• Read Time 7 min
Winning back cancelled customers before they churn, lesser-known ways churn hurts your company, key metrics for new CS platform users
Flashback Friday: The very first customer that ever cancelled on me actually did so 5 full months before the end of their contract. As they started to deliver the news, my rational side knew I needed to listen carefully so I could respond to their reasoning but my emotional side was quickly becoming a full-on rage monster. I mean, really, really? They were just giving up! We were just barely halfway through their first year! Arrgghh!@?#!!$??!
A customer who tells you they are going to cancel before the end of their contract is a special kind of frustrating – but it is also a special kind of opportunity. Thus today’s Churn Fighting Focus will be all about understanding and responding to these customers. With the help of an excellent post by Chargify, we’ll dive into why it’s important to win these customers back, actionable ways you can try to save them and how to enhance your cancellation process to minimize future cancellations.
Why winning back cancelled customers matters
Subscribers who cancel but still have time left on their subscription are potential gold mines, so much so that best practice is even to not recognize their churn until the actual end of their contract, regardless of when they give notice (translation: it’s not over until it’s over).
But before diving into why it’s critical to win back cancelled customers, Chargify offers an important caveat: “Sometimes there are customers who are better to let go when they cancel without a fight. […] When you admit your product isn’t the best solution and let the [bad fit] customer go, you can then can focus on cancelled customers who have an issue you can easily fix such as alerting them to a “missing feature” that is actually already part of your product, helping them with a feature they weren’t using correctly, etc.”
The key reason it’s important to win back canceled customers is quite simple and one we are all familiar with: it is less expensive to retain existing customers than it is to acquire new customers. And just because a customer has tried to cancel doesn’t mean they are a definite lost cause. As Andrew Tate from Profitwell explains, “The key is to think about all of the pros of dealing with canceled customers instead of fixating on the fact that they hit the cancel button. They signed up in the first place. They have experience with your product and a ton of knowledge about it. The product may even still be a habitual part of their workflow. Of course, there’s a reason they’re looking to leave, so the clock’s ticking on your opportunity to convert them back.”
How to win back canceled customers before they churn
For starters, you should already have an exit survey that automatically goes out whenever a customer cancels. If you don’t have such a survey, drop everything and start there. (For a great look into the value of customer exist surveys, check out this read.)
But as we talked about last week, it’s not enough to just email your customers, you need to be calling them. Yes, it’s hard to confront failure and there is real fear in phoning someone up, knowing they are going to criticize you. But that same reason why it’s so hard to talk to your canceled customer is the reason why you absolutely must start calling them: you need to learn the truth about your service and you need to know now.
Once you’ve identified the reason(s) that led to the customer canceling, Chargify recommends working to align solutions to the customer’s problems: “This is pretty self-explanatory, but you would be surprised at how many companies miss the mark on this. If you discovered in your call with your canceled subscriber that their issue had to do with pricing, then the solution you offer should tie back into pricing.” Chargify also offers a list of actionable solutions to win back canceled customers – we highly recommend checking out the full list – but here are a few to get you started:
- Share upcoming feature releases: “By offering churning customers a glimpse of what’s coming down the line, you can excite them about future releases. Things that inspire people to stick around are usually features which save time (e.g. better importing), increase efficiency (e.g. integrating with 3rd parties) or offer additional value for no extra work (e.g. weekly reports),” advises Steli Efti, CEO at Close.io. But Chargify wisely cautions that you should be sure to only share feature releases that are within a couple of weeks of shipping; if you get too specific, you risk the customer being upset if the feature isn’t released in a time frame they feel is suitable.
- Upgrade/Downgrade: If the customer canceled because their business has scaled and it seemed your product wasn’t able to scale with them, an upgrade to a higher tier may provide them with the additional features or support they need. Alternatively, when pricing is a concern a downgrade can help fit their financial needs while still allowing them to utilize your product. But Chargify issues an important reminder: “If a downgrade entails a loss of features or support, first make sure those aren’t vital to the customer achieving success with your product. Otherwise, you’ll likely find yourself looking at the same customer canceling again in the future.”
- Allow the account to be paused for a short time period: If your subscriber’s business is seasonal, having the ability to pause their account for a few months may be all that is needed to help get through the financial difficulty of a seasonal dip.
