How to Prevent Churn


Revenue Management

Last week I wrote extensively about the cardinal rule for churn prevention.


This week let’s talk about a few options companies can take to reduce churn.


The “Put People on It” Approach


In this approach, organization structures are devised, role profiles and job descriptions are identified, people are hired and accounts are assigned.


Corporate goals and individual objectives are outlined and the company works diligently (or not as the case may be) to achieve its desired outcomes.


In companies where the culture places a high regard for its customers, people work hard to fulfill every and any request a customer may have to ensure successful adoption of the product.


In this scenario, the company acts with a high degree of responsiveness and flexibility through direct interactions with its customers.


If the vendor is well organized and uses the insights gained through these interactions to improve its product(s) and operations, and is nimble enough to execute change, then this is an effective way to learn from, and adapt to, customer’s needs.


I like this approach for start-ups or piloting new initiatives, but the problem is it is not scalable.


The interactions also tend to be reactive as the vendor is responding to customer requests and customers are trained to expect a high degree of service assistance in the use of the product.


The “Random Acts of Customer Success” Approach


Like the “Put People on It” approach, the “Random Acts of Customer Success” approach has the defined organizational structure, corporate objectives, role profiles and account assignments in place.


In this scenario, companies have also identified that growth through increased customer retention and account expansion is critical and have thus decided they need Customer Success.


Looking to create a more disciplined approach to driving customer success, the company establishes a playbook of Customer Success best practices for a more concerted effort around managing the renewal cycle.


Account data and systems are used to track and manage where the customer is in their subscription period and understand how much of the product they are using.


I like that companies using this approach are starting to establish a more formalized methodology for repeatable customer success and that they are monitoring customer health not just through initial onboarding but through the entire customer lifecycle.


The problem I see with this approach occurs when Customer Success “best practices” are blindly copied and employed in an activity- or time-based manner.


Without consideration for example, of whether the customer wants or finds value in an Executive Business Review, or will follow a Customer Success Plan template that was pulled off the internet, etc. the customer is subjected to random acts of Customer Success done to them, not for them.


The Customer Centric Approach


For truly effective customer retention and expansion, I prefer the customer centric approach to churn prevention.


In this approach, the company first looks to understand its customers.


Why do they buy the product?  What business outcomes are they looking to realize? And what change typically needs to occur at the customer environment in order to fully integrate the product into their business and recognize the return on investment?


In this scenario, companies map out their customer journey from the customer’s perspective taking into account the aforementioned considerations.


Once the company understands what customers require in order to successfully traverse the journey, they then start to build the corresponding business model around the customer.


That is, the playbook to support the customers along the journey, the corresponding skill sets and roles to best deliver those plays are identified and the metrics to measure customer progress through the journey is established.


Customers are segmented based on adoption needs and maturity, and the corresponding account coverage model is created to define the best aligned organizational structure to service customers.


The reason I favour this approach is because, in understanding, aligning to and observing the evolving needs of the customer, the organization is best positioned to operate in a holistic approach to customer management.


By prescriptively managing the customer to success using a blended approach of automated, low-touch and high-touch models throughout the journey, and to varying degrees depending on customer segment, the vendor is set to proactively drive customer retention and expansion in a way that’s most natural for the customer and in the most efficient, scalable and disruption-proof way for itself.

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