Why you absolutely need a churn goal for your company (and who should own it)
The path to successfully retaining customers includes onboarding, activation events and consistent feedback—with measurement all along the way. Simply put, you have to know your numbers if you’re going to reduce churn and grow your subscriber base sustainably.
We just participated in a webinar about customer retention success. During the webinar, I polled the audience about their churn goals and learned some interesting things about the state of churn ownership.
Question 1: Does your company have a published churn goal?
23% of respondents did.
68% of respondents did not.
Nearly 70% of companies without churn goals is a pretty staggering number, but it’s consistent with my experience in the subscription industry and with the companies I talk with frequently. And not all of these conversations are with early stage companies who’ve yet to scale. I’ve met with some well established organizations who don’t have clear targets for churn.
We know that what gets measured gets done. Without clear goals for reducing churn, customer retention initiatives are not going to move to the top of an organization’s priority list.
The lack of commitment to a churn goal is why the subscription industry has such a problem with customer retention today.
Most companies don’t want to only pay lip service to reducing churn. They actually want to keep more of their paying customers for longer. So, what stands in the way of establishing goals for churn? Here are 3 reasons.
Churn is not as sexy of a number as other business metrics
Because churn isn’t as glamorous as acquisition and conversion related numbers, it doesn’t get the mindshare that some other metrics do, but is nonetheless a key part of a company’s growth equation.
It’s difficult to accurately track and reduce churn
If companies embark on setting a churn goal, it means teams must be activated to respond. Those teams don’t always know what systems should be involved in gathering and surfacing the correct data for a retention initiative. And sometimes those teams aren’t working together or within the same system. For churn to be reduced, it often requires coordination and cooperation across departments.
There’s a lack of strategic churn leadership
Successful subscription CROs and CEOs are truly lifecycle centric—not just sales champions. The messaging given to a sales organization, and the company as a whole, needs to focus more on the full customer journey and not just the acquisition event. Churn leadership lacks in most companies because ownership is ambiguous, which leads to the second poll.
Question #2: Who is responsible for achieving your churn target or goal?
30% - Marketing
27% - Customer Succes
15% - C-suite
9% - Sales
9% - Other
5% - Product
2% - Growth
2% - Operations
These answers illustrate how churn has a mix of ownership in companies today. Personally, I’ve experienced more product, growth and operations involvement than is represented here (likely due to the fact this was a growth marketing audience). And I’ve seen a growing presence of marketing representatives involved in churn management.
Marketing is equipped to tackle churn
Many companies are shifting their focus to the full customer lifecycle instead of purely acquisition activities. That’s why we’re seeing teams like customer marketing, advocacy marketing, lifecycle marketing and account-based marketing grow within subscription and SaaS businesses. CMOs are increasingly responsible for CAC:LTV, not just CAC, which means that they’re optimizing their acquisition strategies on the ideal customer profile (ICP) for the business over solely lead conversion.
Marketing is also more prepared for the nature of churn initiatives. They typically own more data than other departments and manage its various sources. Marketing teams are accustomed to using automated systems to solve problems (think CRM and marketing automation tools), so they understand what it takes to track a broad issue like churn.
Product and engineering are churn stakeholders, not owners
Product and engineering organizations are more stakeholders in churn initiatives than they are the drivers of the initiatives themselves. These organizations are focused on building the best experiences for customers, and they typically aren’t involved in churn beyond incorporating insights (from sources like exit surveys) into product roadmaps. Armed with the right data, product and engineering teams can make significant and meaningful improvements to product, which makes it imperative that feedback is systematically and frequently gathered from customers who churn or show intent to cancel.
C-suite churn ownerships spells trouble
Leadership and ownership are two different domains. Leadership supports a customer-lifecycle focused culture, publishes churn goals and speaks to metrics within the C-suite. Churn ownership is responsible for executing on and measuring retention programs. If churn ownership is happening at the C-level, it’s likely not a true priority to the organization. C-level leaders most likely don’t have the time or capability to execute retention programs themselves. Companies with churn ownership at the C-level are most likely represented in the 68% of companies that don’t have published churn goals.
If you missed our live webinar, here's my slides. In the recording, I walk through the path to customer retention success and how to measure each phase of your effort to reduce churn.
I’d love to hear about your team is taking on churn and how you handle ownership. Tweet me @Guy_Marion.
