Retention is about measuring, not keeping

April 17, 2019

Churn. The dreaded word that strikes fear into the heart of accounting, marketing, and even development.

“Why are they leaving us?”

The head(s) of Customer Success must track — and then know — why customers leave.

Are there likely opportunities to recapture lost business? Yes.

Is there a chance to save an account by explaining the service better? By offering a discount? By understanding a customer’s pain point? Yes.

Should we be compiling churn data using great tools? Yes.

Account management roles easily seep into Customer Success and Support. Partly because Account Management should be a sub-function of Customer Success.

But, reporting higher retention numbers is not the goal.

What happens when we focus on a numeric goal like retention/churn?

We see Customer Success departments turn into badgering retention departments, using tricks to keep customers onboard.

We have to separate out those “retention” efforts from the real goal.

The real goal is to deliver products and services that satisfy and please customers.

Question: If annual retention increases from 91% to 93%, is that a win?

Answer: Probably not as much as you think. 7% of customers are leaving, dissatisfied with some aspect of their relationship. The 2% might have left, also dissatisfied, but were persuaded to stay longer.

A 2% retention boost gives CSMs and AMs cheers and praise. Maybe bonuses.

But the underlying problem is actually worse now.

We now must employ this “praise-worthy” team to continue their efforts to keep retention at 93%.

We may not have fixed the real issue: unsatisfied and anxious customers. We didn’t stop customers from trying to cancel. Customers will keep trying. It may increasingly become harder to keep them.

The real churn will happen when that team burns out as retention starts stagnating again. Then, a new team comes in. New ideas, new tricks, to retain customers.

Fix the real problem. You save the 2%. You save the other 7%.

You can stop paying the retention team and put money in your pockets.