Greg Daines of ChurnRX gave a fascinating presentation at KAMCon 2023 titled, "Building Account Strategy On The 3 Laws of Retention." He shared some of his churn research results and revealed how we can overcome the obstacles to customer retention so we can minimize customer churn.
“Almost any factor we measure has some correlation to retention,” according to Greg. He continued, “There’s only one thing we’ve ever tested that never correlates with customer longevity and it’s satisfaction. It’s not a thing for customer retention.
We should make our customers happy, and shame on us if we don’t, but it has nothing to do with how long they stay. So, if it’s not that, then what is it?”
“There is one factor that is by far the most predictive of customer long-term retention: measurable results.” According to Greg, “Customers who have measurable results stay six times longer than customers who don’t.”
And it turns out that even unhappy customers will stay longer. “Customers who’ve had one or more negative experiences, pay more than twice as long as customers who’ve only had positive experiences,” according to Greg’s research. “It turns out that if customers are going to get results, they actually have to use the thing you sell, to get the result they bought it for.” He pointed out that someone who’s using your product is more likely to run into problems than someone who isn’t using it.
Of course, “the negative experiences don’t make people stay longer. It’s the actual trying. It’s the investment of their time and energy into using the thing that inevitably leads them to problems,” Greg pointed out, “The people who are going to run into trouble are the ones who actually try.”
“The real reason they stay is for results,” Greg shared, “And the real reason they leave is because they either aren’t getting results, or they no longer believe they will get results.”
“The difference between customers who succeed and those who fail is that customers succeed because they change how they work to take advantage of the way your solution provides benefits,” Greg explained, “and customers who don’t (change), fail.”
But how do we make customers change their behavior?
To solve customer behavior problems, you need to help them understand why and how to change their behavior by helping them make that connection. The best way to do this is to help them identify a specific result they want to achieve using your product or service and tell them what they need to do to achieve it.
Before you build an account strategy that helps change customer behavior and achieve measurable results, it’s important to understand that not all churn is the same.
“Churn is non-linear,” according to Greg. “We lose more customers earlier than later. It turns out that the reasons customers churn early are different than the reason they churn later.”
In fact, there are three kinds of churn: early, mid, and late. The reasons for early churn are different than the reasons for mid and late churn. What this means is that there are three ways to produce customer longevity.
1. Early churn: Customers must achieve initial results early or they fail. If they don’t receive some feedback, most customers get discouraged early and fail. They may not churn if they have a two-year contract, but they have failed and they failed early.
Since customers who receive measurable results stay six times longer than those who didn’t, helping customers achieve results quickly is essential to churn prevention.
2. Mid churn: We must measure results. Interestingly, “just measuring doubles the lifespan of your customer even if they find out that they’re getting terrible results,” according to Greg’s research.
He asked them why they stay if they are getting poor results based on measurements and they said, “What’s my alternative? If I go to your competitor, they won’t even measure my results. At least you care enough that you’re putting us on the screen. I think we can find our way to results better with you than if I leave.”
So, measuring customers’ results gives you a competitive advantage.
3. Late churn: We must improve results. The better the results, the longer customers stay. This eliminates the early churn problem.
However, if you produce good results for your customers, they’ll stay for a while but eventually want more. Their problems evolve over time and “we’re either along for the journey with them, or you aren’t.” as Greg put it,” so, you have to improve customer results.” But you do not need to improve them massively.
Addressing these types of churn keeps churn low enough “that it’s no longer getting in the way of your company’s growth,” according to Greg. And you can update the account strategy plan on a regular cadence of every 6 or 12 months, depending on your business, for continuous monitoring and improvement.
Here’s how Greg recommends building a customer results strategy with the customer. This 3-step process helps you change your customer’s behavior and overcome the three churn types.
Guide your customer through these three steps collaboratively:
1. Key result: Ask the customer what key result they want to accomplish by using your product or service.
2. Measurement: Identify the best way to measure progress toward and achievement of the customer’s desired key result. The key result they select must be measurable. Otherwise, the customer can’t see the benefit of achieving the result.
3. How: Now that the customer knows their why (key result) you need to tell them exactly how to achieve it by spelling out what they need to do.
Greg recommends limiting the key results to no more than three since “customers can’t succeed doing 50 new things.”
Then store these customer plans in Kapta to make it easier to measure and monitor progress toward achievement of customer key results.
When you implement this three-step process, you’re “in a position where a customer understands why and what to do. And your job is to hold them accountable,” Greg explained.
So, “What happens when you get six months in, and they haven’t done any of the things on the list?” Greg asks, “You say, ‘Well, we’re looking at your measured results and they’re terrible. Did you do any of the three things we talked about?’ No. ‘Why?’” He continued, “Whatever the answer is, say to the customer, ‘Now you know why you’re not getting good results. What can we do to help you with that?’”
The results are ultimately driven by the customer’s behavior. And if you’ve laid it out clearly, measured it, and followed up on it, you’re likely to boost customer results and keep customer churn to a minimum.
Looking for a platform to manage your customers’ measurable results? Schedule a call with a team member to see how Kapta can help.