How to Predict Customer Churn Before It’s Too Late

by Trevor

Predicting churn is one of the most important things you can do for your business, but it sounds far-fetched, like a concept ripped from a science fiction novel.

How can you predict when a customer is about to leave?

Should you consult a Magic 8 Ball?

Image Courtesy of MemesHappen

For SaaS businesses, there are actually several big warning signs, in flashing neon colors, that indicate churn probability. Even though these warning signs are hard to miss, if you don’t know what to look for, they can easily be misinterpreted or brushed aside.

Let’s look first at the top warning signs that predict probable customer churn ahead. Then, we’ll discuss how to use these signs to prevent churn from happening. Let’s get started.

Here’s a checklist of what to do to minimize churn.

App Usage Has Declined

App usage is one of the easiest predictive metrics to track. If a customer isn’t getting what they need from your app, they’ll stop using it. App activity may end weeks or even months before the customer actually cancels. But make no mistake– cancellation is coming.

When you see a decline in app activity, jump on it right away. Your immediate course of action should be a re-engagement email series.

In this series, I recommend educating the customer on how to use your product. Also, send case studies that align with the customer’s stated goal for using your product. Finally, have your customer success team reach out personally to each disengaging customer to offer ways to improve the customer’s experience with your app.

They’re Not Opening Your Emails

If you send out email after email but are met with dismal open rates, churn is on the horizon. Customers who are highly engaged with your product are likely to open up your emails… at least some of the time. You’re never going to get 100% open rates, but you should never be satisfied until you do.

Email marketing is one of the best ways to deter churn and remind people to come back and use your product. It’s especially crucial in the beginning stages when the customer is still trying to understand your product. If you’re sending the wrong emails, they won’t get opened, and your customers will slowly drift away.

Low open rates across the board could indicate that your email content isn’t resonating with your audience. In other words, your emails aren’t helping your customers solve their problem. Don’t make the mistake of trying to speak to all of your customers at once, through the same email.

Instead, segment your email list into groups. You can slice and dice your list in different ways, including: app activity level, job title, user end goal, trial user, customer pricing level, and more. Segmenting your email list allows you to write more targeted and relevant content that will appeal to your users.

Through your emails, you can help your customers succeed with your app.

The right message can be compelling enough to pull them back to your product and remind them why they signed up with your product to begin with.

Administrative Changes Within the Account

Are you a B2B Saas? When you work with an entire business and not just a single consumer, churn is often a result of an internal change within that business account.

Let’s say your key contact for a business account leaves the company or gets promoted to a new position. Now, you have to work with a completely different contact– someone with a different personality, who may not “get” your SaaS, or may be looking to switch things up and cut costs.

Sometimes change is swift, and you’re not always privy to the internal operations of your business customers. But, if you establish a solid relationship with your customers with the help of your customer success team, your contact may give you a heads up.

Being prepared is crucial. If you know that there are internal administrative changes within an account, your customer success team can reach out to the business and offer to host a webinar and train new employees on how to use your product.

If you haven’t already, forge relationships with all the key contacts for your business accounts. Follow them on social media (especially LinkedIn so that you may know if the contact changes jobs). Send personal (not automated) emails to them periodically, asking how you can improve their experience. Or actually call them on the phone (it’s a dying art and a surprising gesture).

Expired Credit Cards

Credit cards expire every three years on average. That sounds pretty innocent, but here’s what should worry you: expired credit cards are among the top reasons why customers churn.

It’s not that the customer actually wants to leave, it’s just that their credit card expires, and they forget to update their information. Or, in another scenario, the customer isn’t notified that their credit card is about to expire. So, they’re blindsided when they attempt to access their account and find out that they’ve been locked out.

That’s not a good look for your customer service.

And now, your customer has to go through the headache of updating their information, reactivating their account, possibly paying a late fee, etc. For your customers, it may be easier to just leave. Yikes.

Don’t let an expired credit card be the reason for your customers to leave. Use pre-dunning emails to ask customers to update their billing information before their credit card expires and the payment fails. This can help you prevent unintentional churn and improve positive sentiment. Customers like when businesses are proactive and not reactive.

More Complaints

Complaints are a part of doing business with the public. You can’t please everyone. But, have you noticed an increase in customer complaints recently?

For every one squeaky wheel that complains, there are at least two that don’t. They’ll just quietly take their business elsewhere. So, be thankful for the squeaky wheels, and don’t forget to find out why they’re squeaking. Their complaints can help you identify what’s not working in your product. By addressing these concerns swiftly, you’re not just helping one customer, you’re helping the ones that suffer quietly in the background.

By the way, squeaky wheels don’t always contact you directly. This is why social listening is crucial for any SaaS. What do people say about your product on social media platforms like Twitter or Facebook? Has anyone complained about your product in a blog post?

If you don’t know, you need to find out. Fortunately, tools like HootSuite or Google Alerts can help you monitor the web (automatically) for any mention of your brand or products.

Final Thoughts

Predicting and preventing churn is just as important as acquiring new customers. In fact, I would argue that keeping customers is even more important than constantly getting new ones. If your customers are canceling, you need to know why.

You need to get Retained. Retained will show you who’s in danger of churning and why. We look at key indicators, including sentiment and in-app behavior to make an intelligent prediction. Get email alerts before the churn so that you can stop it from happening in the first place. This is the one app that can help you predict churn before it’s too late.

Get an invite to Retained now.

Don’t forget to download this checklist for minimizing customer churn.

Kill your churn. Keep more of your customers. Get an invite to Retained.

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