How to reduce churn and how customer success managers can help you achieve it?
Updated: Apr 5, 2020
Reducing Churn is as important as bringing in new sales to the company.
To achieve growth a SaaS company needs to make sure there is minimum churn.
What is churn?
The churn, also known as the rate of attrition or customer churn, is the rate at which customers stop doing business with an entity. It is most commonly expressed as the percentage of service subscribers who discontinue their subscriptions within a given time period.
In simple words, Churn is when customers stop using your product for whatsoever reason.
For SaaS companies to grow at all times, they need to constantly evolve their product to keep providing value to companies or provide such a great and unique value that the customer is hooked onto it.
Now not all companies are able to provide the latter, so we will focus on the former.
Before we measure customer satisfaction/happiness, we need to define it.
Customer satisfaction is based on how happy your customers are with your product. Their happiness is based on the experience they have with your product.
Customer experience is the sum of your customer’s experience with your brand across all touchpoints on the customer journey, from initial discovery through conversion.
Measures to reduce churn should be from the day when the MVP is ready.
You can do the following things measure customer happiness/satisfaction.
NPS - (Net Promoter Score)
it’s a customer satisfaction metric that helps you find out:
How satisfied consumers are with your products/services;
How loyal they are to your brand;
How likely customers are to recommend your company to others.
You can read more about in one of my articles here.
2. Customer Satisfaction Score (CSAT)
CSAT surveys are ideally sent when you want to see how happy clients are with an action your business took, or certain aspects of your products/services.
It could be after a certain stage in a customer cycle.
Customers usually rate your service on the scale of unsatisfied to satisfied.
They can rate you out of 5 stars or you can keep a scale of 1-5 or 1-10.
CSAT can have multiple questions and the average of these answers would be in percentage to give you the satisfaction score.
3. Customer Effort Score (CES)
It's the amount of effort taken by the customer to interact with your product.
These are more details surverys which are asked after a certain effort has been made your customer to use the product.
For example after they have just ordered something on your website or just reached a milestone while using your product.
Why Customer Success Managers?
These metrics will help you gauge which aspects of your product, service or interaction with the consumer needs to be improved.
The above metrics can only help in identifying certain problems but CSMs can help you gauge even more details.
A few of the problems could be.
1. Is the customer company financially stable?
2. Who is the key user and key sponsor and have their roles changed? Having your power user or your sponsor leave is a big problem, tracking that relationship and their role or position at the company can be a key indicator.
3. How engaged are they in the customer community.
4. Is your product solving all of the customer's problems, CSMs have product knowledge about the customer and can help companies shape the product to avoid churn.
Apart from identifying, CSMs also help you in upselling, the more products the customers use the more value the customer sees and this increases the customer life cycle with your brand and product.
CSMs help clients succeed which eventually helps in renewals as well.
You can read more about what qualities CSM's have and the impact they have on SaaS companies.
You can have two types of CSMs in the company. One to One and One to Many.
One to One is for high-end accounts you give you a lot of business and One to Many are those who can manage multiple smaller accounts at the same time,
Although Customer Success lead the goal of reducing churn it's a collective effort of the team to reduce churn which includes the UI/UX team, product team, marketing team, quality assurance, etc.