If your business is a bucket, you can keep pouring as much water (customers) as you want into it, but if you have a lot of leaks, you’ll never fill the bucket. Without filling the bucket, you’ll never achieve growth.

<ul><li>Customer churn refers to how many individual customers have deleted their accounts, cancelled their subscriptions, or not logged in for X amount of time.</li></ul> <ul><li>Revenue churn focuses on the value of these customers, and measures the monetary loss of the future transactions rather than the loss of relationship.</li></ul>

Customer Churn vs Revenue Churn

<ul><li>Competitors. If a new competitor has appeared in your industry and is making some serious waves, it’s natural to expect a peak in your churn rate as customers shift.</li><li>False advertising/disingenuous marketing. This is why marketing teams deserve a lot of credit for customer retention. Bad marketing leads to churned customers, who may arrive at your product with the wrong expectations.</li><li>Usability/accessibility issues. An interface that isn’t easy to use, appealing to look at, or adaptable for those with special needs, will be dropped like a hot potato.</li></ul>

Identifying The Source of the Churn 1/2

<ul><li>Bloated price point. If the price isn’t justified by the value the product provides, customers will likely search for an alternative.</li><li>Reduced functionality. Did you scrap a feature that you thought no one liked? If you then see floods of users abandoning your product, it’s probably missed!</li><li>Unmet needs. Quite simply, your product doesn’t meet the need or solve the problem the way the customer thought it would.</li><li>Poor customer service. Word of mouth is a powerful thing, and a bad customer service experience can ruin a customer relationship for life.</li></ul>

Identifying The Source of the Churn 2/2

<h3>Damage control</h3>Recovering from a loss of trust is hard, but not impossible. The key is not to shy away from the conflict, but to lean into it. Pretending that the controversy doesn’t exist will only deepen the distrust between you and your customers. <h3>Rewarding loyalty</h3>While many companies focus heavily on providing discounts and freebies to new customers, it’s a grave mistake to ignore your existing customers. They should be rewarded for their loyalty just as much as you reward new customers for taking a chance on you.

How to Reduce Churn 1/2

<h3>Re-brand</h3>While not a step that should be taken lightly, if your product/service is one of the older ones on the market, it could have fallen out of fashion. <a href="https://productschool.com/blog/product-management-2/branding-builders-netflix-vp-product/?utm_source=blog&utm_medium=blog&utm_campaign=WeeklyArticles">Branding is a very powerful thing</a>, and customers are paying attention to design now more than ever! <h3>Talk to your customers</h3>If you’ve ever cancelled a subscription before, you’ve most likely been on the receiving end of a ‘we’re sorry to see you go’ message, along with a short survey about why you’ve decided to cancel.

The first step in getting your churn rates under control is to understand them. Here's everything a Product Manager needs to know...

Customer Success 

What To Do With a High Churn Rate

A company you bought something from months ago sends you an email with three immortal words: “we miss you”.These messages feel icky because the sentiment is belated and insincere. Deep down we know that the business doesn’t really miss us. The business doesn’t know our sparkling personality or understand our unique contribution to the community – the business just misses our money.

We Miss You!

﻿A retention campaign that paints a commercial relationship as a personal one will always be awkward at best and at worst will create ill will. Here are three better ways to create retention campaigns that feel genuine and actually work:<ul><li>Focus on how your product helps</li><li>Identify and solve the problems that caused churn</li><li>Proactively monitor usage and value</li></ul>

A Better Retention Campaign

The mistake at the heart of the “we miss you” message is that it represents the customer’s relationship to the business as personal, not commercial. Personal relationships are based on who we are, and we want them to persist through thick and thin. But commercial relationships are different.To <a href="https://www.intercom.com/blog/customer-engagement/">re-engage customers effectively</a>, you need to remind the customer of what it is that got them there in the first place. Instead of guilting them into returning simply because they bought from you once, remind them of the benefits that your business can provide.

Focus on how your product helps

Many experiences can cause churn: inability to find the right product, <a href="https://www.intercom.com/blog/product-tours-first-use-onboarding/">struggles to get set up</a>, a poor service experience, or changing business needs. A retention campaign that specifically <a href="https://www.intercom.com/blog/churn-retention-and-reengaging-customers/">addresses the issue that caused churn</a> and provides a simple next step stands a high chance of success, as it speaks to the root cause of the churn.<ul><li>The first step is analyzing customer actions to identify common causes of churn. </li><li>Secondly, design a campaign to specifically address the cause of churn.</li></ul>

Identify and solve the problems that caused churn

Customers generally stop using (or cease to repurchase) products when they don’t get enough value out of your product to justify the price, not out of forgetfulness or disloyalty. To identify customers who might not be getting enough value (and so are candidates to churn), look for the ones who aren’t using the functionality that they’re paying for.The trick to doing this well is <a href="https://www.intercom.com/blog/understanding-your-aha-moments-and-putting-them-to-work/">measuring behaviour that corresponds to a customer getting value</a>. For consumer products, the value will be tied to usage. But ensure you set a threshold that avoids counting logins or app opens alone.

