Churn… ya boring. Yawn. Time to move on.
I’m so over talking about churn and if you really understand what Customer Success is all about, you should be, too.
Churn is so easy to get rid of… you just have to do five simple things.
If churn is a problem for you, this post will change that (if you’ll let it) and then you can move onto bigger and better things.
Once churn is a non-issue, you can focus on growth.
Customer Success-driven Growth
Customer Success is a growth driver.
Revenue growth from your existing customers.
Growth in the value of your company.
Real Customer Success is the future of business.
It’s the future of high-growth business.
Customer Success isn’t there to just stop shrinkage or lead to incremental growth.
No… done correctly, Customer Success leads to exponential growth!
I originally gravitated toward Customer Success because at the time this movement started to gain momentum (2011?), it really seemed to align nicely with what I was already focused on: growth from within the existing customer base.
And then I instantly got bogged down with “churn busting.”
After so many years, that stops now! And the first step is…
Busting the Churn Busting Myth
I’m tried of talking about churn and you should be, too.
I’m also very tired of consultants, software vendors, hackers, and hustlers talking about the latest “churn busting” gimmick (and stealing my ideas and content, but that’s for another day).
You don’t need gimmicks to eliminate churn.
You can’t hack churn away.
Solving churn – truly eliminating churn at the source – is so simple I’m going to lay out exactly what you need to do.
And then I’m done talking about it… forever. It’s time to shift gears and exclusively focus on growth.
So, below are my last words on churn forever.
What I’m going to share with you is my “secret” formula for eliminating churn.
If it doesn’t eliminate churn 100%, this formula basically renders churn a non-issue.
Are you ready for this?
The better question is… will you act on what I’m about to tell you?
Why Churn Happens (and How to Eliminate it Forever)
Churn happens for one of two reasons:
- your customer dies (or goes out of business) or
- they just don’t achieve their Desired Outcome.
Customers dying or going out of business you obviously have less control over, though I’ve seen some customers go out of business and remain customers, so some of you can take that excuse off the table, too.
But the other reason – customers not achieving their Desired Outcome – you have SO much control over that it’s insane if you fail to recognize this amazing opportunity.
But how do you take control over churn and make it a non-issue?
First you have to realize that churn is just a symptom of an underlying disease, and second you have to cure that underlying disease so the symptom of churn goes away.
When it comes to churn, too many companies simply treat the symptom and not the root cause, which results in symptoms either continuing or, usually, getting worse.
Sometimes much worse.
If you want to solve Churn once and for all, fix these…
Five Reasons Customers Don’t Achieve their Desired Outcome
The underlying reasons customers don’t achieve their Desired Outcome are:
1. You have Bad-fit Customers
Perhaps you have a lot of bad-fit customers, even more in the pipeline, and even more you’re currently paying to get in front of via SDRs or Marketing campaigns.
As long as you keep bringing in customers that don’t have Success Potential, your churn will reflect this poor business decision.
To fix this, you need to first identify what a Bad-fit Customer is – what their characteristics are that would indicate they won’t be successful; use my framework to create your own checklist – and then communicate this to Sales and Marketing to stop the flow of customers without Success Potential. And keep communicating this as it evolves.
Now, some people will take what I’m saying here as “sell to fewer customers” which is complete bullshit. They only hear what they want to hear.
I’ve never said anything about acquiring fewer customers… and I wouldn’t say that. I’m all about growth.
I want you to sell more. Sell all you can. Beat your quotas. Reach for the stars.
Just do it by selling to good-fit customers that have Success Potential. Why is that so hard to understand?
If the only way you can hit your numbers is to bring in customers that are a bad-fit, you have some serious problems with your business and I won’t help you.
2. You have a Broken or Incomplete Product or Service
Dude, fix your product… WTF? Seriously.
If your product development roadmap is emphasizing shiny new features over fixing or adding things that will make your existing customers – or those new customers you’re trying to attract with the shiny new features – successful, you’re doing it wrong.
I don’t know what else to say on this. It’s SO obvious.
But I encounter this ALL THE TIME.
And most companies blame their customer for being stupid or asking too much of them.
If asking for a product to not fail and not cause data corruption or not result in excessive downtime or to not keep the customer from doing their job is asking too much, then…. I won’t help you.
You don’t deserve customers!
3. You are providing an Inappropriate Experience for your Customers
Maybe your product is great. It doesn’t break and it has all the features your customers need. That’s great. You’ve solved for the customer’s Required Outcome.
But there’s another piece to the Desired Outcome puzzle and that is Appropriate Experience (AX).
AX is how your customers need to achieve their Required Outcome to feel successful, and this includes all interactions across the customer’s lifecycle, from the buying process to onboarding, and yes, from within the product, to support, training, Professional Services, and beyond.
If you’re only thinking about the customer’s experience as a user in the product, you’re… doing it wrong.
The lack of an AX is why customers that are otherwise functionally “successful” with a product churn out, stop renewing, or at least fail to increase their investment with your company.
You have to look at the full Desired Outcome of the customer and solve for all of it – Required Outcome AND Appropriate Experience – if you want to make churn a non-issue. I can help you with this.
BTW, this is one reason there’s often a lot of churn in low-revenue customer segments.
Because these customers don’t pay very much, the vendor usually gives them a lesser experience, let’s say all self-service. But the experience that would be appropriate for them is maybe a higher-touch experience. But since they don’t pay very much they don’t “deserve” the higher-touch experience. And since the experience they’re given is inappropriate, they churn.
