Ways to Monitor Customer Churn before it happens

Ways to Monitor Customer Churn before it happens
Customer retention
Suprej Venkat Dec 9, 2022

Ways to Monitor Customer Churn before it happens

What if your company only pays attention to customers after they churn? This approach to customer retention has some serious flaws since it is already too late when the business is addressing churn. Instead, SaaS businesses should consider ways to monitor customer churn before it happens.

If you identify at-risk customers in a timely fashion, you can take steps to retain them and save valuable revenue for your business. While it may seem appealing to acquire new customers to offset churn, the revenue you can earn from existing customers often outweighs that from newly acquired customers.

SaaS businesses must place their emphasis firmly on customer success and engage those existing customers that might be at risk of churn. These savvy businesses must be highly alert to those signs that tell you churn is on the horizon.

What is Customer Churn?

Customer churn is a metric that tells you how many customers have canceled their subscription in a given time frame. Churn can be measured in several ways and can be tracked on a monthly or annual basis.

Churn can happen for many reasons, and it might be because customers aren’t happy with their experience with your product. If businesses can identify these customers with low health scores and take action, they might be able to reduce churn before it’s too late.

Customer churn is the direct opposite of customer retention and seriously threatens the growth of your SaaS business. This is not the least because existing customers are an important source of revenue from cross-sells and upsells since it’s much easier to sell to an existing customer than a new one.

Ways to Monitor Customer Churn

Number of support tickets received

The first measure you can use to predict churn is the number of support tickets you receive from a particular customer. If a customer submits support tickets weekly or even daily, you can use this as an indicator that they might not be happy with the product.

Customers who don’t understand how to use your software have not successfully completed the onboarding process. They might need extra help to understand how your product can be useful to them.

customer support

The good news is that if customers submit tickets, they are likely to be engaged with your product. The bad news is it might lead to churn if their problems still need to be resolved. Customer success managers can reach out to these unhappy customers and see if they would benefit from further training.

Activity during the first 90 days of the subscription

You must analyze the customer’s health during their first 90 days of using the product since this will be when they are engaging in product adoption. The first 90 days is the period before customers will have developed any kind of loyalty to your SaaS, which puts them at high risk of churn if they fail to adopt your product.

Signs that customers might be having low health could be a drop in the rate at which they are logging into your software. It’s a common problem for customers to be excited to use your product at first and then disappear as the novelty wears off.

Identifying these customers with low health scores means your customer success teams can take action to reengage them with the product. You can introduce them to features they may find useful that they glossed over during the onboarding phase.

Speak to churned customers

Customers who have already churned may be open to conversations with your business about why they made that decision. Finding out why customers churn can give you insight into preventing future churn since many of the reasons may be common across different customers.

At the very least, churned customers may appreciate that your business is taking the time to understand why they were unhappy. You might find that they churned for simple reasons, such as your business taking away a software feature that they found useful. You can show other at-risk customers that they can accomplish their goals with an alternative method.

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Applying your learnings from already churned customers means you can proactively take steps to retain customers in similar situations. As Bill Gates said, “Your most unhappy customers are your greatest source of learning.”

Assess health with customer success software

High-performing customer success teams understand that the right customer success software will help them monitor and reduce churn. Software such as Churn360 has been developed to help your CSMs to identify churn before it happens and prompt them to take steps to correct it.

In Churn360, you can see whether customers are moving through the customer journey and pinpoint those customers who get stuck. Customers should be moving steadily through onboarding, adoption, renewal, and upsell, and if they become paralyzed, then CSMs can intervene quickly.

Churn360’s health score tells you which customers are at risk of churn by analyzing various factors. Factors include usage information, CSAT survey responses, credit card expiry date, and more. Tracking the churn risk is done for you, and CSMs can easily see which customers need their urgent attention.

Wrapping Up

It makes sense to monitor churn before it happens because that’s when SaaS businesses can take corrective action to save their unhappy customers. Once a customer has canceled their subscription, it is already too late because they have decided your business cannot help them.

Paying attention to these factors will help businesses to reduce churn and retain more customers in the long term. Retaining more customers is vital for business growth and ensuring that the company has a sustainable customer base. Customer lifetime value increases, and everyone is satisfied as a result.

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