Tips to Reduce Customer Churn in B2B and Technology Sales
Churn impacts every B2B software company but, if managed correctly, it can not only be reduced but also be a strategic advantage for accelerating top of funnel leads, increasing customer conversions, and impressing board members.
- Account Executive’s: They are the frontline of your organization and, as such, are usually one of the very first impressions customers have of your company. Having them set expectations with customers from day one is a very fine line between hype and reality. Over sell and you get misaligned expectations; under sell and you will fail to make a deal.
- Customer Success: This job title covers everything that falls under implementation, customer enablement, and even ongoing customer service/support. This is where most churn happens, as there’s plenty of surface area and opportunity to make a happy customer an unhappy one quickly.
- Marketing: Believe it or not, marketing can play a hand in churn management, as this department is responsible for making sure that customers know about the support offered during the go live process, as well as throughout the lifetime of the customer relationship.
Now that we know the players, let’s hit a few of the major ways churn can occur and how to solve it.
- Poor product implementation: This type of churn results in customers that never realize the full value of your product and all of the lovely value-add features. This is a long churn as your customer starts to slowly find ways to fill the void. Ultimately, you end up forcing them to create their own solution with a patchwork of other apps, even though the solution is hiding in plain sight.
- Solution: Giving AE’s all the tools they need up front to not only sell software, but make sure the customer has every possible resource available to get up and running, is crucial.
Pro tip: tell AE’s they can play with implementation pricing as an alternative to discounted pricing if your company charges for implementations. This won’t impact bookings and makes it easier to establish a higher base fee.
- Signed and stalled: Maybe the most sneaky type of churn. You worked hard to get the customer to sign but the go live is dragging. This is especially becoming more relevant as B2B software is moving more towards a transactional/usage model as seen with API companies. Although not traditional churn, this signed and stalled customer typically churns before they can start generating revenue for you. In fact, this is the costliest type of churn given all the resources used to get a customer to this point.
- Solution: This is where marketing can help with some very simple campaigns. Those automated campaigns can get triggered after a customer sits in the signed stage for too long without go-live or activity. This nudge is immensely helpful to get the customer moving or to guide them to the help they’ll need to get the product live.
- Pro tip: Have your customer success team monitor the signed and stalled category closely and encourage them to pull in marketing to build content and strategy.
- Misaligned expectations: The biggest culprit of churn and it involves every part of the organization: marketing, sales, and customer success. Marketing can overrepresent product features; AE’s can over sell; and customer success can over promise ease of onboarding. The downstream impacts show up in so many different ways throughout the customer journey creating churn.
- Solution: There’s no hard and fast rule here, but make sure expectations are set early and everyone is aligned. Customers appreciate honesty more than anything, so don’t take shortcuts and if the product team has put the work in to fit market needs, AE’s should sell that. Hard work shines through more than vanity metrics and false hopes.
- Pro tip: Create calendar reminders to reach out to customers about product updates and any issues you might have heard from other customers. Get ahead of the problem.