Learning From Churn

Question 1

Name four sources for churn

Answer 1

1) Signed a wrong customer (bad fit)
2) Failed in delivery
3) Failed to create sufficient value
4) Missed expectations

Churn rates differ between customer segments. Try to look at cohort between SMB/Ent, contract duration, payment terms, demo and industry.

Question 2

Provide examples on the financial and non-financial impact of losing a customer

Answer 2

Costs used for acquisition is lost
Time spent on trying to safe and deal with an unhappy customer
Simple cost for processing churn (administrative)
Damage on reputation in the market
TAM shrinkage (Total Addressable Market; you can’t sell to those who churned)

Question 3

How to understand churn metrics?

Answer 3

1) Revenue churn (how much revenue you’ll lose with a period)
2) Logo churn (how many customer accounts you are losing)

Question 4

Explain how you can perform a churn analysis

Answer 4

Reasons for churn tends to be multifaceted (bad experiences, lack of value etc.)

1) Track all churn events that happened
2) Enrich data (with product usage, interactions etc.)
3) Get input from colleagues
4) Analyse trends and dig into root causes
5) Socialise learnings and commit to action (share learnings internally etc.)

Question 5

What steps can be taken post churn analysis?

Answer 5

1) Identify and fix product/service gaps
2) Improve risk detection and data points (from Health Check)
3) Understand competitor strengths/market dynamics