We recently discussed reasons why churn happens, and how to deal with it when your business is based on recurring payments from customers. But we only focused on mistakes you might make that cause customers to leave. Sometimes churn is due to events outside your control.
So, this time we’re looking at external causes of churn, and what you can do to tackle them. This is based on how we’ve learned to deal with churn at CANDDi.
1. Your key contact leaves the company
It’s great to have a strong relationship with someone at each of your customer companies. They can be real advocates for what you offer, making sure your product is successfully deployed and makes a real impact.
However, that person will probably leave at some point. Then what? Sometimes they don’t hand over responsibility for use of your product to someone else at the company. And without that strong advocate, your product can quickly stray into ‘Why do we have this? Let’s cancel it’ territory.
SOLUTION: Your product can’t just be something one person at a company likes using. For it to be truly invaluable, it needs to be woven into your client’s business practices. It may be up to them to do that, but it’s up to you to make sure they know how important it is if they want to make the most of their subscription. Think about what you could do to help them achieve that.
Making your product an essential part of your client’s workflow, used by multiple people, should be an essential part of your early relationship with them.
2. They change their business processes
Even if a company has your product tightly integrated into the way it works, things won’t necessarily stay that way if they review their business processes. Your product is likely to be just one of many factors they have to consider, and it may get lost in the shuffle.
SOLUTION: Keep in regular contact with your clients and make sure you ask about anything on the horizon that might impact on how they use your product. If you know a change is coming, you can make sure you’ve put your best case forward to why they should continue to use it, or explained how they can use it differently.
3. The business is acquired
Building on the point above, if a company is acquired, there’s often a process of consolidation, where the new parent company’s processes and systems are adopted by its new purchase. If the parent company is using one of your rivals, or simply doesn’t see the value you bring, it’s going to be difficult not to lose your client. You might be able to sell into the parent company at some point, but that’s unlikely to be possible immediately.
SOLUTION: What seems like a hopeless situation shouldn’t bring you down too much. It’s a great opportunity to find out why they decided to drop you. What do they like about the products and systems they use instead? What functionality will they miss from your product? Is price a factor? All of this can be useful in assessing how to address churn in the future, and stop it happening in the first place.
4. They don’t see the point of your product
As mentioned above, not having your product deeply integrated into your clients’ processes and workflows is a recipe for churn. Even if you’ve done the best possible job at onboarding them, things can slip over time.
SOLUTION: Make a point of checking each client’s usage over time. Assuming you have an online element to your product, you can check their usage. Is it stable or increasing? Or has it declined? You should contact any customer with a clearly declining usage pattern and see how you can reverse the trend.
It may seem attractive to have inactive users continuing to pay you, but at some point they’re going to realize the mistake, and it’s surely better to have active users who advocate for your product.
5. They’re unhappy with your product
Sometimes you might find customers churn because they dislike aspects of what your product does – and they may never think to tell you about them. Maybe due to the way billing works internally, they’ll continue to pay for your product for now, but those problems will eventually lead to churn.
SOLUTION: Make sure you maintain a dialogue with each of your customers. Don’t just try to upsell them; make sure they’re happy with what they already buy from you, and listen carefully to any complaints or suggestions. You might identify issues you never considered and that can be easily remedied, or that you can add to your product roadmap for future development.