It’s a Tuesday morning. You’ve grabbed your coffee and opened up your inbox. The first subject line you see is “Cancellation.” It’s from one of your top accounts.
[Cue the shoulder slump and exasperated “ugh”]
Once the initial frustration wears off, your mind begins to play back all your interactions with the customer.
Are you surprised they churned?
Oftentimes, not. There are patterns and universal reasons for cancellations. If you don’t have a process for identifying them before the dreaded cancellation email and taking a proactive, systematic approach – then this is the place to start.
Step 1 | Do Your Homework
If you haven’t already, pull as much historical churn data as possible. Go to school on why customers left in the past. Don’t stop at just one reason per account, attempt to find all factors that contributed to their cancellation. Make a master list, and boil it down to the top 7-9 reasons customers leave.
Common / cross industry examples are things like:
- Primary point of contact / champion / contract signer leaves
- Aren’t seeing the value in the product
- Not an ideal customer – product fit
- Client company sells or gains a new primary investor partner
- Economic downturn – nationally / industry / individual client
Step 2 | Identify At-Risk Indicators
We have a phrase at Blind Zebra – “you know before you know.” That’s especially true in the world of customer success.
Now that you have a list of cancellation causes, it’s time to take it a step further. Look for the red flags that pop up that alert you that one of your churn reasons is on the horizon. These are your At-Risk Indicators.
Things like:
- Less timely payments (slow pay or overdue accounts)
- Declining or sudden drops in usage
- LinkedIn notification that your primary contact has a new job
- Industry news predicting detrimental market changes or funding news
- Slow or no onboarding
Step 3 | Develop an At Risk Process
So, now you have your At-Risk Indicators. How do you put them into action to help prevent churn?
If you have a CS platform, these lists will begin to inform your client health scores. If you don’t have a CS platform, you can create your own mechanism for “At- Risk.”
A quick play-by-play on an At-Risk Mechanism could look like this:
- Define churn reasons & signs. Get specific but don’t overthink it. You should have no more than 7 – 9 “At-Risk Indicators.”
- Train the CS org on all At-Risk Indicators. They should now be diligently and proactively looking for these warning signs.
- Create a repository to capture At-Risk Indicators as they pop up. Each CSM tracks the date an account is added, the account name and MRR. When they see a warning sign, they select an At-Risk Indicator from a drop down of defined reasons. This can be done using your CS platform. If your company doesn’t have a platform, a simple spreadsheet will do the trick.
- The final part is an ACTION step. The CSM defines their plan of proactive action to address the potential churn risk.
- Set a standing team meeting (some teams have called this the “least exciting meeting of the week”) to go over the list of at-risk customers on a regular basis. The spirit of the meeting is shared accountability and brainstorming around best ways to help clients through challenges that may otherwise lead to churn. Accounts stay on the list until the red flag is resolved or they churn.
- Track the results, update the process, rinse + repeat.
This is not a foolproof guide to eliminating all churn. Some accounts will still churn. Some should churn (a topic for another day). But, we’re positive that employing a proactive at-risk strategy will prevent losing some accounts that would have churned.