In an ideal world, our customers would stay with us forever. But as a CSM, you know that churn is inevitable when it comes to maintaining a customer base. How then do you reduce high churn risk?

High Churn Risk: Why Customers Cancel Their Subscriptions

High churn risk refers to the likelihood that a customer will cancel their subscription to a service. This can be due to several factors, such as dissatisfaction with the service, a change in circumstances, or a better alternative being available.

Know the Signs of Churn Risk

While you may not be able to prevent every customer from leaving, knowing which customers are likely to leave can help you spot warning signs and take steps to reduce future turnover.

The following signs may indicate that a customer is at risk of churning:

• Not providing feedback
• Expresses dissatisfaction over an app feature
• Change in company leadership
• Out-of-character customer behavior
• Value perception changes
• Low app usage
• Personal differences

It’s helpful to keep a list of these symptoms, especially when you’re having those monthly or quarterly business reviews with your customers.

The earlier you can identify a potential customer’s risk of churning, the easier it will be for you to prevent that customer from leaving.

Fixing these problems involves two main elements – visibility and communication.

Once you identify the problems, talk to the customer. Ask what solution they need.

A little care and attention to detail go a long way.

What is Churn?

Let’s say your company has 1,000 customers. In 12 months, you lose 100 customers. Then you have a 10% churn rate.

If you want to keep your business afloat, you can either focus on getting 100 new accounts each year or you can try to reduce customer turnover by making sure that your current customers are happy enough to stay.

Why Should You Care About Churn Risk?

So, if some customers are going to leave you anyway, why focus on reducing customer attrition?

It’s not a reflection on the services you’re providing, right?‍

Yes and no.

For some clients, you’ll never be able to change their minds no matter what you do.

But there are customers who you might be able to save if you can identify their churn risk early on.

It’s been said that it costs 5 times as much to acquire a new customer than to retain a current one.

Since it costs more to seek out new customers than to retain existing ones, it’s in your best interests to keep your existing customers as happy as possible.

The lower your churn rate is, the more cost-efficient your company will be.

While we know that some customers will inevitably leave, let’s look at a scenario in which losses might have been avoided.

Here are some glaring signs that indicate a customer is at risk of churning.

Example of Churn Risk

Let’s say Company ABC has been your client for two years. During that period there has been no indication that they are unhappy. 

You’ve never had a problem with them. In fact, they once called you to ask for some new features, but when they didn’t get what they wanted, they didn’t complain.

Everything else has been business as usual. You noticed a change in leadership on their LinkedIn profile, but again no worries.

Your primary contact with Company ABC even reached out to you! They confirmed the number of licenses they are purchasing.

You’re getting close to renewal time and you’re feeling pretty good.

Then, all of a sudden, disaster struck. Company ABC asks for a cancellation 30 days before their annual membership expires without warning.

Except there was plenty of warning that you did not notice in time.

Let’s talk about what went wrong.

Problem 1: You Have No Data

Company ABC didn’t approach you with any problems, but you also did not have data on how they feel about your product.

You assumed that everything was going fine because they didn’t complain about it. That was your first mistake.

If you don’t make it easy for your customers to give feedback, that doesn’t mean they’ll always be happy with your product.

Every customer is a potential churn risk if you don’t record the following:

• Performance
• Usage
• Survey data (including NPS)
• Roadmap requests

If you’re not sure how your customers are feeling, always assume the worst.

Problem 2: You Didn’t Investigate a Feature Request

When was the last time you asked a customer about a new feature? Probably never. There could be some valuable insight you’re missing.

If you have a normally quiet customer who asks for a new feature, there must be some friction or frustration behind it. You should investigate why the customer is asking for this change.

It’s not necessarily a “mistake” to not implement every single feature request. But, not taking the time to investigate why a customer wants that feature is where you went wrong as a Customer Success Manager.

Problem 3: Change in Leadership

While a new leader may bring in new ideas, there is bound to be some change under their new management. A business leader may arrive, set in their way with their preferred tools and methods, and attempt to use those at their new place of work.

A change in leadership can also bring about much-needed changes to an organization. This can be an opportunity to right any wrongs that have been long overdue.

Regardless of the reason, you need to recognize that a change in leadership could mean trouble for you and the client relationship you have.

Problem 4: Out-Of-Character Customer Behavior

Your primary contact at Company ABC never paid much attention to software licensing.

In the past, they let their license renew automatically, but suddenly last year, their contact person asked for the number of licenses they had.

Why?

Any change in a customer’s behavior is something to take note of. If they become very passive, they may be losing interest in you.

If a customer unsubscribes from product emails that they have been receiving for two years, they may be cleaning house.

Company ABC was likely doing the math on what they were spending on your product and what value they were getting in return in terms of functionality and feature (or the lack thereof).

By understanding the typical behavior of users, it’s easier to spot anomalies.

Other Potential Churn Risk Signs

While Company ABC exemplifies common red flags that indicate a customer is about to churn, there are other signs to watch out for.

Value Perception Drops

Your customers may be feeling less satisfied with your software or service, or they may be seeing a decline in value. This can happen gradually or suddenly and is especially true for expensive services.

What your customers really think about your product isn’t necessarily as apparent as you might think. Even though they may be using your product or service daily, they might not be fully aware of all the benefits or features that make it so useful to them.

You may have to do some investigating to figure out what they truly think of your offering. Look into support tickets for clues, or look at their Net Promoter Score (NPS) or their comments on your social media pages.

The more that customers complain about a lack of value in your product, the harder it will be for you to retain them and prevent them from leaving you.

Low Usage

This is just another example of how important data can be. By looking at how your customers use your product, you can get a window into their behavior, even if they don’t directly communicate with you.

Usage data is important because it can help you understand how your customers are using your product. Low usage data may indicate that your customer is struggling to get the rest of the team to adopt the tool.

By examining usage data, you can help identify areas where your customer may need assistance and make changes to improve the overall experience.

When possible, set up a dashboard for your clients that measures their performance metrics and utilization by their team. Set up triggers that alert you when a client falls below a certain level.

Usage data is important because it can help you understand what is really going on, even if your client says that everything is the same as it always was.

Personal Differences

No matter the tool, it’s important to remember the personalities behind the usage and the power of strong relationships.

Differences in opinion or personality could be what causes a customer to decide not to renew their contract. If they feel they’re not getting the value they need, they may just decide to move on.

If you feel like a customer-CSM relationship is a bad fit, let your supervisor know. They will then reassign that customer to a different representative who’s more compatible with their personality and needs. 

Conclusion

By understanding and addressing the root causes of attrition, you can keep your customers happy and engaged for longer. So if you’re looking to reduce your high churn risk, focus on the tips we shared. It’s the best way to create a culture of engagement and loyalty with your customer base.