Churn Analysis 2.0
People like to focus on the good. It's in our nature. While the customer success community has produced a tremendous amount of resources on how to build customer relationships and grow accounts, my feeling is churn has become the elephant in the room. I'm not going to show you a growth chart predicting 5 year growth with 98% NRR and 110% NRR, because we've all seen it. Let put that one to rest. Rather, I'm hoping to dig into the strategic importance of going deep into churn, how different stakeholders can build strategy around churn reduction, and a tactical resource (linked at the end) Principle 1: Churn happens, and isn't good or bad
Churn is a fact of life something Churn Analysis 2.0 keenly recognizes. Your investors know it. Your founders know it. And, while she may act like each churn case is a Black Swan event, your VP Success knows churn happens. She's probably modeled it, actually. While CSMs main role is eliminating or reducing unit churn and downgrades, adding a value prop like "churn is the enemy" doesn't do any favors. First, it makes churn difficult to talk about. If your reps are defensive about losing an account, you may miss key details that can lead to product or process improvements. Even worse, one-sided conversations can hide important indicators of PMF or market shifts. With cheap capital and cheaper development, the most succesful firms are the ones that identify changes in the landscape, and pivot product or GTM quickly. More on this later.
Principle 2: Flip every stone. There might be a scorpion or pot-of-gold hiding
The three focus areas for Churn Analysis 2.0 are Customer Success, Product, and Externalities.
For Customer Success, the core exploration is how well our service delivery team met initial expectations, and expanded relationships and use case. Focus deeply on how effectively you penetrated the organization. Where did you have buy in? Where could you have done better?
This is a bit subjective, but a good rule of thumb - if a decision maker or main user isn't sharing information that helps your organization, it's not a real partnership. You should spar these out with your executive team, especially GTM. It's much easier to carry the momentum executive sponsorship from the beginning of a relationship, than to inject yourself into a client's organization deep down field. It also raises the other PMF (not product market fit). Partner Market Fit.
Despite what your PMs and CTO might say, your beautiful code, 5 9's of uptime, and intuitive interface don't mean a lot if your client sees you as transactional. In these cases, the winds of externalities can as easily sweep you away, as they likely were what brought you in.
For discussing Product, they key for success is to look inward, and not get into a pissing match with your developers. Yes, your app is probably missing features. Yes, there are bugs in every SaaS app. (Some ideas for this in the exercise at the end)
Stay objective, and reference CS's role in product collaboration. Think of how you could have uncovered product gaps sooner, as well as uncovered information that might help prioritization on roadmap or design specs.
Having beta partners, or a quarterly CS-Product scrum, can help keep alignment. Expectations are also important here. GTM, CS, and Product need to be aligned on product strategy, and understand why you are or are not building in a specific direction. Understanding your strategy will help position the intentional design choices that you DID make.
Externalities are important for CS, but even more valuable for your executive team. Think of things like competitors undercutting you on price, client downsizing, or client-side reasons, outside of relationship, that may have limited product adoption. Understanding the current in the market is critical, and can take early-stage founders out of the weeds. Simply put, its a good time to do a think on your 3-5 year plan, while addressing immediate GTM and retention woes. Again, examples in the exercise at the end.
Principle 3: Zoom Out
As you go through the exercise at the end of this presentation, you'll realize that Churn Analysis 2.0 could produce documents that rival War and Peace in both length, and boringness. Don't do that. Think of the key drivers and levers you can impact in terms of people, process, and product. The goal of this exercise is to produce something actionable, and having 100 areas of improvement is the same as having none. Rather than some heavy-weight LEAN or OKR process, Churn Analysis 2.0 finds the 1-2 things you can do now, while planting the seeds for long term strategy. Below is a template doc, make a copy, and have your design team make it pretty and branded. Make this something you do. Every. Damn. Quarter.
or every account. or not at all, up to you.