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5 Playbooks for Customer Churn Prevention

January 24, 2023
January 20, 2023
January 20, 2023
|
13
min.

The world, and SaaS in particular, looks very different today than it did a year ago.

A maniacal focus on new customer acquisition while retention only being an afterthought is no longer a sustainable model.

Today, churn carries more risk than it ever has.

And you don't need me to tell you this.

Research shows that it costs 5-7x more to acquire a new customer than it does to retain an existing one.

How can we effectively mitigate churn? Is there a way to ensure our customers remain loyal and engaged? These are questions that all businesses must consider when it comes to understanding customer churn and preventing its negative impacts.

This post will highlight five high churn risk scenarios and provide playbooks for how your team should take action.

Each playbook will focus on the Signal that indicates the churn risk, the Alert that should be sent to your internal teams, and the Actions that need to be taken to mitigate the churn risk.

From understanding customer onboarding to creating effective strategies for reducing revenue churn, these playbooks will provide you with the information you need to build strong relationships with your customers.

So, what can be done to combat churn? Let's dive into these five playbooks and find out!

Understanding Customer Churn

Before the playbooks, let's briefly overview Customer Churn and why it's so important.

Understanding customer churn is critical to developing effective strategies for preventing it.

In the SaaS industry, there are several factors that can lead to customers leaving your products or services. Common causes of churn in SaaS include poor onboarding processes, lack of product innovation, and poor pricing strategies.

It's essential to identify these problems quickly to prevent customers from leaving.

Building customer loyalty must be a top priority to retain customers and avoid high churn rates. This can be done by responding promptly to customer complaints and staying up-to-date with industry trends.

Additionally, tracking customer behavior data like usage patterns and feedback can help you identify potential issues before they lead to churn.

Customer success management is also a key component of preventing churn. By proactively engaging with customers and understanding their needs and goals, you can tailor your services accordingly and increase customer loyalty. Investing in customer lifetime value (CLV) initiatives like rewards programs can also help reduce churn while improving overall profitability.

An effective churn analytics program is essential for understanding the underlying reasons behind customer attrition. This data can provide valuable insights into improving your products or services and creating more successful customer relationships in the long run.

Playbook 1: Low Account Activity

Low account activity is a common challenge faced by SaaS companies. It refers to when an account that was once active has suddenly gone silent - no logins, usage, or engagement for the last 7, 14, or 30 days.

This could potentially indicate a customer’s intention to churn, so it is essential to have a playbook in place to prevent this from happening and keep them on board.

Step 1: Signal

Let's take a hypothetical scenario where one of your long-time customers, "XYZ Corporation," has recently displayed low account activity. The signal that would indicate the need to run this playbook on XYZ Corporation is low account activity (as defined above).

The KPIs that should be incorporated into the signal includes:

  • Login frequency
  • User actions that are taken on the platform
  • Total usage time

These key indicators of customer engagement can help you determine whether or not they may be at risk of churning.

Step 2: Alerts

To ensure timely action, it's important to set up alerts for low account activity so you're notified when customers are exhibiting signs of inactivity.

This way, you can take immediate action and contact them before they decide to leave.

These alerts can be customized based on your KPIs and thresholds for each one - for example, if login frequency dips below a certain limit or usage time remains at 0 for more than 7 days.

Tools such as Slack or Teams can be used for setting for these alerts.

Step 3: Actions

Once you've identified XYZ Corporation with low account activity, it's time to act.

This includes engaging with them directly via email or phone (depending on their preference), offering personalized advice and solutions tailored to their needs, and providing incentives such as discounts or free trials so they continue using your product/service.

Email sequences can be used in tools like Outreach to keep the communication consistent and personalized.

You may also want to ask them detailed questions about their experience with your product to better understand why they stopped using it in the first place. This will allow you to identify any potential issues and develop solutions accordingly.

How Parative Helps

Parative's Revenue Scoring Engine can be used to monitor customer behavior and usage and track inactivity.

This data can provide a score indicating the likelihood of churn and trigger alerts or workflows for the customer support team to reach out and engage with the inactive subscriber.

Additionally, Parative can also be used to understand the reason for inactivity by looking at feedback data, such as support tickets, to identify any issues or blockers that may be preventing engagement.

By identifying potential churned customers early on, a SaaS company can take proactive measures to reduce customer churn and improve customer retention rate.

Step 4: Goal, Team & Timeline

The goal here is simple - increase engagement and satisfaction among customers who are exhibiting signs of low activity in order to reduce churn rates and ensure long-term success for your business.

