No one likes to be dumped. Whether by a partner or a customer, when the other party leaves you have unanswered questions and doubts. When customers churn, you need to understand and act on what went wrong in order to manage your business.
For SaaS companies, even a small shift in churn rates has a tremendous effect on the bottom line. Unfortunately, it can be challenging and uncomfortable to gather churned customer feedback. Here are three lessons learned on the front lines to help you shift this difficult activity into a critical component of your churn management program.
Conduct interviews rather than surveys
While a survey gathers a lot of information from many people quickly and cheaply, it rarely delivers critical details that can genuinely move the direction of your company. A structured 15-minute phone interview provides enough time for most churned customers to get to the meat of the issue.
During a recent churn analysis for my client, the most valuable information often did not show up in the planned questions 1-4, but rather in question 5 which requested the churned customer’s advice for the executive team. Perhaps it took those first 12 minutes of conversation for the other person to get comfortable enough to provide truly constructive criticism. Another possibility is that the word “advice” opened the door for a more forthright answer. In either case, the discussion itself helped get the churned customers to talk about the deeper issues.
Use an objective third party to conduct the interviews
Once a customer has left, you must be careful how you reach out for their input. Communications need to be genuine and non intrusive. I recommend that the first contact be an email from the CEO, humbly acknowledging the loss and seeking advice. This email also sets the expectation that someone will be reaching out for a short interview on her behalf.
While you can conduct these interviews using internal resources, often marketing or customer success representatives, churned customers are more open and detailed when speaking with an objective third party than a member of the company.
Humans tend to want to be kind. It is hard to call the baby ugly to the parents. However, an outside party does not have an obvious, long-term connection to your company. While bringing in an outside person may not be possible every time, for the sake of collecting honest feedback, it is important to do so at least once in awhile.
Talk to happy customers as well
Once a customer churns, it is obvious that something went awry. More difficult to discern is which of your current happy customers are at risk of churning in the near future. That’s why I recommend you interview them as well. By comparing side-by-side churned and happy customer feedback, you may discover clues to potential trouble spots down the road. Forewarned is forearmed.
While many companies have embraced Net Promoter Scores or other survey tools to gauge customer satisfaction, surprisingly few take the time to regularly gather qualitative feedback from their satisfied customers with an eye towards future churn conditions. Supplement a churn analysis with a similar interview process focused on currently content customers. Figure out what your company is doing well and use that, paired with the churned customer analysis, to identify where to focus resources to improve your retention and, as a direct result, your revenue.
What can you do today?
First, build a voice-of-the-customer model for your business and make a plan for ongoing feedback collection from content customers, churned customers and lost prospects. Second, decide if you can budget for an objective third party and reach out to your network for possible resources. Third, determine what questions will give you actionable information to move your business.
Interested in learning more about how to most effectively interview your churned and happy customers? Drop me a note at karynh@kickstartall.com.
Karyn is a sales and customer success operations strategist who excels at understanding what makes each client unique and using that insight to create strategies for their desired outcomes. Her goal for each client is a strategic vision with an implementation plan that drives measurable results and exceptional success.