Did onboarding go smoothly? Have they had many support issues? Are they getting the expected value from your product?
Analysing customer churn helps you understand patterns, improve adoption, and boost retention targets. To reduce churn, it is vital to understand why your customers are leaving in the first place. Basic CRM data often selected from a brief list of potential reasons, is not enough to truly grasp their reasons.
Most customers decide to leave much earlier than you might think and way before you discover that they are at risk. CSMs (as well as renewal teams) have customer check points. For those low and no touch accounts these check points tend to be around 90 days before renewal, yet data shows that most customers make their decision not to renew between 6 months and up to 2 years before the renewal.
Why such a long time before the renewal is due? Well, there are many reasons, but generally speaking, customers find out quickly if your product provides the expected value. If it doesn’t, the renewal decision will start to form shortly after that realisation. Maybe the customer went out on a leap of faith with you, because you are the market leader and everyone is talking about your product. They realise they cannot achieve the expected value using your product and start to look around for alternatives. This time they will take their time to get it right. They plan. They evaluate. They test, to ensure a repeat of the previous mistake will not happen.
In my last company I started a project to use AI to collect all kinds of indicative customer data to develop an early indicator for a potential churn. These indicators, accumulated to a churn risk score, would provide the CSM and/or renewal team a priority list of customers to reach out way before the renewal was due in order to understand the customers issues and prevent a churn. The idea was to start developing this score as early as 3 months after initial purchase and keep improving it over time.
When is the best time to engage with a churned customer?
Ideally you leave a little time between the communication to you and your churn interview. It is suggested to wait approx. two weeks but not longer than three months for the interview, as people’s memory fade over time.
Who should do the exit interview?
You want to uncover the real reason why the customer has left you. You also want to understand why they have decided to go with another vendor. Asking a CSM or another company employee to do the exit interview might not give you the real reasons. Customers like to leave on good terms, even when they leave you, they like to leave a door open for future engagements. I recommend to engage a third party for the win/loss and exist interview analysis.
How do you execute the interview?
To uncover the real reason they leave you, it is best to understand what they tried to achieve in the first place. Has their vision changed? Has the champion left the organisation? Often price is given as the main reason. Has the customer realised the value of your product? This is not a scripted interview. Ask open ended questions, let the customer go into story telling mode, create some space for them to speak. Why are they saying what they say? Find out what the real why is. Do not rush. Ask the same questions in a different way. Dig in further. Repeat what the customer told you to ensure you really understood them correctly. Let them confirm or correct you. Do they feel their voice was accurately reflected in your summary? Again, leave space for them to correct specific items you played back.
If they have given you a whole lot of information, synthesize, summarise and play it back to the customer. Use what-if statements to test the strength of what they just told you. If they told you that some specifics were the reason for their churn, ask what if that specific didn’t exist, would they still churn.
Silence can be your best friend. Let the conversation breath.