Customer Success Magazine
For the Management of Customer Lifetime Value
By Mikael Blaisdell

An old Country & Western song about lost relationships includes a funny line: “When the phone don’t ring, you’ll know it’s me.”  There is little to smile about, however, when the subject is lost income streams and customers for a SaaS company.  Customer Success Managers who don’t want to be singing the blues can’t afford to wait until renewal time before making sure that the relationship is in good shape, for by the time the renewal doesn’t happen, it may well be too late to recover.  Early detection of an at-risk scenario is a challenge common to all CSM teams and practitioners.  What are you doing about it in your company?

SaaS Risk/Churn Indicators

Behind the typical Green/Yellow/Red status indicators in a CRM system for the health of a given customer relationship, there are various metrics and calculations.  We know that the two biggest churn generators for SaaS B2B vendors are disconnection, the loss of a sponsor in the customers’ organization, and disengagement, the failure by the customer to fully adopt the features & functions of the application.  Given this knowledge, the departure of an internal champion or decision-maker in a customer’s organization should definitely be cause for concern, as is a scenario in which a customer bought 100 licenses but only 5 of them are being used.  What about the loss of a significant number of the “power users” at a customer?  Are there key features & functions in your app that every customer needs to be using?  If so, what actions should be taken when a customer doesn’t begin using those features — or stops using them after a while?

Besides the two main churn factors, there are others that can also indicate a customer relationship that’s coming apart.  Has the customer consistently been reducing their spending with you, scaling back the number of licenses they renew, training content consumption or their use of professional services?  Is payment for invoices becoming more and more delayed?  How about numbers of customer support cases entered, or logins to the support knowledge base?  Do you track load times to see if a customer has been experiencing lower overall application performance?  Was the customer asked to serve as a reference — and they declined to do so?  Has their participation in your surveys been falling?  All of these can be warning signs, though the weighting or significance of any can vary by application type, market and size of customer.

At the Source: The Customer’s ROI

no-churn-TMBeneath the various indicators of an at-risk customer relationship, there is one certainty: A customer that is not getting the desired level of measurable value out of their relationship with your company is one that is surely headed for the exit door.  What are you doing to measure your customers’ ROI, and to be sure that they are in agreement with the results?  To find out what others are doing in this regard, join us in the ongoing discussion in The Customer Success Forum on LinkedIn.

 

(An earlier version of this article was originally published in The HotLine Magazine.)

January 27, 2014