Enhancements to decrease future cancellations
In an ideal world, you would retain every customer that you talk to but in reality this isn’t going to happen. But as Chargify points out, “Don’t let conversations with canceled customers go to waste! The feedback loop (Build > Measure > Learn) is just as important here; you can use what you learn from canceled customers to continue to improve.”
Depending on the issues you’re learning about via customer cancellation conversations, Chargify suggests that you experiment with:
- Better communication
- Better customer support
- Improving onboarding
- Trials (offering a trial vs. not offering a trial, trial lengths, requesting a credit card prior to trial signup, etc.)
- Marketing to re-align your value proposition (especially if you’re losing customers to competition)
- Reviewing buyer personas and how you’re currently marketing to those personas
- Ensuring your sales teams are properly identifying when a potential customer is a good fit and setting proper support expectations
- Cancel flows, which are an off-boarding workflow that allows customers to cancel in-app if they want but reminds them what they’ll lose if they do and gives them another, compelling option other than canceling
Customer Success Around the Web
- 5 lesser-known ways churn hurts your company: A common refrain in SaaS discussions is that if a customer stays long enough to pay back the cost to acquire them, they became a “profitable” customer and everything is great. But the fact that your customer churned out – even after becoming “profitable” – likely means you didn’t get all the value you could from them and they definitely didn’t get all the value they should have from their relationship with you. Those customers you paid to acquire – that your company put time, energy, resources, and money into acquiring – are leaving and there’s a cost that comes along with that that you might not have considered. As CS thought leader Lincoln Murphy explores in this thoughtful post, there’s more than just a dollar cost associated with acquiring those customers that aren’t a good fit for your product or service; there are emotional and other intangible-but-valuable-resource tolls associated with that churn that negatively affect your business. Murphy dives into five lesser-known ways that churn can hurt your business including diminishing your total addressable market, giving your competitors a weapon and damaging employee morale. An important read for any company that thinks churn is an acceptable and/or unavoidable problem.
- So you just implemented a CS platform – now what? For those just getting a Customer Success platform up and running, deciding what metrics to track can be confusing. There are so many data points in Customer Success, but which are the ones that really give you insight into the health of your customer and which ones should you prioritize right away? This quick but interesting post presents four key data points to get you started on the right foot with your CS platform. A great read for newcomers to CS technology.
- 6 emerging trends in SaaS Customer Success: We are truly in the Golden Age of Customer Success, with ever-improving tools and processes available for reducing churn and increasing customer engagement. Pre-customer, from day one, companies are beginning to talk about Customer Success best practices. This post dives into six emerging trends from the field including engaging earlier in the customer lifecycle, sharing results and insights with customers and the importance of self-service customer resources. A good read for CS teams who are working to stay on top of developing CS trends.
Word to the Wise
This week’s wisdom comes from a recent post about four brands that are revolutionizing their customers’ experiences. While the four highlighted brands are not all subscription businesses, we still wanted to highlight this post as this week’s wisdom because the spirit of the changes these brands have made – the spirit of being doggedly customer-centric – is something every business, especially every SaaS businesses, should take to heart. We recommend checking out the full read but here are a few points and ideas that caught our attention:
“Nordstorm is creating a seamless experience across all their channels. For example, if you’re doing a mobile search for boots, Nordstrom lets you know the nearest store where the boots are in stock, in your size. And of course, they also make it easy to purchase with a few clicks online or in their mobile app. And like most retailers, Nordstrom reminds shoppers about what they’re interested in via display and social retargeting, but they always stop these ads after you’ve purchased the items online. And now they are working on this connection for in-store or phone purchases.”
How can you create seamless experiences for your customers across all the teams and mediums in which they can interact with your business (CS, Support, Billing, as well as online, in person, etc.)? How can you ensure that all your company’s teams have deep insight into each customer to ensure superior experiences?
“Amazon is exploring new ways for customers to engage. You have to hand it to Amazon for constantly pushing the envelope on the customer experience. Their online and mobile shopping experiences are second to none, but what’s worth noting is how the company is stretching these experiences with offline channels like the Echo and Dash buttons. These devices are a nice convenience, but Amazon’s goal is to provide enough value to customers that their interactions with Amazon become integrated into daily life. When placing an order becomes as easy as playing your favorite song, that’s a seamless customer experience.”
How can you ensure that your solutions are a natural, integrated part of your customers’ daily lives? How can you improve their efficiency and effectiveness?