The Ins and Outs of Churn Analysis

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    More About Customer Churn Prediction

    Experiencing churn is a painful ordeal. No business likes to bleed money, let alone the challenges that come with investigating the causes. Unfortunately, customers will always churn, especially in SaaS where it can come out of the blue with just a few clicks. That’s why Churn Analysis needs to be taken seriously today. Let’s learn about what is churn analysis, and how this can be done in the best way possible.

    No business today is immune to churn. But understanding what causes it can help post-sales groups, product teams, and business executives create more effective strategies and introduce changes to boost retention.

    What is Customer Churn?

    Customer churn, also known as customer attrition, is a metric that lets you know how much business you have lost in a specific period of time. Lost business includes customers who have dropped out while onboarding and also existing customers who have not renewed their paid plan. 

    Businesses need to invest 5 times more to acquire new customers than to retain them today. This is why post sales pros, especially customer success teams, are now playing a huge role in minimizing churn rates and improving bottom lines. Frustrating onboarding, usage friction, and lack of customer advocacy are all major churn contributors that are now being looked at closely by CS leaders and CSMs.

    Why Do Customers Churn?

    Here are some common churn accelerators.

    1. Customers aren’t reaching the “Aha!” moments 

    Customers today want quick results. 

    They sign up for your service and engage with your business to reach their desired outcomes as fast as possible. This requires a strong post-sales cycle that eliminates friction and demonstrates value quickly. If customers fail to achieve this, they’ll probably churn sooner or later. Strong adoption and engagement requires a proactive customer success strategy that addresses the customer’s needs.

    All businesses today need to create a smooth onboarding process and constantly tweak it based on product usage data and customer relationship insights. A strong focus should be placed on understanding what’s the aha moment and you must then make sure that customers are getting there as soon as possible. For example, it takes just a few clicks to reach your aha moment with Wordtune.


    1. Lackluster Relationship Management

    Customers are living and breathing entities who want their feelings and requirements to be prioritized. Failing to understand relationship hierarchies and failing to develop strong relationships with key stakeholders can create more risk. 

    Relationship management provides real insights into what the customer is trying to gain and if this is being achieved. It can provide intelligence (competitor threats, organizational changes) that is nearly impossible to gather in other ways. 

    Relationships need to be managed in a holistic and methodological manner with goals and KPIs to make sure you are connecting with the right people. Strong relationships, along with demonstrated value, will go beyond churn prevention and can potentially create loyal brand ambassadors. 

    Read More: Customer Relationship Score

    1. Your Competition’s Customer Experience is Getting Better 

    Having a potent post-sales machine and a highly capable product doesn’t guarantee optimal retention with minimal churn. Customers can easily be tempted to join the competition if CS teams fail to read between the lines and uncover customer sentiment blind spots. Sudden churn spikes can lead to lost market share, brand damage on social media, and poor reviews rating – a snowball effect.

    • Regain trust with clear communications and updates 
    • Highlight your selling propositions and differentiators, as well as new features or services
    • Ensure that every customer views your product as an essential part of their business / day to day. 
    • Promptly communicate about glitches and downtimes 
    • Offer promotions and free trials strategically

    Performing Churn Analysis: The Best Practices

    There are no shortcuts when it comes to performing churn analysis and pinpointing the issues that are plaguing your business offering. You need to collect customer journey information, analyze drops in engagement, and analyze their experiences. Once you have this data, you can create a CS playbook to cope with good and bad signals, while also measuring your team’s performance and relationship health. 

    Here are some best practices you should follow to minimize churn:

    1. Demonstrate Value and Ramp Up Fast(er)

    Customers like to get value fast. Your onboarding and customer journey should be planned accordingly. Create quick wins for customers and make them reach their desired milestones faster. Furthermore, you need to get them engaged fast to prevent partial adoption or in-app frustration. Shorten formalities, encourage engagement, and get notified in real-time if the adoption process is in limbo.

