Churn prevention recommendations

Hi all - interested to hear your experience if you've worked with any "churn prevention" solutions, bonus points if it was a software vendor. Here's the background...

We're building a customer health index from the ground up to 1) introduce a leading indicator to compliment retention, 2) provide my execs with visibility, transparency, and access to the real-time health of our customer base, and 3) highlight opportunities and prevent churn. The ultimate goal is to build and automate the index, but churn prevention has the ROI "punch" needed to get budget.

Given this, does anyone have any solutions to recommend? Thanks!

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Comments

Andreas Knoefel

Hi Dave,

im my unhumble opinion the software is the least influencing factor. I run an annual NRR benchmark survey and can extract what the best-in-class (NRR of 140) are doing different from the remaining 75% (NRR of 87). here is a link to last year's results: https://cstuners.com/2019-cspi-benchmark-survey/

Happy to chat in more detail,
Andreas.

Ed Powers

My recommendation, @Dave Williams, is to keep in mind that churn is an enterprise-wide problem, and if prevention is your goal, churn should be addressed with an enterprise-wide approach:

Collect the reasons why customers leave and why they stay (and buy more). Get this information directly from customers themselves, not from second-hand, internal, biased sources. Get answers from both perspectives to highlight what you must do more of/less of.
Use Pareto analysis. Bucket the reasons into categories and count frequencies of mention, noting most times customers churn for more than one reason. Pareto will show you maldistribution--the critical few have more impact than the trivial many. Chances are product and service issues account for the majority, while relationship (including things Customer Success can affect) and customer (financial trouble, strategic change, bankruptcy, etc.) issues account for the minority.
Estimate the economics. Once you have the percentages, you can easily calculate the ARR, CLTV, and even company valuation impact. All of this builds your business case and gives you credible figures for ROI estimates.
Obtain CEO commitment. Enterprise-wide change must be driven from the top. If the appetite is there, drive a company-wide initiative to make breakthrough improvements. If not, perhaps focus your efforts on what Customer Success can address, tracked by health scores (see below).

I recently did a webinar with ClientSuccess on the topic which you might find interesting. I describe how to plan, execute, and manage breakthrough improvement across the enterprise.

Regarding building customer health scores, I recommend once again you study the problem before you engage a technology provider--it will save you a lot of time and money and avoid false starts:

Assemble a draft dashboard. If you have done Pareto analysis above, you will have clues as to what to put on your spreadsheet in addition to the ones you mention.
Collect data. You will need to collect baseline data in order to study what's happening.
Conduct regression analysis. If your focus is revenue churn/expansion, use multiple regression; if it's logo churn, use logistic regression. These will provide linear equations that are usually between 40-70% predictive of outcomes.
Deploy. Use the coefficients to weight your dashboard metrics and use the predictions for improving your forecasting and conducting "what-if" analysis.

Doing these steps before you automate will accelerate deployment and reduce TTV and costs. You will have narrowed your list of factors, implemented data collection, and improved overall data hygiene along the way, all of which will make implementing CSM tools faster and smoother. Then you can take advantage of their fancier predictive analytics approaches (Random Forest, Boosted Trees, etc.) to increase predictive power to 90% or more.

I have a Udemy course called CSMath: Data-Driven Decision-Making for Customer Success that describes how to do multiple regression and gives an overview of logistic regression and predictive analytics.

I'm also happy to help you with any of these steps--email me at ed@se-partners.com and we can set up a time to chat.

Anita Toth

@Dave Williams Awesome stuff! ? Sounds like you've thought this out. How will you be validating the accuracy of the data?

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Anita Toth
Customer Retention/Churn Consultant
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Original Message:
Sent: 09-10-2020 12:52
From: Dave Williams
Subject: Churn prevention recommendations

@Anita Toth

1) We have a mix including product utilization, customer sentiment, account activity, and external industry trends.
2) The education element would be an executive-level dashboard which highlights the aggregate churn risk present in the renewal base (which they can't see currently) AND demonstrates the opportunity for growth and expansion in healthy accounts.

------------------------------
Dave Williams
VP, Enterprise & Staffing - Emsi
------------------------------

Original Message:
Sent: 09-10-2020 10:33
From: Anita Toth
Subject: Churn prevention recommendations

@Dave Williams Great question.

1) which lead indicators are you considering?
2) in 'highlighting the opportunities' -- do you have an element of education so the exec team can quickly see the value in the data they're seeing and make their decisions more confidently?

I work specifically with CS teams around churn reduction. Given that it's a lagging indicator with so many possible causes, I'm curious if there are additional elements you could add to your CHI to make it even more beneficial to the CS team as well as the exec team. I'm thinking more along the lines adding in the 'why' behind the CHI numbers.

If you're going through all this effort, wouldn't it be great to really impress them with more than just numbers? ??

------------------------------
Anita Toth
Customer Retention/Churn Consultant

Original Message:
Sent: 09-09-2020 12:30
From: Dave Williams
Subject: Churn prevention recommendations

Hi all - interested to hear your experience if you've worked with any "churn prevention" solutions, bonus points if it was a software vendor. Here's the background...

We're building a customer health index from the ground up to 1) introduce a leading indicator to compliment retention, 2) provide my execs with visibility, transparency, and access to the real-time health of our customer base, and 3) highlight opportunities and prevent churn. The ultimate goal is to build and automate the index, but churn prevention has the ROI "punch" needed to get budget.

Given this, does anyone have any solutions to recommend? Thanks!

------------------------------
Dave Williams
VP, Enterprise & Staffing - Emsi
------------------------------

Dave Williams

@Anita Toth

1) We have a mix including product utilization, customer sentiment, account activity, and external industry trends.
2) The education element would be an executive-level dashboard which highlights the aggregate churn risk present in the renewal base (which they can't see currently) AND demonstrates the opportunity for growth and expansion in healthy accounts.

Anita Toth

If you're going through all this effort, wouldn't it be great to really impress them with more than just numbers? ??

Steve Bernstein

Hi Dave -- one of the biggest reasons for churn that we see is due to loss/change of a key champion, exec sponsor, or other key decision maker. We also see that the "people on the ground" that are interfacing with your products/services ("end users") are often forgotten in key decisions and modes of execution. For these reasons, we see that companies that take a "deep and wide" approach to DEMONSTRABLY LISTENING to all the right contacts in the right accounts at the right time are best positioned to prevent churn from happening in the first place. Customer Engagement solutions such as Waypoint's TopBox can automate this process and are purpose-built to measure the breadth and depth of account relationship, including sentiment and "why" across any given portfolio of customer accounts.

Here's an article that explains in detail...
https://waypointgroup.org/stop-chasing-renewals-heres-how-to-keep-customers-engaged-so-renewals-and-more-will-just-come/
It's a "juicy" article so there's lot's of detail on the approach...

And if you want even more detail, including a case story, here's a whitepaper around applying the method to health scoring:
https://waypointgroup.org/whitepapers/silver-bullet-customer-health-scoring/

Does this help? Can I provide more detail, address any concerns or answer any questions?
/Steve