Taking advatage of churn reason analytics

CS leaders are always looking for ways to improve the processes and playbooks in their organizations. One of the most important motions is risk mitigation and churn prevention. This process entails doing deep dives with account teams to understand the reasons that led to churn. Although a lot can be done proactively to mitigate potential churn, when churn does materialize, there are a lot of learning opportunities. The key is to have a program in place to get the most out of these learning opportunities, and it can all start by having the right amount of churn reason analytics in your CRM.

Review your CRM for account data collected

As a first step, CS leaders should review the data collected from the accounts in their CRMs. At a bare minimum, accounts should have:

1. Start date
2. Renewal date
3. Annual Recurring Revenue (ARR)
4. Account health (green, yellow, red OR score)
5. Account team (CSM, AE, supporting team)
6. Lifecycle stage (onboarding, adopting, nurturing, churned, etc)

More data will be specific to the product/service offering like consumption analytics (usage, adoption), renewal and expansion opportunities, etc.

A lot of times when accounts churn, nothing is tracked about the reasons that led to churn. Most companies will just flag the account as churned in fields like the "lifecycle stage", put the ARR value to $0, and unassign the account team attached to the account. By adding churn reason fields to your CRM, you'll have the ability to do periodic churn reviews that can uncover trends and patterns that can help you avoid future churn.

Add fields to collect "reasons for churn"

Expand your CRM to allow account teams to give details about the reason for churn. Depending on your CRM setup, you could do this at the account level or opportunity level; the advantage of doing it at the opportunity level is that you can expand your analysis to failed expansion motions. These are some fields you can offer:

1. Churn reason - a multi-select dropdown with a few common options like:
   1. Bad product fit
   2. Not getting ROI
   3. Went with a competitor (expand further)
   4. Product deficiencies (expand further)
   5. External factors (expand further)
   6. Pricing
2. Churn reason details - text box to capture further details, especially for reasons like "went with a competitor", "product deficiencies", and "external factors". You can also have a pre-populated list for these to normalize data collection.
3. (Optional) Churn mitigation attempt - text box to list any churn mitigation attempts. This can help improve the playbooks in place by measuring efficacy.

Analyze the data during churn retros

Gather your CS and GTM leaders to discuss the findings from the data. I suggest you run quarterly reports based on the churn reason fields to uncover findings and trends. Present them to other cross-functional partners like Engineering, Product & Design (EPD) so they have more data about product fit and deficiencies. I led this motion and I focused on:

• The span of control - What are the reasons that are under our control, either directly in our CS team or company partners, or purely external? It helps prioritize efforts that are easier to influence.
• Correlation to ARR and account tenure - What accounts churn faster and how much was the spend? Place special emphasis on long-tenured accounts with big ARR.
• Use AI to categorize churn reasons details - For the free-form text box fields, use AI to bucket them into common categories. This exercise is super interesting when you analyze the progress over time (for example, quarter over quarter).
• Review current churn mitigation processes - This allows you to retire ineffective programs and try new ones as the product and the market evolve.

Iterate and keep teams accountable

Take a step further and make sure that CS teams and other cross-functional partners follow up on the proposed changes. As teams refine the product and iterate over processes, it's very important to be able to show how these are improving the churn analytics, reducing churn, and improving Net Dollar Retention (NDR). This will keep them motivated and will ensure significant changes to your bottom line.