See how often your customer success team shares new features and benefits.
- Correlate the severity of incidents with the lapse rates of customers to identify common threads.
- Carefully analyze the interactions your best retention people have to identify best practices that you can share among the team.
In short, you need better engagement insights to understand the root of any problems so you can take action.
Tools—Ensure Full Integration Across Your Sales Tools and Processes
Finally, you’ll want to look at the software tools you use to manage customer relationships and success. Invest in CRM and analytics platforms that integrate with your other software and let you easily mine data from a central location. You should also align all your tools with your sales and customer success processes—look at streamlining your processes first, then fitting the tools around all the key customer interaction points.
Integration is vital—you’ll want to include:
- Marketing activities and promotions
- Features added by application development
- Financial KPIs and analytics
- Website, guides, and resources usage
Each of these areas is important, but we believe the key one is understanding your data—which provides you with objective information on how your sales and customer success teams are interacting with your clients. Get that right, and it gives you the business intelligence you need to make changes elsewhere and significantly reduce your churn rate.