Agenda 2023: Invest in Customer Success (CS) to Reduce Churn: Here’s How

Soaring churn rates are among the first signs of poor business health. It means that a company is leaking revenues and is probably spending more on new customer acquisition than the ROI it earns. That is why most Software-as-a-Service (SaaS) companies value churn as a critical predictor of success. We recognise the red flags after it is too late and try to mitigate the gap with new acquisitions. Here is why that is not such a good idea.

Why Product Companies Cannot Afford Customer Churn

As a growing business, it is easy to overlook the warning signs amid a large customer base. However, churn can cost your business severe revenues beyond a point and lead to goodwill loss. According to industry estimates, an existing customer will spend 67% more than a new one, and acquiring a fresh customer can be up to 25X more expensive than retaining your buyers. Furthermore, it means that every time you lose a customer, simply replacing them is not enough.

Further, in the age of social media, word will get around. When churn becomes a persistent trend, you will likely attract negative reviews, which only get amplified through various social media channels. From B2B forums like G2 and Gartner Peer Insights to platforms like LinkedIn and Twitter, dissatisfied customers will likely make themselves heard.

The only natural way to stem churn is to address customer concerns and be attentive to their needs, which is where CS comes in.

What is Customer Success or CS

Customer Success (CS) refers to the cumulative effect of the strategies you adopt to generate value for your customers, demonstrate that value and translate that value generation into a positive upstream impact for your company.

For a B2C company, CS can take the shape of personalised products and features that target highly individualised use cases. In a B2B company, customer success takes on a much larger dimension. It emphasises value generation for a customer so that they have a reason to stay loyal and continue to/increase their purchase behaviour.

Today, several companies act as B2B and B2C suppliers, such as SaaS companies like Grammarly, UpWork, Monday, and even Microsoft. They require a detailed and multi-faceted customer success strategy to prevent churn across these various buyer personas.

How Does Customer Success Help Reduce Churn

Did you know that churn reduction is the number #1 objective of customer success programs? When asked why SaaS companies adopt CS, 66% responded with “to reduce churn,” followed by “to increase product usage” (65%) and “increased renewals” (57%). It is because a CS strategy helps you in the:

1. Constantly monitoring customer sentiment: The CS owner regularly checks customer sentiment using various survey techniques and metrics. It helps anticipate churn risk.
2. Strengthening 1-on-1 relationships: The CS owner can act as a face for your organisation. Customers always have someone to turn to for queries, and the business offers a personal touch.

3. Acting on improvement opportunities: The CS owner will feed back any comments or recommendations from the customer. The organisation can prevent long-term churn risk by taking advantage of these opportunities.

4. Preventing escalations: Churn in B2B or high-value scenarios may occur when a conflict escalates. The CS owner can quickly step in before an issue can snowball.

5. Building a customer-centric culture: By making CS part of the organisational mantra, you implicitly make it a top priority in employees’ plural everyday work life. As a result, customer churn/retention is always on the team’s mind.

Tips for Maximizing CS

If you’re getting started with a customer success program to reduce short and long-term churn, there are a few tips to remember:

● Train CS managers in product stickiness. The idea is that customers should accrue lasting value from your offerings throughout their usage term and not merely purchase and forget.

● Support CS managers with a customer success team. Depending on the size of your company, a dedicated CS team can boost the results of account-based marketing (ABM) and reduce the burden on support.

● Invest in anticipatory communication, which means that CS managers must regularly reach out to buyers even without a query or issue.

● Share ownership with all product stakeholders. While having a single director accountable for CS is good, you need collaboration between product, sales, marketing, and CS teams to resolve issues and act on opportunities.

● Eliminate bureaucracy. This all-important tip should inspire you to be agile and quick on your feet regarding customer success communication.

Ultimately, a customer success strategy signals a fundamental shift in how companies do business and the values they prioritise. The end goal may be the same — i.e., prevent churn, boost revenues, and improve business health — but the success pathway places the customer at the centre. That is why CS is crucial for reducing churn (at its core, it strikes a human chord with buyers) and should adopt in the early stages of growth.

To learn more about customer success and churn, contact me at Arvind@AM-PMAssociates.com.