For best results, this should involve collaboration between Customer Success Managers (CSMs), Product Teams, and Support teams who can work together towards achieving this goal within an agreed-upon timeline (e.g., 14 days).

Ultimately, through comprehensive planning and execution of this playbook, businesses can reduce their customer churn rate significantly while also improving overall customer experience and satisfaction levels - two key metrics that will continue driving growth in today's competitive market!

Parative Revenue Expansion Offer

Playbook 2: Account Exports Data

When it comes to customer success, an account exporting its data can be a powerful signal that is often missed.

This playbook focuses on using analytics to identify potential churn signals, set alert triggers, and create detailed steps that need to be taken to improve customer retention rates.

Step 1: Signal

Let's take a hypothetical scenario of XYZ Corporation, a SaaS company that provides project management software to small businesses.

XYZ Corporation has recently exported all of their data from the platform, a clear signal that they are considering churning.

What's worse, XYZ is currently within its 90-day renewal window - increasing the churn risk further.

The first step is defining what behavior indicates that this playbook should be run on a customer.

In this case, it’s important to gather KPIs such as the number of account exports done over a certain period of time, frequency of usage, types of exports users are running (e.g. CSV vs. PDF), any changes in the frequency or types of exports, etc.

These KPIs will help you determine when there is an increased risk for churn, so you can take action quickly and effectively.

Step 2: Alerts

Once you have identified the relevant KPIs for this playbook, setting up alerts should be the next step.

The aim of these alerts is to notify customer success teams quickly if any customers show signs of churn risk in their activity. This way, your team can act fast and take preventative measures before it’s too late.

Alerts can be set up in different ways depending on the systems you have in place, but generally come in the form of Slack or Microsoft Teams messages or emails to the Account Manager in charge of the account.

Step 3: Actions

Once an alert is triggered due to increased churn risk, you need to decide which actions should be taken immediately by the customer success team or manager responsible for that account.

If the alert is correctly set to be fired in real-time, there is an opportunity to engage with the user directly in the platform while they are still logged in. The first action to be taken is to fire an in-app engagement using a tool like Intercom, Pendo, or the Parative in-app Widget.

In addition, or if they are no longer logged into their instance, an immediate email from their Account Manager or CSM with an offer for a meeting should be fired off.

Here are some other examples of what specific actions should be taken:

  • Contacting the customer directly via phone or email to check if any issues have arisen that need addressing.
  • Offering additional support resources such as webinars and tutorials.
  • Setting up regular calls between CSMs and customers to ensure they are getting full value from your product.
  • Offering discounts or promotions if applicable.
  • Gathering feedback on the features they would like to be added.

How Parative Helps

Parative can be used to predict a high risk of churn by monitoring customer behavior, such as data export.

It can then provide a score indicating the likelihood of churn and trigger alerts or workflows for the customer support team to reach out and understand the reason for exporting data. This can help identify customer satisfaction issues and mitigate churn and retain the subscriber.

Parative can also be used to identify opportunities for upselling and customer acquisition.

Step 4: Goal, Team & Timeline

The goal here is to understand the reason for XYZ Corporation's data export and take immediate action to address any concerns they may have before they decide to churn. A team of customer success managers, product teams, and support teams should collaborate to achieve this goal within an agreed-upon timeline (e.g., 7 days).

Through comprehensive planning and execution of this playbook, businesses can reduce their customer churn rate significantly while also improving overall customer experience and satisfaction levels - two key metrics for driving growth in an increasingly competitive SaaS environment.

Playbook 3: Low Feature Adoption

Low feature adoption is a common issue that can lead to customer churn, and it is crucial to have a playbook in place to prevent it.

By identifying the customers that are failing to adopt the features they've paid for and proactively engaging with them, you can increase their usage and satisfaction, ultimately reducing the risk of churn.

Step 1: Signal

To identify customers who are failing to adopt the features they've purchased, you should look for an abnormally low Contract Utilization Rate (CUR).

The Rate of Utilization measures the percentage of available features, Seats, or other variables that are being used by a customer relative to their total number of purchased features. If the Rate of Utilization drops below an established threshold, this is an indicator that should trigger this playbook.

You should also consider other metrics such as customer feedback and satisfaction scores, usage data from individual users, Customer Health Scores, and any other relevant data points specific to the product or service.

Step 2: Alerts

Once you've identified the KPIs and metrics you'll use to define the signal for this playbook, it's essential to set up alerts so that your Customer Success team will be notified whenever a customer is under this scenario.

The alerts can be sent via email, SMS, Slack messages, or other channels, and you should specify how frequently they should be sent out and who should receive them within the organization.

