4 How to improve customer retention and loyalty through feedback

In 2005, David Dempsey stepped to the podium at a Salesforce team retreat. They’d just had a year of hypergrowth following their IPO, and people were ready to party.

But Dempsey’s message was bleak: Salesforce had an 8% monthly churn rate. And you can’t pour enough business into the top of such a leaky funnel to sustain Salesforce’s growth rates. Slap!

This woke up CEO Marc Benioff: churn is a huge problem opportunity. The customer success revolution was in the air–you might say it started right then and there.

What is churn? And why it’s your
hidden growth engine

Churn happens when someone cancels their contract.

If customer retention is the goal, churn is the arch nemesis. Like yin and yang, peanut butter and jelly, they go together in inverse harmony. A 5% churn = 95% retention. A 95% churn = find a new job.

customer churn
customers lost during the month
customers at the start of the month

This works fine if all customers are paying the same amount. But what if you’ve got people on different plans? Losing a customer paying $30 a month is a bummer. Losing a customer paying $3000 a month is a kick in the wowzers.

If you have customers on different plans, it makes more sense to look at revenue churn:

revenue churn
revenue lost during the month
revenue at the start of the month

Here’s a quick refresher on why it matters:

And remember what that means for revenue:

Okay, you got it—churn matters. So the question on everyone’s mind: how can I reduce churn?

The answer: you have to know why people leave you.

Sure, bad customer service, missing features, cheaper competitor–all reasons why people walk away.

But you’re not interested in why people might leave. You need to find out why your customers are leaving.

And you’re going to need a plan. In the words of Ingmar Zahorsky, director of Customer Success at ChartMogul:

Find out why they say goodbye

“It’s not you, it’s me,” said the unhappy partner with a kind heart. But guess what? It was you. You weren’t providing what they needed.

Why not? Either you didn’t know, you didn’t care, or you couldn’t execute—ignorance, apathy, impotence. Not your sharpest weapons to bring to battle.

To improve retention, you have to understand customer loyalty, and why your customers are leaving. How do you do this?

Feedback. It comes in lots of flavors. Here’s where you start:

Listen via tickets.

What features are missing? What are people confused about?

Dig into data.

Analyze user behavior. Has a user not logged in for a while? Are they using the features they need? Are they having trouble finding tools they could use? Perform a cohort analysis to discover behaviors of people who leave and those who stay.

Do more user testing.

Get some people in a room who’ve never used your product before. Have them test it. Then watch and listen.

Ask your employees.

You never know where insight might come from.

Check in with an NPS survey.

It’s a gauge of loyalty, and question 2 will open your eyeballs.

Are your customers loyal, or will they betray you?
Check out the galactic guide to NPS.

Find out why they left with a churn exit survey.

Didn’t do the above things fast enough to prevent a loss? There’s still time to fix it for the next guy, or gal. .

And don’t take too long to act. George Szundi, Marketing & Growth at Natero explains why:

Got it? Let’s fix it.

Take action to reduce churn

You’ve listened. You’ve observed. You’ve asked. And you’ve learned a lot. Now use that feedback to design a better user experience.

As Karina Norkaitienė, Customer Success manager at MailerLite, put it:

Here are some steps you can take to reduce churn now:

Set the right expectations.

Disappointment happens when expectations exceed reality.

Provide faster time-to-value through better onboarding.

Understand your customers’ goals. Identify their friction points. Get them to ‘wow!’ faster.

Fix your product.

Use feedback from customer tickets and platform usage to shape your product roadmap.

Reach out to users who are slipping away.

See those users who haven’t used your product in over a month? Make that phone call.

Ask earlier.

Don’t check in on day 30 of your monthly contract. If there’s a problem, it’s too late. Try asking on day 20 while there’s still time to fix it.

Educate instead of selling.

Creating education material on your help center or blog improves customer experience and reduces support tickets. Use Google Analytics to help understand what people are searching for, then provide the solutions that match.

Provide inspirational use cases.

Teach users new ways to get value from your product. Send them to your blog or your help center when they need a dose of inspiration.

Sell to the right customers.

Sales and marketing teams get people in the door. So if your main goal in customer success is retention, make sure your doormen are letting in the right people.

Talk to your ideal customer.

Talk to your best customers. You know those people who keep paying the big bucks, month after month? These people are getting value from you. What problem do you solve for them? What do they like most about you? What’s still missing for them?

Remember: there will always be churn in a subscription business. It’s normal. And not every customer leaves because they don’t like your product. The timing may be off, or that magic feature may be hiding in a menu that’s one click too deep.

And stay cool, because most customers won’t abandon you at the first sign of friction. But have some sandpaper handy to smooth out any rough edges.

Remember to L.O.A.D. up, then exceed expectations:

L – Listen through your support team
O – Observe through platform usage
A – Ask through proactive outreach
D – Design better experiences & Deliver on what you promise