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Reducing Customer Churn

6 Tips For Reducing Customer Churn from Moz

Last week, we hosted AnReducing Customer Churnnette Promes, CMO and Head of Customer Success at Moz, to discuss all things related to customer churn, and came up with some tips for reducing customer churn effectively. Annette has an extensive marketing background, and has worked at several large corporations including Microsoft and AT&T, as well as SMBs, like Big Fish Games. She shared a small portion of her 20+ years of marketing knowledge with us in last week’s podcast, which we have consolidated into a few main points here. Without further ado, here are 6 tips for reducing customer churn that every CMO should know.

1. How much time and effort should I put into reducing customer churn?

Reducing customer churn is a key factor to maximizing customer retention, so it is important to put a lot of time and effort into it. Otherwise, your company’s customer acquisition efforts are not being as effective as they should be, and you are letting customers slip away. Annette says that her marketing and customer success teams collectively spend about half of their time on reducing customer churn, with the other half spent on customer acquisition. She says that this makes her team’s customer acquisition efforts as impactful as possible, while making the business more efficient overall.

2. I agree churn is an issue, but where do I begin to address it?

The first step in your churn reduction process should be investigating the causes of the churn. There are numerous reasons why a customer could be churning, all of which can affect your business heavily. It could have to do with a feature of your product or its service, or could be caused by expectations of features your product should have. And if you don’t know the specific reason behind this churn, it makes it impossible to know what steps you should take to reduce it. Annette and her team created an exit survey for customers, to figure out why exactly they are leaving, and what initially caused their churn. Also, to get more in depth information, they conduct exit interviews, so that they can pinpoint the problem within their business to help improve it for the future. Thus, it is important to investigate the reasons behind your customer’s churn, to give you a starting point. This is key to reducing customer churn well, and should be your first step.

3. How do I communicate with everyone internally around churn and what we’re doing to change it?

In order to ensure customer churn is being recognized and that changes are being made to limit its impact, keep in touch with your team regarding the entire reduction process. As a result, everyone will be on the same page about their responsibilities, and will know exactly what improvements the company is making to better their product. Annette organizes biweekly meetings with the marketing and customer success teams, with reps from the design, product, billing, web development, and other teams in attendance as required. She will invite a rep from any applicable team that week, but stressed the need for that the rep to have the power within the team to make real change in the business. Meetings like these keep everyone in open communication, and ensure that everyone is managing their job within the churn reduction process.

4. So you’ve identified the reasons why customers are churning; what to address first?

The level of importance and impact of a certain cause of churn can vary greatly from case to case, depending on how many customers are experiencing it, who these customers are, and if the issue is regarding the lack of a feature in your product. If many customers are experiencing the same problem, fixing it is obviously of more importance than an issue that only a few customers have. Also, if the customer experiencing the problem is someone who fits your ideal customer profile, then it is important to address the issue, as it is likely other customers will experience the same thing in the future. Additionally, if the problem is easily fixable, then it should be addressed quickly, but if it is a longer term project, it needs to be well thought out and analyzed. Lastly, if the issue is regarding a feature your company doesn’t offer, it is important to find out how many of your competitors offer the feature. If many of them do, it could be crucial  that you add it quickly, so that customers don’t leave for a competitor that has the feature. Annette and her teams at Moz create a priority list for short and long term fixes, in which a cause’s importance is based on these reasons as well as more specific factors. Some type of priority list like this can help to keep everyone organized and on the same page, so these tasks are being managed effectively.

5. How can I proactively reduce churn, before it happens?

At Moz, Annette tries to identify customers at risk of churning by analyzing customer behaviors. Annette does this by defining a “loyal customer profile”, and then tracking each individual customer against this “loyal customer profile” and also against their historical involvement with the product. In doing so, Annette can easily begin to identify changes in customer behavior and thus flag these customers as potentially high risk and have her team reach out. Also, Annette’s customer success team reached out to each customer, regardless of it they are at risk of churning, to ask them what business challenges they are facing, and how the product can help them manage those challenges, showing a continued involvement and interest in the customer.

6. How can I manage customer churn with limited resources?

Talking to customers is an important part of reducing customer churn, that can be accomplished with little to no cost. It is the most direct of tactics, but gets the best and most reliable information as a result. There is no better way to discover what issues people face with your product than to ask them yourselves. Annette emphasized the importance of this, as building trust is very important in customer relationship management in general.

If you found this helpful and would like even more information on reducing customer churn, click here for the full podcast.  Thanks to Jack Blattman for his contributions to this post.

Loren Vittetoe
Loren Vittetoe

<p>Loren is a Principal at Bowery Capital based in New York. Prior to joining Bowery Capital, Loren was an Associate in the Investment Banking Division at Goldman Sachs where she participated in a number of equity, debt and M&A transactions, predominantly in the enterprise software and internet sectors. Prior to Goldman Sachs, Loren worked at Groupon in the Corporate Finance Division where she built and led the initial Investor Relations department and subsequently ran Financial Planning & Analysis for the company’s 12 countries in APAC. Loren started her career at Activision Blizzard in the Investor Relations department. Loren has a B.S. in Communication from Boston University.</p>