What’s the dirty little secret of SaaS churn?
Just look at this chart, from “Market-Based Management” by Roger J. Best, and it will jump out at you like a skeleton at a haunted house.
It seems a little counterintuitive, but the data show that dissatisfied customers who never complain are much more likely to bolt than those who complain.
This is an eye-opener for many of us in account management. When I saw this data, I realized I was spending a big portion of my time trying to make the “Dissatisfied Complainers” successful and a very small portion of my time working with the “Dissatisfied Non-Complainers.”
I had to re-evaluate my approach because the first group only makes up a small portion of churn while the second group constitutes a huge portion of lost revenue.
Here are three simple questions to help you identify dissatisfied customers who never vocalize their dissatisfaction:
1. Are they using your product?
Usage is my No. 1 key performance indicator of a healthy and successful customer. The more a customer uses your product, the more integrated your product becomes in the customer’s everyday operations — and the more dependent your customer becomes on what you provide.
Don’t confuse a complaining customer with an unhappy customer. The more a customer is using your product, the more likely that customer is to call your support department.
Sometimes we see customers with multiple support issues as unhappy, and we allocate extra time to them in an attempt to reduce SaaS churn. In reality, these are often the healthiest accounts.
The inverse is also true. Imagine a customer that never calls into support and never asks for help. You might assume that this customer is overjoyed and will stick with you for life.
Beware the non-complainers. Maybe they aren’t reporting any issues because they aren’t using your product. The silent, disengaged customer is sometimes the most likely to churn.
Usage is the first key to your client’s success. Find a benchmark that you can use to measure your client’s health based on usage.
2. Are they engaged?
An engaged customer is a healthy customer. Engaged customers openly communicate their needs. This transparency gives account managers the ability to strategize an ongoing plan to achieve success with their customers.
Signs of an engaged customer:
- Invites consultation
- Gives referrals
- Attends webinars and other events
- Challenges the limits of the product
Signs of a disengaged customer:
- Does not respond to emails
- Unaware of product updates
- Uses a limited portion of the product
- Makes late payments
3. Are they growing?
Customer growth should be the goal of an account manager. As your customers grow in size, so should their accounts.
A key indicator is the number of licenses that are assigned and being used. A client will find the highest ROI of your product when all licenses are being utilized. If a client is paying for unused licenses, the perceived value of your product may be diminished.
Pay attention to the growth and utilization of your client, and you should be able to read into the health of the client.
By paying close attention to these key indicators, you can help your customers achieve greater success. Making your customers more successful is the best way to reduce SaaS churn.
Bobby Cooper is a client success manager at XANT.
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Image credit: Kevin Dooley