7 Root Causes of Churn (and how to fix them)

By November 6, 2019Blog, Churn

If you find yourself shrugging your shoulders or scratching your head each time you check churn rates, this post is for you. It’s easy to think of churn as a problem within your business, but it’s actually a side effect—a “symptom” as Lincoln Murphy calls it.

Sure, churn is something we all want to reduce, but churn is just a lagging indicator of issues in your processes or customer experience. Luckily, there are ways to identify, resolve, and prevent what causes churn

What causes churn?

We’ll go into how to find and fix the most common root causes of churn in a moment, but it’s worth noting that they all lead to a shared theme. A SaaS user decides to use a product because they think it will help them achieve a goal. If the tool doesn’t meet expectations, or a user doesn’t achieve their definition of success, they’ll abandon ship. That’s why a company-wide commitment to being centered on customer success is so important. 

Want to see just how big of an impact churn is having on your bottom line? Check out the Churn Calculator and calculate your potential ROI from reducing churn. 

A bad product/ customer fit

Churn prevention starts at the very first interactions a potential user has with your company. Your company can’t be every solution to every person, and you shouldn’t try to be. What that means, though, is that there inevitably will be bad product/ customer fits, especially in the early days as you try to figure out what exactly you want to be and to whom. 

How to spot it

Take a look at your current top and bottom performing users. What do the least engaged and most likely to churn customers have in common? Customer segmentation gives you insight into which types of roles, company sizes, and more are most successful within your app. 

How to fix it

Make sure there’s company-wide alignment on who the ideal user is and what success looks like to them. There also needs to be an understanding between marketing, sales, and customer success about how prospects are rated. 

Poor user onboarding

The next critical point in a customer’s journey that affects long-term churn outlook is onboarding. If a user fails to realize an app’s value quickly or doesn’t know what to do next, their chances of canceling increase. Onboarding gets new users up to speed as swiftly and smoothly as possible. 

How to spot it

Take a critical look at your onboarding strategy. First, make sure you have alignment between the customer success and product teams so that you’re clear on what steps are essential for new users. Then, take a look at feature adoption across your user segments. Are new users taking advantage of the features you expect them to? Are they progressing through onboarding or are they getting stuck and dropping off?

How to fix it

Some of your best defenses to poor onboarding are segmentation, determining what mix of high-touch and high-tech is right for your users, and delivering in-app messages that enable users to learn the ropes without guidance from a person. Guided product tours also ensure new users don’t miss critical features and can be strung together to automate the set up and onboarding experience. (This is especially critical if you have a high touch model or a high ratio of accounts to CSMs.)

No ongoing support

Customer questions and concerns are bound to pop up, and how you handle them can affect churn. Users may become frustrated and leave if you don’t promptly address their questions. Similarly, if the process feels too cumbersome, they may give up asking questions altogether and opt for a different solution that’s easier to use. =

How to spot it

One metric to use to keep an eye on churn-inducing support issues is the number of support tickets fulfilled and closed by a user. Are there customers or segments who tend to need more support? If so, there may be an opportunity to be proactive about answering questions by updating your knowledge base or adding in-app resources. 

In addition, keep an eye on how long each support response takes and the frequency in which a user submits tickets. If support response times creep upwards over time, you may need to bring in additional support to handle requests. It’s also important to remember that a sudden dropoff in requests from a user could be a sign they’ve given up. If a particular user goes quiet after having a lot of questions, it’s worth following up to make sure they’re actually moving forward. Finally, remember that silence doesn’t always mean everything is peachy. Asking some questions is healthy. 

How to fix it

If customer questions do arise, respond as quickly and thoroughly as possible. Providing self-service resources, such as a knowledge base, Launcher, and tooltips, give users the power to be proactive, gets them answers to questions faster than waiting on a team member to respond, and helps save your teams from answering the same questions over and over (thus giving them time back in their days). 

Lackluster user engagement

Sometimes using a new piece of software is like giving a gift to a kid – it’s exhilarating for a while, and then the newness wears off, and the toy gets set aside. Sometimes, users need nudges to keep the momentum going. A user may stop engaging if they don’t see success fast enough or aren’t sure how to incorporate the app into their workflow.

How to spot it

The two primary data points to keep an eye on for this root cause of churn are login activity and feature adoption. If an account has had decreasing login activity, they may need a reminder to get back into the app. Likewise, feature adoption lets the customer success team know if an account is missing out on a critical feature (or if they are using pertinent features at all). 

How to fix it

If login activity is on the decline, try a targeted email campaign to get users back in the app. If a user isn’t utilizing the tools they should be, tooltips point them in the right direction. Customer success automations, such as error announcements, also give a boost engagement by calling attention to an unfinished task. Sending use cases that present features in a new way are also helpful for helping customers realize what’s possible with your resources. 

Not achieving desired outcomes

As your user base grows and evolves, so too must your product. If there’s no alignment between customer success and product management, the evolution of your product could stall. The same is true if you aren’t taking time to check in with customers and get feedback. Users may also miss hitting their goals if they aren’t using the right combination of tools. 

How to spot it

In-app surveys, NPS scores, health scores, and customer success check-ins are your direct line to understanding user sentiment. Keep an eye on which segments are happy and frustrated and how the goals of each change over time. 

How to fix it

Here at UserIQ, we use voice of customer feedback, such as NPS scores, to reinforce the direction we’re taking the platform. Creating a customer advisory board is another great way to open a line of communication between your company and its users. Don’t forget – customer success and product management should be sharing these sorts of valuable insights to make sure all teams are working in the same direction. Regular check-ins from customer success managers also make sure users feel taken care of. 

No product champion in a larger organization

Adopting a new product and incorporating it into your workflow is a task for anyone. It’s also a whole new challenge if there’s an entire team to get on board. In addition to a strong onboarding strategy, having a product champion within a larger company helps reduce churn. 

How to spot it

Each company and user segment is different, but a product champion is useful when there’s one decision-maker and a network of subsequent users. If you haven’t already identified product champions, it’s helpful to start. 

How to fix it

When you’ve identified your product champion, it’s time to make them your ally. If they’ve put their reputation behind bringing your product into their organization, it’s important to nurture that relationship and show that you appreciate them. This should mean that your champion is the most trained user on your customer’s team. They should also have the resources they need to be effective in reaching their goals using your product.

Involuntary churn from financial issues

All of the root causes of churn we’ve covered so far have been voluntary. That means a customer makes a conscious decision to cancel their account. Unfortunately, you might also fall victim to involuntary churn that can sneak up on you, but is much easier to prevent with the right processes in place. 

How to spot it

Each month there should be a check to see if any accounts have credit cards on file that are about to expire. There are plenty of tools out there that can help automate this process for you, or you may consider using your CRM (along with UserIQ alerts) to track payment method expirations. 

How to fix it

If an account does have a card about to expire, you need to be proactive and remind them. Send dunning notifications to make sure that a customer doesn’t slip away or experience an interruption in their account without the user wanting to leave.

Some churn is inevitable, but it isn’t all a lost cause. Rather than seeing churn as a mysterious black box of canceled subscriptions, you can use churn as an indicator that some users are having a hard time. By keeping these root causes in mind and consulting data such as feature adoption and NPS scores, you can get to the bottom of the problem. Customer success and product management teams that are aligned can then share insights between teams and work together to improve retention. 

Want to see just how big of an impact churn is having on your bottom line? Check out the Churn Calculator and calculate your potential ROI from reducing churn. 

 

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