Proactively monitor and manage value

Understanding why each customer is buying your product and then measuring whether they’re taking the actions that would enable them to achieve that result enable you to deliver specific and personalized interventions. If your company has an account management team, this scorecard can form the basis for high-impact business reviews with customers.

The Bottomline

How often do you get an email from some company you once used with the words “we miss you”? Here are 3 better approaches to user retention.

Stashed ideas

Don’t tell me you miss me: 3 better approaches to user retention

To effectively improve retention, companies need to have a defined process in place to manage renewals. Your team will be more efficient in their day-to-day and ensure that nothing slips through the cracks when renewal time comes along. Additionally, it will also allow them to deliver a more consistent and positive customer experience for your customers.

Retaining customers: The purpose behind the process 

The first step of establishing a renewal process is defining the leading indicators of risk within your customer base. They could include:<ul><li>Change of an executive sponsor</li><li>The number of support tickets opened</li><li>A drop in usage of your product or key features</li><li>Negative survey responses or low NPS/CSAT</li><li>Missed onboarding, adoption, or lifecycle milestones</li><li>Lack of perceived value by your customer. </li><li>Lack of visibility or missing indicators that can escalate the possible churn of a customer.</li></ul>

Determine what at-risk means and how to monitor for it 

You need to define a standardized plan of action or a playbook that enables your team to mitigate risks before a renewal cycle. Playbooks help your team be more proactive in managing renewals and provide step-by-step guidance on the actions your team should take to close the renewal.Playbooks for at-risk and healthy customers help your team build consistency into their workflows, collaborate more effectively with other teams working on the renewal, and ensure that no missed critical steps during the process.

Drive the right actions to close every renewal

The key to driving a lasting and meaningful impact on customer retention metrics is scaling your processes properly. For most companies, this is where CS technology can have the most significant impact. Automated workflows can help your team work more efficiently and engage your customer base throughout the entire customer lifecycle.

Power improved retention at scale 

3 Steps to Creating a Renewal Process and Retention in Your Customer Base | Customer Success and Product Experience Software | Gainsight

Churn can most basically be defined as resources lost in a given period of time. Typically it’s referring to users or revenue lost and is usually represented with either a percentage or dollar amount. For example, if you had a 5% monthly user churn rate, that means each month 5% of your customer base is cancelling. Or if you said you had $2,000 in monthly revenue churn, that means you lost $2,000 in monthly recurring revenue from either customer cancellations or downgrades.

The Definition Of Churn

[Leaving Customers/ Total customers]×100

Calculating Customer Churn: The Formula

<ul><li>User churn is the number of customers you’re losing in a given timeframe (typically per month or year).</li><li>Revenue churn, which is arguably even more important, is the amount of revenue you’re losing in a given time frame due to downgrades or cancellations.</li></ul>

Users And Revenue

Here are a few signs/red flags that you might have a churn problem: <ul><li>Your churn is outpacing new customers.</li><li>LTV is shrinking: The longer your customers stay with you, the higher the lifetime value (LTV) of your average customer should be.</li><li>Your churn rate is above 10%: 5-7% is considered an average churn rate. But when you start getting into double digits, it’s usually a sign that something in your process isn’t working. </li><li>More downgrades than upgrades: If you offer different plans or add-ons for your product, you want to have more customers upgrading than downgrading. </li></ul>

Signs Your Company Has A  Churn Problem

Ask your customers why they are cancelling. Make sure you customize the cancellation reasons in your survey based on your product.After having a cancellation reasons form, you can break down the reasons and segregate the customer feedback. If trying to find out why they are cancelling is the first time you interact with your customer, that’s probably part of the problem. The best time to establish a strong relationship with your customers is during the onboarding/free trial process.

6 Churn Reduction Strategies: Find Out Why Customers Are Cancelling

A great onboarding process helps companies: <ul><li>Give customers the best first experience of the product possible, by guiding them through it.</li><li>Keep customers informed throughout the process with a clear line of communication.</li><li>Enable customers to learn more about how to use the product.</li><li>Find out what works and doesn’t for their customers.</li></ul> Many companies use the tried and tested method of well-timed emails to ensure the onboarding process is smooth.