The alerts must be in real-time, sent where the customer success manager in charge of the account will see them. In addition, the alert could be sent somewhere visible to the rest of the team to create additional accountability.

Step 3: Actions

Once alerted that a customer has triggered this scenario, it's time for action!

The most important step here is proactively engaging with the customer – reaching out via phone, email, or in-app chat and discussing why their feature adoption has dropped significantly.

Providing the user with resources to help them learn about the value of the features they are missing is critical here. One way to do this is to trigger an in-app engagement with a feature guide to highlight the value of the features they have yet to adopt.

It's also important to listen carefully during this conversation; understanding what led them not to adopt more features can give valuable information about how your product/service can better meet their needs in future iterations.

Once you've had this conversation with them, you may need to provide additional training on how they can make use of those features they haven't yet adopted.

You may even need to send additional resources, such as emails or videos demonstrating how those features work in greater detail than previously provided.

How Parative Helps

Parative can be used to track feature adoption and contract consumption and provide a score indicating the likelihood of churn.

It can also identify the specific features that are not being adopted and trigger alerts or workflows for the customer support team to understand why and address any issues that may be preventing adoption.

On the flip side, Parative can also use this tracking to identify potential upsell or cross-sell opportunities for customers that have a high contract utilization rate, sending internal alerts and firing off automated workflows in the tools you already use.

Additionally, it can also be used to identify opportunities for upselling and customer acquisition by understanding which features are being adopted and how they are being utilized. A SaaS company can improve customer retention by improving customer satisfaction and reducing churn.

Step 4: Goal Team & Timeline

When engaging with customers who are underutilizing their feature set, it's critical that there is an established goal in mind for what needs to be accomplished by when.

The goal could be something like increasing feature utilization by 10% over two months' time; whatever it is, though must bring measurable value back into their business process if it is ever going to truly satisfy them and potentially prevent churn from happening as a result of low feature adoption levels.

Once the goal has been set, it is essential for the internal teams (such as Sales, Product, and Marketing) to communicate the necessary steps and responsibilities to all stakeholders effectively.

This includes outlining clear timelines for when specific tasks should be completed and by whom to ensure a unified effort toward achieving the goal.

Playbook 4: Account Admin Leaves Company

When the admin of an account leaves a company, it can drastically impact the customer experience and the customer's ongoing engagement with your product.

This scenario requires a proactive approach to ensure that the customer remains engaged and that the new admin is quickly onboarded on the product. Here are some steps to take when this situation arises:

Step 1: Signal

Another important churn signal to look out for is when an account admin leaves the company. This can be a major red flag, as the account admin is often the main point of contact between the company and your product or service.

When they leave, it can indicate that the company is no longer as invested in using your product or service and may be more likely to churn.

To detect this churn signal, you can use market data sources like LinkedIn, ZoomInfo, or Parative's native market data source to track when an account admin leaves a company. Additionally, you can also look for direct feedback from the customer about changes in their team or leadership.

When you notice that an account admin has left a company, taking immediate action is important. This could include reaching out to the remaining account team members to understand how the change will affect their use of your product or service.

You should also look at metrics such as customer feedback and satisfaction scores, usage data from individual users, Customer Health Scores, and any other relevant data points specific to the product or service to get a complete picture of the customer's engagement with your product.

Step 2: Alerts

Once you've identified the signal of an account admin leaving a company, the next step is to ensure that signal doesn't get lost in the noise of internal communications with your team. You have to ensure the Customer Success team, and the manager in charge of the specific account is notified in real-time.

These alerts should be set up to be sent out in real-time so that the customer success manager in charge of the account can take immediate action. It's also important to specify how frequently the alerts should be sent out and who should receive them within the organization.

For most companies, the ideal channel for these alerts would be the internal communication system already being used - Slack or Microsoft Teams.

Emails, SMS, or tasks in the CRM are also potential options. For example, the alert could be sent to the customer success manager and a visible channel for the rest of the team to create additional accountability.

Step 3: Actions

Once alerted that a customer has triggered the scenario of an account admin leaving the company, it's time for action! The most important step here is to reach out directly to the new account admin if one has been set.

This can be done by sending an email sequence, making a phone call, or other direct outreach methods.

If no new admin has been set yet, identify the most active user in the account that is not the admin and make them the target of your outreach. They are likely the ones with the most affinity to the platform and could act as your new internal champion.

Given that there is or will soon be a new admin, offering a fresh, customized onboarding for the new admin makes sense so they are fully trained and ready for adoption.

This will ensure they have the knowledge and skills they need to utilize the features they have purchased fully and that their team can benefit from the platform.

