When it comes to dating, there’s a big difference between “breaking up” after the first date and terminating a long-term relationship. Likewise, in business relationships, losing a potential sale is quite different from seeing your long-time customer walk away. While interviews with won and lost prospects provide insight into the evaluation process, churn interviews explore the deeper perspectives of experienced users who have decided to end their relationship with you. Both are invaluable to a substantive win-loss program.
Losses vs. Churn = Perception vs. Experience
Traditional win-loss interviews uncover issues that a sales team might be completely unaware of. Some responses may make sense while others may elicit a head scratch and a defiant, “Our product can do that!” Regardless, the feedback you receive can improve your product, sales team, and processes. Most importantly, you’re hearing it from the source: the actual customer.
Just as the sales org experiences losses, the customer success world experiences churn. Churn interviews need to be treated differently than post-sales interviews because of the existing relationship with the client. These former customers know you, your product, and your company in a completely different way than someone that has only had exposure through the sales cycle. Churn customers are able to speak at a much deeper level, having used your products. The opinions of experienced customers are not based on perception, but on experience.
Churn in the Customer Success World
As a former Customer Success Manager at a large software company, my main goal was to drive adoption of our product to ensure customer renewal. We had high customer retention rates. However, when churn did occur, it hurt.
I remember one particularly painful experience. Within 5 minutes of stepping into the office, I had an email from our SVP, a Slack message from my VP, and my manager and director were looming over my desk. One of my key clients did not renew and somehow I was the last person to know. I was shocked. This client was one of our strongest ambassadors and had given zero indications of non-renewal. Yet they churned. While we tried everything to save the account, the client walked away.
What was most frustrating was that we never found out the real reason behind their decision. They said it was budgetary, so we cut our prices. They still left. We were baffled. We lost that customer to a question mark and had to close the account.
“We never found out the real reason behind their decision. They said it was budgetary, so we cut our prices. They still left. We were baffled. We lost that customer to a question mark and had to close the account."
Customer churn is costly. Customer Success leaders estimate that it is three times more expensive to find a new customer than to retain a current customer. As a result, effective customer success teams do whatever it takes to drive down churn. To do so, they need to understand why customers are churning. Interviews of departed clients, especially when conducted by an objective third party, can uncover the key information customer success leaders need in order to make proactive changes that will increase client retention rates.
Role of Churn Interviews in a Win-Loss Program
At Clozd, many clients decide to do a combination of win, loss, and churn interviews. After focusing on wins and losses, one client decided to venture into churn interviews. The results were surprising. Based on the sales interviews, our client’s product was a top strength while their pricing model was a top weakness. After talking to multiple churned accounts, we gained a completely new perspective. The heart of their frustration lay in product issues. What was perceived as a strength by prospective customers actually evolved into a major weakness as they started using the product. These churn interviews provided deep, powerful product feedback that helped our client make key changes to address churn rates and increase client retention.
Different levels of engagement provide different levels of feedback. An effective win-loss program provides feedback from various points in the sales pipeline — from prospect to departed customer. Contact Clozd to learn more about how we can help you establish a world-class win, loss, and churn analysis program.