    • Plan your customer journey to demonstrate value faster
    • Create quick wins to elevate satisfaction and engagement levels. The faster the user reaches milestones, the better your retention rates will be
    • Prioritize usability and reduce in-app friction. For example, allows quick template changes. But it also allows quick list and task migration
    • Feel the pulse. Check account usage trends. Set up health check meetings
    1. Track Relationships and Connect Better

    Customer accounts are very dynamic. Teams using your product can expand, certain stakeholders can be replaced, while other customers simply start using something else. Every customer success team needs to be at the top of things when it comes to relationship management. Finding the champions and brand advocates is extremely crucial, so is onboarding new customers that may have just hopped on.

    • Relationships with accounts can change with people leaving their positions or get promoted, amongst other things. How are you identifying champions?
    • Keep track of users that are most active and connect with them.
    • Constantly map your accounts and look for potential internal promoters. Once detected, nurture them and give them more attention.
    1. Post-Mortem Your Churned Customers

    First, you’ll need to monitor the relevant metrics – churn rate, health score, sentiment score, and customer lifecycle value for example is a good start. You can then define the number of times you are reaching out to churned customers, including some kind of involvement from your marketing team. Also try to determine if there are geographical, industry-based, or demographic-centric trends with your churn.   

    1. Monitor Engagement and Sentiment in Real Time

    Every post-sales operation should be driven by data-based insights, unlike traditional strategies that hinged more on NPS surveys and direct feedback, both incomplete techniques with inherited disadvantages. More on this later. 

    Feel the pulse and track your customers’ sentiment. Client-vendor engagement and communication patterns should also be monitored, along with product or service usage trends. Promptly react to every key signal. For example, if a customer sent a few discouraging emails and service/product usage has decreased – it’s clear a red flag you must address, even if it’s just a 10% drop that seems insignificant.

    1. Align Internally and Externally

    Align your post-sales team with the main business goal (implement a North Star Metric). Once this is done, your CS team can have more clarity while creating new retention and growth strategies. But internal sync is just the first step.

    Your business needs to track your customer’s roadmaps and growth trajectory on an ongoing basis. Your product needs to take their shifting business goals into account, while also communicating all shortcomings you may have in meeting the new requirements. Even the toughest customers appreciate honesty and transparency. Align the value you are providing with the customer’s expectations.

    Related: Customer Journey Management

    How to Calculate Churn Rate?

    There is no universal way to calculate churn rate, but whatever route you go will probably help your churn analysis efforts. The formula of choice should not be changed too frequently to make your research more accurate and reliable. The same applies to the time period you are taking into account. If you are opting for a monthly calculation, it’s best advised to continue doing so for a while.

    Here are some churn rate analysis calculation methods in use today:

    • The Simple Formula
    • The Adjusted Formula
    • The  Predictive Formula
    • The Up-to-Date Formula

    We highly recommend checking out our detailed blog post about Customer Churn Rates, where all formulas have been explained in more detail, along with industry benchmarks and answers to the most frequently asked questions.

    Read More: Customer Churn Rate

    Staircase AI: Churn Analysis and Prevention

    Churn analysis is a crucial aspect that needs to be taken seriously today. With acquisition costs constantly rising, it’s becoming important to keep churn to a minimum. But doing so requires a proactive approach, where churn analysis is complemented by the identification of underlying churn indicators. Detecting at-risk accounts in real-time can help salvage accounts before they are lost.

    Staircase AI is helping fight churn with its next-gen customer intelligence platform that covers multiple bases to enforce a customer-first approach. Its strong machine learning model breaks down millions of customer interactions and helps digest siloed data from multiple communication channels to create unbiased human signals to track churn indicators that are simply impossible to get to manually. 

    Relationship intelligence is another key benefit, where CSMs can always be one step ahead and create a personalized strategy for different accounts. Unfortunately, churn can’t be nullified. Staircase AI is here to help you learn why and minimize it.

    All in all, Staircase AI is boosting retention and also helping investigate churned customers to elevate post-sales operations and promote growth.

    Discover your churn indicators with Staircase AI