How Parative Helps

Parative's Revenue Scoring Engine includes access to real-time market data, which can be used to enrich company and contact records in your system with updated information, including headcount changes.

Parative's Market Data source can automatically trigger alerts, update scores, and change buyer-fit models when an account admin leaves a company.

This allows you to take quick action with the tools you already use, empowering you to catch important changes like this and more successfully interdict a potential churn risk.

In addition, Parative's automation and alert functionality enable you to streamline your customer success processes, making it easier to detect and act on potential churn signals.

This can help you to engage with customers proactively, provide them with resources and training, and listen to their feedback to improve your product or service.

Step 4: Goal, Team, and Timeline

The goal of this playbook is to keep customers engaged and satisfied during a time of transition.

The team responsible for executing this playbook should include customer success managers, account managers, sales representatives, and any other person who has contacted the customer before transitioning admins.

The timeline for completion should be tailored to individual customer needs but should generally aim for completion within 7-10 days after notification of transition.

Playbook 5: User Visits Cancellation Page

With any customer journey, it’s important to recognize the key touchpoints that could indicate when a customer is considering leaving.

One of these touchpoints is when a customer visits the cancellation page, indicating that they may be considering ending their relationship with your product or service.

Having a playbook in place to manage this situation can help you take proactive steps to prevent churn and provide a better customer experience.

Here are the steps you should take when putting together this playbook:

Step 1: Signal

To detect this churn signal, tracking user behavior on the account cancellation page within your product is crucial. This can be done through website analytics tools such as Google Analytics or by tracking data within your product itself.

Additionally, you can also gather direct feedback from the user through surveys or customer support interactions.

When a user visits the account cancellation page, taking quick action is important. This could include reaching out to the user to understand their reasons for considering cancellation and addressing any concerns they may have with the product.

It's also important to look at metrics such as customer feedback and satisfaction scores, usage data from the user, and any other relevant data points specific to the product to understand the user's engagement with your product.

Step 2: Alerts

Once you have identified the signal for this scenario, setting up alerts to notify your Customer Success team when a customer is at risk of churning is crucial.

These alerts can be sent through various channels such as email, SMS, Slack messages, or other channels, and it's important to specify how frequently they should be sent and who within the organization should receive them.

Another factor to consider is the context provided within the alert. The person in charge of saving this account from churning needs all the background they can get to fully understand what the signal was, when it happened and who triggered it.

It's essential that the alerts are in real-time and sent to the Customer Success Manager in charge of the account, as well as in a visible location for the rest of the team to ensure accountability.

Step 3: Actions

When triggered by an alert about a user visiting the cancellation page, there should be detailed steps taken to engage with the customer to understand why they were considering canceling and determine what can be done to keep them as a loyal customer instead.

This could include proactively reaching out via phone or email to welcome them back, scheduling one-on-one meetings to discuss their experience, offering discounts or deals on products and services, or providing additional training or resources related to their use case.

How Parative Helps

Parative can be used to predict a high risk of churn by monitoring customer behavior, such as visiting the cancellation page. It can then provide a score indicating the likelihood of churn and trigger alerts or workflows for the customer support team to reach out and understand why they visit the cancellation page.

This can help identify customer satisfaction issues and mitigate churn and retain customers.

Additionally, it can also be used to understand the specific issues or blockers that may be driving the customer to consider canceling their account by looking at feedback data, such as support tickets.

A SaaS company can improve customer retention by improving customer satisfaction and reducing churn rate.

Step 4: Goal, Team & Timeline

The goal of running this playbook should be to retain customers who risk leaving due to dissatisfaction with your product or service.

The team members responsible for managing this process should include anyone working in areas like customer service, sales, marketing, product development, etc., and anyone else with direct contact with customers.

Finally, it’s important to set realistic timelines for engaging with customers after they visit the cancellation page; typically, 24-72 hours is ideal to ensure timely follow-up while still allowing enough time for thoughtful responses from all involved parties.

Conclusion

Customer churn prevention requires a comprehensive approach with several different tactics.

Tracking customer behavior is of the utmost importance, as is taking immediate and decisive actions when needed.

With support from technology such as Parative's Revenue Scoring Engine, businesses can quickly understand their customers and implement strategies to reduce churn risk.

By implementing the playbooks outlined in this blog post, SaaS companies will be able to acquire new customers, keep current customers loyal, and achieve negative churn.

With these strategies in place, SaaS companies will have a better chance of survival in this rapidly changing business landscape.

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by
Mark Lerner

Head of Marketing @ Parative, the Customer Behavior Platform. SaaS enthusiast, B2B Marketing Specialist, Startup Survivalist. Dad x2.

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