Why People Churn and What you Can Do About it

Churn is painful. Let’s get into why customers leave and what you can do about it.

Pricing/Cost: If customers feel your product is too expensive, the translation is they aren’t getting enough perceived value. One great way to initially address this is to make sure you are delivering updates on their results, either via email reports or within a dashboard. Many of the tech vendors we use send emails like, “Congratulations, this month your email open rates are in the top 5% of users!”. Display positive progress and remind users of the impact they are achieving as they go. 

Now, it is possible that your platform just isn’t delivering results or your TTV (Time to Value) is misaligned with your cost structure. One option for products with a slighter longer TTV curve is to look at lowering your entry price but having a strong upsell motion. Related, you can try to lean more heavily into a usage based pricing model to reduce initial friction but have more long-term ramp. 

Bugginess/Downtime: Nothing is worse than when you get a major adverse affect because of downtime (like you are in the middle of a big launch and your payment processor goes down on you). A good portion of companies hide the bugginess and downtime. Another chunk updates users with a general message.

Here is how the best companies handle it. 

#1 Full transparency about what happened and how it’s being addressed.

#2 A forward looking update on how you will prevent issues like this from happening again

#3 Act like a human. You just impacted people’s wallets. They are upset. Make it right with discounting/credits were necessary but make sure the tone you strike in your customer comms is not robotic or “Well this happens to everyone”.

I watched a company have a major outage event that lasted for hours and some data was permanently lost and yet the comment section was 50+ people rallying behind the team because they did all three of the things I listed above. 

UI/UX: It doesn’t matter how great your product is if people can’t figure it out. Your onboarding and product experience is a huge factor behind churn. 

So at a minimum, if you are losing people because of this, here is where to start…

#1 Do you have clear videos (not just written content) explaining the core concepts of the platform?

#2 Have you honed in on your MVR (Minimum Viable Result)? What does a customer have to do to ultimately activate and retain? Are you providing a clear pathway to get there within the interface?

#3 Do you have outside testers? Sometimes our internal team can get blinders. Go out and find people unfamiliar with the product and pay careful attention to their feedback.

Bad fit for the product: This will naturally happen in almost any business. If you know your ICP, make sure your messaging is clearly aligned to them and make sure you are asking people’s industries, roles etc. on intake so if you see you are getting a larger portion of bad fit leads, you can solve for this.

Product Fatigue: You have customers that got some good results, but 6+ months later they become inactive and then they churn.

Many brands do nothing in terms of messaging to inactives, and those that do it’s often just a “see all these great things you can be doing!”. But the reality is that the effort required right now is outweighing their benefit.

So one thought is to have a DFY (Done-for-you) service. Imagine that 10% of people who leave because of product fatigue would happily pay you good money for someone else to do it for them. Remember this cohort knows the value of the product, just struggles with the time input. This could be a great revenue booster.

Another idea if you have high churn due to product fatigue is to make sure you have a product option with less time commitment. Downselling an account but retaining them is certainly better than a full churn.

Sometimes it can be as simple as automating a few weekly components that formerly were manual to keep people engaged.

Emergent Issue: This is where good offboarding is important. If you have a form where you ask why people are leaving, you can try and learn if there is an emergent issue. For instance, we asked people leaving during COVID about why they were leaving and found many physical businesses were trimming tech when their doors were closed. In these cases we gave them 3-months of free access, and then unlimited pause until they were ready to start again.

People who have a financial crisis or lose a key employee, might still like the platform and just not have the bandwidth. Make sure you have pause account options, as 4-10% (depending on the industry) will opt to take this. You can even charge $10-20/m just to hold their data (think 10% or less of monthly sub cost)

Customer Support: Your support matters more than you think. One really frustrating issue that gets met with an emotionless “Here is a support article” and you could lose your customer. 

A few ideas here to optimize CS churn…

#1 Reward first touch resolution. The absolute best outcome for a customer reaching out is for you to fix their problem on the first outreach. I remember once being frustrated that simple issues kept getting bogged down, so I walked 1 minute over to tech support, asked a friend about an issue and got a resolution for a customer in under 5 min that normally would of taken 2 days, running the ticket through a queue and on and on. Not to say you should have a rogue hand-off system with no protocols, but built a process where reps are highly incentivized to solve on first touch.

#2 Don’t rate CS reps based on time on call speed: Many CS teams are rated on how many calls they take and thus are pushed to grind through calls. Zappos saw that and thought, “lets reverse that” and reward reps who spend longer on calls to fix issues. Happy customer accounts grow and don’t churn. 

#3 Make sure your reps are synthesizing: One thing that really annoys customers and is highly pervasive in the CS world is just knowledgebase or support doc article dumping. Your rep should learn about their issue, and then grab the key parts of a KB article if needed and provide those. Don’t make a customer shift through 10 pages. Help them solve the issue. This is really just a training and management issue.