Tag Archives: Churn

Are Your Early Warning Signs Early Enough?

19 Jun

Good Customer Success teams are analyzing data in order to understand the characteristics of their customers.

Great Customer Success teams are analyzing the right data in order to understand the characteristics of their customers.

Nowhere is analyzing the right data more critical than in understanding the early warning signs of at-risk customers.  In generating awareness for this Thursday night’s CSM Forum Event: Detecting the At-Risk Customer Relationship, Mikael Blaisdell points out in his most recent blog post the one certainty behind at risk customers: “A customer that is not getting the desired level of measurable value out of their relationship with your company is one that is surely headed for the exit door.”  I couldn’t agree more… or sooner.

In my last post, I indicated that the primary objective for a CSM organization should be to ensure that a customer is getting value from the implementation of your company’s solution.  The CSM organization, whether highly personal, highly leveraged, or highly automated, needs to know which customers are at risk due to a lack of demonstrated value.  Most organizations try to identify indicators of risk.

Generic Indicators: The Lowest Common Denominator

There’s one great thing about generic indicators of risk, such as system login/usage trends, support cases opened, and NPS values:  Everyone can relate to them.  There is almost always a correlation between one ore more of these factors and the level of churn risk associated with a customer, so everyone knows that they’re relevant.  The problem with most of these indicators, however, is that they don’t always provide you with an early enough warning to allow you to take action that will save the customer, and in some cases, there isn’t even a cause/effect relationship between these criteria and churn.  By the time most of this data is available, the customer knows they have a problem, and in some cases (like NPS) the customer has already gotten to the point of communicating it to you.  In the case of usage metrics, I recently spoke with an executive who came from a financial services company.  She told me they initially looked at usage data to determine which customers were at risk; however when they dug deeper and looked at the process that customers who defected went through, it was clear that by the time usage had declined, the customer had already run a month in parallel on a competitor’s solution and had already migrated off of theirs.  Horse gone …no need to close the barn door.

Getting Beyond the Generic and Going Upstream

Really understanding whether a customer is getting measurable value from your solution requires that you look at indicators that are specific to you and to them.  Think about your key selling points.  Establish a Value Roadmap that you plan out with your customers and help them measure progress on a regular basis.  This can be done with CSMs in a high touch environment or with system metrics and drip campaigns for low touch / high volume customer relationships.  For example, if you offer a digital marketing solution, help your customers benchmark their existing conversion rates, then set goals and objectives for improvement and measure progress against those goals.  If they aren’t achieving those objectives, then get out ahead of the problem.  Do what you can to make them successful on your solution.  Especially in the case of low-touch / high-volume deployment models (think B2C SaaS), great products will have relevant metrics reporting and prescriptive recommendations built in.  Your offering shouldn’t just be about creating a technical solution to a problem, it should be about helping your customers get better at solving that problem with your offering. Keep in mind that your full “offering” includes product, services, and additional company interactions.  Think about applying marketing automation principles for your installed base where the overt goal isn’t conversion, but successful use of your solution.

Also look at other data you have that might either indicate or result in a poor customer experience:

  • Have you had any recent system performance issues? If so, which customers were logged on at the time?
  • Have any of your key customers recently started following or connecting to your competitors on social media?
  • Are they not engaging with your drip customer marketing campaigns even though you’re sending them relevant content?
  • Are they not implementing the recommendations your team or the system has been providing on how to be more effective with your solution?

Are Generic Indicators Useless?

No.  Absolutely not.  And in many cases, they can still be useful as early warning indicators, especially in combination with other indicators.  Every company, however, is going to need to take a good, hard, honest look at their own data to really understand which elements are early indicators – in their world – and which elements are simply correlated, but might be able to provide them insight on the trajectory of the customer relationship once they’ve been identified as “at risk” and a plan of action is put in place.

What early warning signs have you identified that are specific to your business and how have you used them to: 1) address the existing at-risk customers in the short term; and 2) and put a proactive plan of action into place to keep those issues from affecting other customers in the future?

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