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It’s 2023 but customer retention is still a big challenge for B2B businesses. Around 5% of B2B customers churn today, a number that customer success leaders are desperately trying to bring down. But how to reduce customer churn? Read on to understand the main reasons why B2B customers actually churn and learn about the 5 best practices to grow faster.
Most companies, regardless of their size, have been focusing on measuring their Net Revenue Rate (NRR) over the last few years. This is a great thing to do from the business standpoint, but it doesn’t really point to drops in customer sentiment or risks that have freshly appeared in accounts. Businesses can only respond after the damage is done, something that forces them into reactive strategies.
This is why reducing churn, even if it’s not looking bad, is key.
You can only address the problem and reduce customer churn by analyzing it. This action is becoming more and more crucial for business growth today. Analyzing churn impacts not just your ability to prevent it, but also grow from it. Accurate insights can improve your GTM and business strategy, while also better defining and accurately planning your product roadmap to improve customer happiness.
The two things are similar in many ways, but still are different at their cores.
Focusing on your NRR will help you expand happy customer accounts by using various upselling and cross-selling tactics. On the other hand, reducing churn and analyzing it helps prevent unhappy customers from leaving. Furthermore, the latter will also help you push them up the happiness scale and lay the foundation for future expansion. It is safe to say that today, Retention and churn fighting is equally important to new business deals.
Read More: The Ins and Outs of Churn Analysis
Before learning how to reduce customer churn, it’s important to understand why it actually occurs. There are dozens of reasons that create churn, based on specific industries, geolocations, and other factors. But some stand out across all verticals.
Here are the 5 main reasons why customers churn:
Simply put, the customer will churn if the first success takes too long. A disproportionate amount of churn occurs between the acquisition stage and the first success. The gap is often too wide for comfort.
Now that you have a better understanding of what issues are the main causes of customer churn in B2B setups, you can and should start creating your playbook after asking yourself and your team a set of strategic questions.
Once you have the answers to these strategic questions, you are left with the everlasting dilemma – how to reduce customer churn. You can get closer to your goals by integrating the following best practices into your playbook.
Customer success teams simply can’t afford to sit back and wait for #@&% to hit the fan anymore. Relationships within accounts are constantly changing and you need to be on top of things. Set stakeholder KPIs and track them relentlessly. Once you are prepared for organizational changes beforehand, you can make the shift to a proactive approach. For example, you can groom a new champion if needed.
Being proactive is the name of the game again. Learn your competition, conduct conclusive market research, and prepare battle cards before you go to war (literally). Feel the pulse and understand customer pains via customer communications, review websites (G2, Capterra, etc.) social media channels, and surveys. This is the only way to stay ahead of your competition and keep your customers happy.
The idea here is simple. You need to make things straightforward and guide customers to their first aha moment as soon as possible. For example, you can show them previews of what’s to come or a streamline tour of the product’s features. Once the customer can visualize success and experience demonstrated value, the possibility of churn gets left behind in the rear-view mirror.
Furthermore, CSMs have to turn customers’ into strategic product consultants. The discovery part has to be addressed and customer pains need to be uncovered. This is the only way to plan, create, and amplify the aforementioned aha moments.
Customer success teams need to be on top of things also when it comes to creating optimized product experiences. They can do so by tracking customer sentiment in real-time and pinpoint the friction areas to help product teams optimize things. Drops in customer sentiment and other risk signals can then be addressed with cross-department actions, a shift from traditional reactive approaches.
Communication channels are multiplying and CS teams can no longer be selective with their approach to them. A thorough channel mapping and response strategy needs to be in place for best results. CSMs must improve their email responsiveness, while resolving tickets faster without ignoring Slack chats and social media messages. Strive to improve your communication metrics across the board.
While the aforementioned best practices can help your retention efforts significantly, how to reduce customer churn is a question that will still be looming in the background. But the power of AI can now help you almost nullify churn in more than one way – it can help you analyze root causes of churn, detect risk factors (relationship changes, sentiment drops), and be more proactive in general.
Staircase AI is a true game changer because it helps you with all of the above. You can manage your account via one centralized dashboard for enhanced visibility. Churn risks are highlighted for quick(er) responses, sentiment levels are monitored 24/7, and you even get a live customer journey map to detect new friction points. Only this kind of end-to-end approach can help you achieve sustainable growth.
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