And then the vendor says “there’s just a lot of churn in that segment.” It’s a vicious cycle.
What the vendors should say is “since we can’t give those customers in that segment an AX in a way that’s economically feasible for us, that customer segment is a Bad-fit and we’re going to stop working them until we can give them the AX that will keep them from churning.” This is a more virtuous cycle.
But they don’t do that… so churn continues and they continue to blame the customer, often further reducing the experience as punishment.
4. You have No Real Understanding of what “Success” is for your Customer
I can’t tell you how many times I start working with a client or just ask this question to a group in a workshop – “what does success look like for your customer?” – and they simply can’t answer that.
These are companies that often have full-blown Customer Success Management organizations or are themselves CSMs that are in my workshop.
Umm… if you don’t know what success is for your customer and you have a Customer Success Management organization, WTF are you doing?
What “success” are you managing? Clearly not your customer’s.
If you don’t know what success is for your customer – what their Desired Outcome or some other measure of success for them if you don’t want to follow my stuff – and you’re doing anything around “Customer Success” or “Customer Experience” … you’re… in need of my help.
5. You Have No Process to Make Customers Successful
Far too many companies don’t know what success for their customers actually looks like, as I talked about above.
But for those that do know what success is for their customers, they very often lack a well-defined process for helping their customer actually achieve that success.
When you acquire good-fit customers, all that means is you’re acquiring customers that have Success Potential.
Potential is the key word there.
Based on what we know about them, they can be successful as our customer. But that’s just potential… it’s not Success Guaranteed.
We need to actually have a process in place to unlock that potential within the customer.
While their Appropriate Experience will dictate to us what that process looks like – it could be 100% self-service or in-product, they do everything and we do nothing, or it could be operationalized, human-power heavy Customer Success Management (or some mix of the two), we need to be able to guide the customer from where they are to where they need to go.
I can help you with this, too.
Churn Isn’t Actually your Problem
Fix those 5 things and churn goes away… it becomes a non-issue. Simple.
Churn is 100% in your control.
You can spend time trying to calculate churn rates, figuring out the difference between logo and revenue churn… like polishing the brass on the Titanic. That’s a nice-looking Spreadsheet, Captain.
You can sign-up for “Churn Busting” courses. Ugh.
You can engage Churn Reduction Consultants selling churn-busting snake oil. Double ugh.
You can hire Retention Specialists to try to keep your customers from churning (generally creating a customer-negative experience and – at best – prolonging the inevitable. At least you got a couple months of extra revenue from them, right? Right??!?!?!?)
Yet churn persists.
Or you could actually fix your shit so you have a legit, strong business upon which to create a growth engine.
Yes, I realize that everything I mentioned might take a lot of work to implement, but that doesn’t make it less accurate or powerful.
Or any less freakin’ transformative.
This is, by the way, where people will try to find hacks or shortcuts… gimmicks or tactics that they can use to bypass all this hard work I just laid out.
That’s understandable, of course, but it doesn’t work. To get the results you desire, you have to put in the work.
I didn’t say I was going to make less work for you, but if you fix those 5 things, you will get the results you’re looking for.
Your “Customer Success Culture” is a LIE
If (any of) those five things I listed are your current truth – and you’re not actively working on fixing those things for real – then you cannot say with any amount of credibility that you have a Customer Success culture.
Customer Success is not in your DNA.
Customer Success is NOT your operating philosophy.
I realize that doesn’t sting as bad as I intended it to, but just know I was trying to be harsh with my words.
I’ve seen companies do quite well – thrive even – with very little operationalized Customer Success Management, but with a culture dedicated to the philosophy that they, as a company, exist in their market simply to ensure customers achieve their Desired Outcome through all of their interactions with them.
Conversely, I’ve seen companies with a very well-defined Customer Success Management operation – processes, systems (including expensive purpose-built CSM software), and talented, driven CSMs – fail miserably and even disband their CSM org entirely because Customer Success was NOT the company’s operating philosophy, there wasn’t buy-in at the highest levels, and the cross-functional cooperation required to make it work wasn’t there.
Living this lie is…
Investing in Failure
If the product is broken or incomplete or if the customers are a Bad-fit, CSMs can help, right?
Sometimes… but that “help” is often short-lived.
In my experience working directly with hundreds of companies around the world (I’ve seen things you can’t even begin to fathom), if those five things I listed above aren’t fixed, your CSM team is setup for failure long-term.
And let’s be clear… that “long-term” might be months. Or less.
But short-term, even if they are able to bridge the gaps in your product or otherwise make customers “happy enough” to stay another month, they’re definitely setup for a lot of stress and disappointment, ultimately affecting morale not just in the CSM org, but company-wide.
This will probably result in high turnover in your CSM org – from leadership to front-line employees – because they cannot work magic to make customers without Success Potential successful or can’t continually keep customers from churning when the product or experience is fundamentally broken.
Companies with a lot of customer churn very often have high employee churn.
Ultimately, I want you to think about this: if your company is investing in Customer Success Management (hiring team members, buying software, creating processes, etc.) but you’re not fixing the five things I listed, then you are investing in an initiative that will absolutely fail to deliver the results you’re looking for.
Whoever approved this investment should be fired because it’s bad business.
But I digress.
These are literally my last words on churn: the secret to eliminating churn once and for all is to fix the stuff that leads to churn in the first place.