6 Churn Reduction Strategies: Create A Magnetic Onboarding Process

You can build Customer(or Brand) Loyalty by:<ul><li>Being honest and transparent</li><li>Celebrating your customers, starting with the high-value segment.</li></ul> Someone who just enjoys your product might leave if another company releases a similar product at a lower price. Their main concern is the utility of the product.A brand loyalist, on the other hand, likes your product AND your company. They consume your content, attend your events, brag about you on social media and send referrals.

6 Churn Reduction Strategies: Build Customer Loyalty

To get more clarity, look at your churn by customer segments or cohorts. Customer segments are the different ways you group customers together. It could be by their plan level, location, coupon vs. full price, or any other category.

6 Churn Reduction Strategies: Analyze Churn By Customer Segments

Listening to your customers (and acting on their feedback) directly impacts churn. The problem some companies run into is feedback can come in from all over the place (social media, support desk, personal conversations, etc.) That makes it tough to keep track of. Brands are viewed more favourably by 77% of consumers if they proactively invite and accept feedback. So being intentional about getting feedback and putting it to use can help you retain customers and reduce churn.

6 Churn Reduction Strategies: Listen to your customers

Typically, one of two things happens when your customer’s payment fails: <ul><li>They eventually realize it and make their payment</li><li>They go ghost and you lose out on the money.</li></ul> Even if the customer does update their payment info later, you’re still missing out on revenue. Instant email communication helps, where the goal is to let customers know their payment failed, and get them to update the information.

6 Churn Reduction Strategies: Recover Failed Payments

In this guide, we’re going to go over six strategies to reduce churn, with real-life examples from SaaS companies that have successfully done it.

I spent over a week talking to founders about how they reduce churn in their SaaS business. Here are the strategies they shared!

6 Proven Strategies to Reduce Churn

Retention measures how long your customer stays actively engaged with your product or business. The two key retention metrics are:<ul><li>Core retention: The total number of active users after a specific time period.</li><li>Proxy retention: These are action-based metrics. They are the core actions users need to take to support your model. It is not pure retention but an action that should lead to retention at some time.</li></ul>

Retention Can Make or Break a Business

A product-market fit gives you a sense of how ready your product is for the market. It's a measure of revenue against the payback period and shows the percentage of users who value your product over a period of time. When you have a product-market fit, you can:<ul><li>Scale your company</li><li>Spend money on growth</li><li>Be confident in your financial modelling</li><li>Be confident in your retention models.</li></ul>

Ensure to Have a Product-Market Fit

A cohort is a group of users who experience the product value at about the same time. <ul><li>Look at users for a month. The first month is Month Zero. All the users that experience the product in Month Zero is your cohort.</li><li>Track the behaviour of each key retention metric for that cohort of users.</li></ul>A PM can look at data per cohort to see what numbers improved over time. This can highlight the value within your product that attracts and keeps your users.

How to Develop Measurable Cohorts

The Activation Curve shows the number of users activated over a specific period of time. Many early-stage companies have bad retention at the start. They can get customers in but haven't figured out the mechanics to keep them around. When the metrics start to improve over time, you generally have the concept of product-market fit.

Building a Retention Chart

<ul><li>Have enough tooling to track signups on a cohort basis, such as Google Analytics, Google Analytics 360, Segment, Mixpanel, or Amplitude.</li><li>Know your proxy metric. What action is the user performing? (consuming content, a download, a daily active user?). Your proxy metric will be similar to your main goal metric, such as monthly active subscribers. </li></ul>

How to Built Retention Metrics

Focus on new users and the initial experiences they have with your product. To create a great first impression:<ul><li>Run experiments on user onboarding.</li><li>Personalise your sales process.</li><li>Incorporate feedback loops.</li></ul>Target better users. Look at the channels users come through (targeted and organic). Measure each channel to find your ideal customer. Kill features that don't provide enough core value. Use Firebase experiments to see how a rollout or a build is impacting retention metrics. Change your model or your pricing.

Four Key Factors that Impact Retention

This article looks at the core retention SaaS metrics you’ll need to monitor, along with how to measure and improve those metrics.

What To Do With a High Churn Rate

Don’t tell me you miss me: 3 better approaches to user retention

3 Steps to Creating a Renewal Process and Retention in Your Customer Base | Customer Success and Product Experience Software | Gainsight

6 Proven Strategies to Reduce Churn

Retention Metrics That Matter

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