Churn and retention are clearly critical issues for most companies. And for many firms, these aren’t just critical issues; they’re existential concerns that can set the odds for long-term survival. Unfortunately, however, management teams will sometimes react to apparent churn and retention issues with much more urgency and alarm than informed perspectives, balance, and nuance. And in most cases, that’s not a great thing.
Here’s an extreme example I heard about recently…
An exec-level oversight team had been tracking performance metrics for each of the individual business units under the corporate umbrella. In the most recent period, their freshly-minted-MBA analysts noticed a dramatic increase in one business unit’s churn metric. Sounding the alarms, the oversight team then set an urgent meeting with BU management to figure out just what the hell was going on and who was responsible! Heads might need to roll, by golly!
Of course, the “emergency meeting with corporate oversight” caused a mini freak-out and mad scramble within the business unit. And to what end? Well, it turned out that the oversight team had been looking at a customer-level churn metric. And though this particular metric was indeed increasing, it was entirely rational, reasonable, and in fact, intentional.
You see, the BU had been making deliberate moves to churn out customers who were inexorably unprofitable from a cost-to-serve perspective. Recognizing that all customers were not created equal in their line of business, the BU was taking steps to significantly improve their ongoing profitability by allowing unprofitable “coffin nail” customers to defect to the competition.
At the end of the day, this oversight team’s rather narrow view of churn was clearly not very meaningful, informative, or even relevant, for that matter. While this might be an extreme example, the lessons are no less applicable.
In the How to Deal With Churn on-demand research briefing and training session, we explore how leading Sales and Revenue Ops teams are working to provide much more accurate and actionable perspectives on the ongoing churn and retention dynamics specific to their businesses:
- Identifying the churn measures and retention metrics that are most appropriate for the business model and customer mix.
- Using a combination of customer, revenue, and profit-oriented churn metrics to paint a more comprehensive picture.
- Understanding the qualitative and quantitative differences between various types or categories of attrition and churn.
- Developing and maintaining organizational clarity around the short- and long-term retention priorities and objectives.
- Using diagnostic processes and investigative techniques to identify the underlying root causes of churn and attrition.
- Prioritizing the strategic interventions and improvements that can eliminate or mitigate retention issues before they ever start.
- Leveraging time-based cohort analysis to better understand and illustrate the in-market impacts of various interventions.
Throughout the session, we try to make clear that contrary to some of the so-called wisdom and popular punditry out there, churn and retention are not simple, one-size-fits-all issues. Depending on the type of business, the customer mix, the market dynamics, the financial profiles, and so on, there can be a lot of variability and nuance as to how churn and retention should be measured and managed between one company and another.
And from our vantage point, Sales and Revenue Ops groups are in the best position to help their management teams figure out what makes the most sense in their specific situation and circumstance.
So please don’t wait to be told. If you do, you might be sorely disappointed in the direction you receive. Instead, step up and take the initiative to provide the most relevant, most informed, and most accurate perspectives possible on the churn and retention dynamics in your business.
How to Deal With Churn
How can we mitigate churn and retain more of the customers, revenues, and profits we've acquired? In this webinar, learn a simple methodology for figuring out what's best in your situation.
Managing Mix to Boost Sales
Product and customer mix have an incredible amount of influence over every aspect of your sales performance. In this on-demand webinar, learn how to get proactive about "rigging" your mix to your advantage.
Retaining & Growing Key Accounts
Taking a more systemic and programmatic approach to key account retention and growth by developing a real Key Account Program.
