Question for an interview: Losing low ARR customers

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Laura Vautour
Laura Vautour Member Posts: 5 Seeker
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edited October 2023 in CS Org Conversations

Hello, I'm interviewing for an individual contributor position / Senior Customer Success. They shared with me that their main issue is that they are losing low dollar value customers who of course are not getting as much attention as larger value customers. What creative things have you done/implemented to address this issue? Anything you did that was not effective? 

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  • Jay Nathan
    Jay Nathan Member Posts: 108 Expert
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    edited July 2020
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  • Ben Winn
    Ben Winn Member Posts: 13 Thought Leader
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    edited July 2020
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    @Laura Vautour  Here's what a friend of mine's company did in a similar situation that might help:

    • CSM time-tracking to determine which accounts CSMs were spending their time on
    • Wanted to have CSMs devoting more time to higher-value clients, so they were super direct with their lower dollar value customers
    • They basically said, "Look, we love having you as a customer and we want to keep you, but we have limited Customer Success resources, and can't continue giving you the same level of service, so we can either offer you X pricing with only customer support, but no customer success, or if you'd like, you can buy into Y or Z packages that come with varying degrees of customer success support.
    • This was all presented as a collaborative effort to make sure the customer got a level of support they were happy with, and it was very fluid. Options weren't presented as rigid/set in stone. It was very "this is the plan we'd like to propose as a potential solution - do you feel it would address your concerns?"
    • End result was that they lost a few customers, but most stayed on very happily either at a reduced contract value (with no CS) or they paid a bit more and got access to dedicated CS, which made it worth it for the company to staff appropriately.

    Transparent conversations with customers is always a good strategy! :) 

  • Shaun Porcar
    Shaun Porcar Member, CS Leader Posts: 19 Thought Leader
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    edited July 2020
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    Have you been able to determine the root cause of this churn? I'd want to know what their CSM's are providing or discussing with all of the additional time the larger customers are receiving. 

    Is there some complexity that requires further training and support? Are there certain tasks or functions required to drive the outcomes their customers are looking for that smaller teams just don't have enough resources to fully leverage? Is the ROI difficult to determine or justify for a smaller company who is perhaps spending a proportionately higher percentage of gross sales on the cost of product?

    Knowing this would be helpful to develop solutions that are more contextual. Then I'd work backward to determine what parts of that large customer experience can be scaled — perhaps some automated personalization to the communications, resources that can be consumed asynchronously, additional signaling in the product that can help reinforce value or nudge adoption.

     

  • Matthew Ferguson
    Matthew Ferguson Member Posts: 7 Contributor
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    edited July 2020
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    Hi Laura, @Laura Vautour 

    This is a difficult one to navigate without calling into question the company's business model and pricing structure! A few thoughts below on what they might be looking for:

    • Considering a Support function (through tools like Zendesk and Intercom). Directing all low value clients to this tool would enable them to get a quick response to their questions and give them the feeling of being valued while possibly saving your company money in hiring CSMs.
    • Conducting interviews with lapsed clients to confirm the theory of churn. It's possible the real issue could be something other than support versus value.
    • Offering to work with Sales on being involved in prospect conversations in levels and types of support. A polite way of asking whether there is any overpromising at the prospect stage.
    • Understanding each clients' "definition of success". We had two clients buying the same product at a similar level of spend, but how they wanted to use them was very different. One was usage-heavy (and wanted to run data and reports) and one was insight-heavy (and just wanted to know what actions they should take). The amount of time a CSM spent on them was the same, but knowing this upfront meant the work we were doing was valued by them.

    Best of luck with the interview.

    Fergie

  • Michael Clark
    Michael Clark Member Posts: 2 Navigator
    edited July 2020
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    Shaun is right...getting to the root cause is important.  If that isn't clear, for this segment, are you able to employ any tech touch communication strategies, such that the long tail of the client segment still receives high quality, relevant communications that are a bit more scalable?  The point would be, as a CSM, you're thinking about your clients in groups such as industry segment, product use case, self/full service, etc.  Think webinars, customer forums, geographical-based client events (vs a lot of Success-driven 1:1 client meetings, etc.)  

    The customer data you have available to you will play a role in the types of communications you can automate.  (ie, unpaid invoices, product updates, client sat/NPS requests, triggers when product usage or individual users' tool use drops, etc.  

    The hope of this approach is that the client continues to receive value from your offering, knows that they are important to you, and is well informed about how your company is trying to improve their client experience.  If you can do this in a scaled way, that could alleviate some of the churn. 

  • Jarren Pinchuck
    Jarren Pinchuck Member Posts: 38 Expert
    edited July 2020
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    Hi Laura,

    I wonder if this is a fictitious question to assess your skills or if it is a reality for the company. If it's the latter, I hope they aren't taking all these ideas from candidates because they've run out of ideas themselves? Let's be positive and assume it's with good intentions...

    I don't think this question lies fully in the hands of Customer Success or CSMs. Yes, CSMs can play a big role in preventing churn but if there is a pattern of churn with lower ARR customers, how does that directly correlate to lack of attention? Not all customers need the same amounts of attention (regardless of their worth to the business).

    Often the product or business may have outgrown those customers and they may not fit directly into their market fit. No business wants to lose customers but it comes down to practicality and if you're losing a bunch of customers, all for the same reason I'd look deeper at either the product or even the price model.

    The beauty of CS is that it involves so many stakeholders so you could have a very interesting discussion with them around this point.

    If they were 100% sure the increase churn was due to decreased touch points then it might be worth discussing "tech touch" options. Often tech touch can be automated and made to look like it's come from an actual CSM. An example would be, if a customer triggers a certain metric or usage of product you could send an email or even in-app message, from the CSM to congratulate the customer. If done in a smart and calculated way it could help improve the churn without putting in more CSM time for those lower value customers.

     

  • Matt Myszkowski
    Matt Myszkowski Member Posts: 143 Expert
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    edited July 2020
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    Some strong advice above @Laura Vautour 

    One thing else to consider - has the company got their segmentation model right (if indeed they have)? If expansion from smaller  ($$) customers is critical, then I would explore making amendments to the segmentation model & CSM assignment.

    By default we seem to always put our CSMs towards our highest revenue generating customers but if your business model is based around growing those smaller customers think creatively around the assignments & CSM:customer ratios.

  • Laura Vautour
    Laura Vautour Member Posts: 5 Seeker
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    edited July 2020
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    Wow, this is so incredibly helpful, I thank everyone for taking time out of your day to give your thoughts. So many good points, that are really helping me to clarify my initial thoughts. 

    I think an important thing for low ARR customers is to provide the opportunity for ongoing community, so they feel a part of something even when they do not hear from the company daily/weekly. Having that group of people using a similar service in and of itself builds loyalty when done right.