DIAGNOSING CHURN
Customer Success professionals
know how important it is to
diagnose churn. Their daily job
is to find at-risk customers and
help get them back on track.
WE CAN HELP
What are the
best ways to
measure churn?
What causes
churn and what
can you do to
increase retention?
GAIN
SIGHT
Companies with a dedicated
Customer Success team see a 24%
lower churn rate than companies
without Customer Success.
24%
MONITORING CHURN
How should you track churn?
Every company manages
churn differently. Pick a few
measurements that make
sense at the board and
executive level and start
monitoring what’s happening
to your customer base.
6%
Customer
Cohorts
23%
Revenue
Only
26%
The majority of recurring
revenue businesses track churn by
both revenue and customers.
Customer
Only
45%
Revenue
& Customer
Companies that only track churn
by the number of companies lost
in a given time period will have
an incomplete picture of churn.
The best companies monitor churn
by revenue, user count, type and size
of company, and the duration of the
customer relationship.
WHAT TO INCLUDE IN YOUR CHURN CALCULATION:
58%
59%
Up-Sells
Cross-Sells
66%
63%
62%
Upgrades
Downgrades Down-sells
Most companies consider these “customer health” measurements when calculating
customer churn. Down-sells (how frequently your customers pay less for the exact same
product) are the most common. Tracking the growth from up-sells and cross-sells is
equally important - existing customers can often exceed the growth from new customers.
What are the most effective
ways to reduce customer churn?
REDUCING CHURN
IDENTIFY: Identify at-risk customers early
1
“The recurring revenue and
services market is extremely
competitive - multiple
product offerings allow for
easy switching.”
Early identification of at-risk
customers will give you the
opportunity to save them.
Apply technology to
increase efficiency and
automate the manual process.
MEASURE: Measure product usage and adoption
2
U
A
Make sure customers move up
the adoption curve and alert your
team when feature usage is low.
ANALYZE: Thorough analysis of churned customers
3
“Some customers lack
visibility into the value
of their investment.”
Unless you understand why
customers churn, it will be
difficult to focus on what to
change in order to increase
retention.
Have an honest conversation with lost customers
and study their usage patterns to identify factors
that increase the likelihood of churn.
SURVEY: Survey existing customers to find problems
4
Top 8 Causes of Churn
Expectations not met
No longer need product
Seek lower cost alternative
Poor service/support
Choose competitor
Champion leaves company
Cutbacks or out of business
Lost through acquisition
Notes:
39% say the #1 reason for
churn is not meeting expectations
5
SHARE: Share customer risk info across company
ONLY
34%
can calculate
customer churn
for ALL time periods
Compare churn
calculations to
forecasts and make
sure you’re on track.
What period of time do companies
use when calculating churn?
90%
81%
76%
45%
39%
Annually
Quarterly
Monthly
Weekly
Daily
MEASURING SUCCESS
Who keeps track of churn?
The goal of a Customer Success organization is to deliver value to your customer base.
The objectives you measure should be specific
to the pain your company is facing (retention,
loyalty, churn, revenue protection, customer
engagement, etc). Every company has different
Customer Success needs based on their
history, growth stage, philosophy, and prior
investments in Customer Success.
41%
Customer
Retention
26%
Customer
Loyalty
4%
Revenue
Protection
What term should
you use to describe
customer success?
18%
Customer
Churn
11%
Retention
Rate
WHAT ARE YOU TELLING ME?
The two least compelling
Compare
churn
benefits
of a reduced
churncalculations
rate are increased
to
customer
loyalty
(13%)
forecasts
and make
and a growing reference
sure
you’re
on
track.
pool (8%).
Reducing churn will:
- Increase the recurring revenue per
customer
- Maximize customer lifetime value
- Increase the return on customer
acquisition costs
- Strengthen customer loyalty
- Build your reference pool
86%
of companies with a Customer Success
team consider "Increased Recurring
Revenue per Customer" as a Top 3
benefit of reduced churn.
[email protected]
+1 888 623 8562
facebook.com/gainsight
twitter.com/gainsightHQ
SOURCE: “Impact of Customer Churn: A Research Survey Conducted by Gainsight.” Q3 2013. © GAINSIGHT INC. ALL RIGHTS RESERVED.