10 Common Reasons Customers Churn – and What to Do About It
While the best parts of working with customers involve forging strong relationships and engagement strategies, there is one downside to the role: customer churn. As hard as you work, there will inevitably be customers who churn throughout your tenure as a CSM.
While some of the reasons customers churn aren’t directly related to your guidance or even the product itself, there are often small things CSMs can do every day to prevent customer churn in small yet impactful ways.
Why do customers churn?
Here are ten common reasons customers can churn:
1. Price: by far, one of the most common reasons customers churn is price. Asking customers to pay top dollar for a product – especially if they aren’t experiencing the value to make it worth it – can be a stretch and quickly wear thin with decision-makers.
2. Product: many times, customers purchase a product based on what it can do (or may be able to do in the future) to make their lives easier. If this product isn’t living up to expectations, or if promised features aren’t being delivered, the customer will churn.
3. Competition: if you’re a SaaS organization, there will always be someone out there delivering the same thing to customers like you. If the competition becomes too appealing, there is often little you can do to pull a customer back in.
4. State of business: sometimes, factors at play internally make it impossible for a customer to continue their vendor relationships. However, this reason cuts just as deep as some of the others.
5. Lack of value: a wide swath of reasons for customer churn falls under ‘lack of value,’ which, at its core, means that a customer just isn’t seeing the promised outcomes from your solution.
6. Access to leadership: this reason for customer churn has become even more common in recent months as more teams are working virtually. If a customer does not feel like they are the most valued customer at your organization (and often this comes through direct access to leadership), they will often find a vendor who can provide this access.
7. Poor experience: this is one reason customers churn directly relates to their CSM, onboarding, and implementation experiences. If a customer cites poor experience as their reason for churn, it may be time to re-think your internal customer success strategies.
8. Need: sometimes, a customer may find they don’t require your product or services any longer. In this case, it’s helpful to pivot your solution to meet their needs for long-term partnerships better.
9. No ownership: whether due to turnover or re-organization, or lack of attention, if a vendor partnership doesn’t have an internal owner at a customer organization, no one can push for a renewal or extension in a contract. In this scenario, the contact will often go dark.
10. Customer fit: as a SaaS vendor organization, it is also your responsibility to ‘grade’ customers based on their fit within your book of business. If a customer just doesn’t fit your profile (or solutions, scope, etc.), it is okay to ‘churn’ them from your customer base.
What can you do about it?
First and foremost, CSMs can prevent customer churn by constantly being on the lookout for warning signals and being diligent about proactive engagement. When customers do churn, do diligent follow-up and ask questions to understand better why this termination is occurring.
By tracking why customers churn over time, your team can identify themes and repeating issues that may be contributing to customers leaving. Knowing why churn is happening and what your team can do about it can help CSMs be more proactive to prevent it.
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