The Three Leading Causes of Customer Churn

The Three Leading Causes of Customer Churn

Churn. It’s that awful, nasty, revenue-crushing word that every SaaS company has to deal with at some point in their customer lifecycle. Some companies experience a massive churn rate and have to fight for every customer. Others have cracked the code and find their churn rate so low, they rarely have to think about it.

Customer Success and Churn

Great customer success is perhaps the single greatest defense you have against high churn. Some of the areas where the churn rate is affected most significantly are during the Onboarding, Product Adoption, Customer Retention, and Product Expansion stages. All of these key areas are within the domain of Customer Success and by emphasizing outstanding service, you have the potential to dramatically reduce customer churn.

Indeed, within these four stages lies a full 53% of all causes of customer churn. Put a different way, by mastering these four key stages you can reduce customer churn by more than half!

But what about the other 47%? The other causes of customer churn lie in different stages of your customer’s relationship with you. To combat these areas, you need to influence the Customer Attraction, Engagement, Trial, and Conversion stages of your customer relationship. While these stages do not fall directly into the realm of Customer Success — after all, these stages deal with creating a customer not managing an existing one — you can still influence them through managing Customer Success efficiently.

This means that by developing a strong Customer Success team, you directly impact 53% of all causes of churn— and positively influence the other 47%!

The Three Leading Causes of Churn

Statistics show that 53% of all causes of customer churn are due to three leading causes. To have the greatest impact on customers and to keep your churn rate low, it’s essential to tackle these “Big Three”. Are you losing customers due to poor performance in one of these key areas?

Leading Causes of Churn
53% of all causes of customer churn are due to these 3 leading causes

1. Poor Onboarding – Results in 23% of average customer churn.

Onboarding is important. It’s here that your customer really engages with your Customer Success team and it’s here where you can make the greatest positive impact. Here are a few key tips:

  • Simplify tasks with walkthrough guides
  • Create engaging how-to videos and other content
  • Name your onboarding process and make it mandatory
  • Wrap software lessons within industry best practices
  • Monitor user health based on their behavior
  • Test onboarding approaches and measure their impact

2. Weak Relationship Building – Accounts for 16% of average customer churn.

Throughout all your interactions with a customer, it’s important to nurture a healthy relationship. They key is to make them feel listened to and for them to understand they’re working with a proactive, professional organization. Here’s how:

  • Conduct quarterly business reviews
  • Survey customers
  • Be proactive: Monitor customer health and contact them when it drops
  • Build relationships with power users, key contacts, and executive staff

3. Poor Customer Service – Accounts for 14% of average customer churn.

In a similar vein, be sure that when a customer has an issue, a resolution is never far away. Here are the top 4 customer service hacks for preventing high churn:

  • Make self-service easy: for every service request you receive, four other customers are seeking self-service
  • Put your employees first: happy employees treat customers better
  • Track response times and satisfaction ratings and use that data to improve
  • Monitor app usage to see exactly where and how a customer ran into trouble

Your Secret Weapon: a Culture of Customer Success

While the above strategies are very practical, it’s important that you don’t stray from the ultimate goal. Remember, you want to discourage churn before it ever becomes a problem. You also want to create a culture of Customer Success in your organization so the customer is considered throughout their entire lifetime at your company. Ensure everyone (from Sales to Engineering to Marketing to Customer Success) understands that their job (ultimately) is to make the customer feel like a million bucks.

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