How-to: Monitor customer churn risk with People CRM
To help you get the most out of People CRM, we've written a series of ‘How-to’ guides for various use cases where People Analytics can be applied. In each guide we’ll look at a specific problem a business may face and how you can easily use People CRM to help solve that problem.
Let’s start with a classic problem that businesses have often struggled with - reducing the churn rate. Churn is a critical metric for SaaS businesses and is very broadly calculated as the percentage of customers who stop using your service each month. Whilst this how-to guide is focused on SaaS businesses, the template can easily be applied to ecommerce or any site where online retention is important.
Teams often have no idea that a customer is planning to leave until they hit the cancel button, or until their credit card expires; by then it’s too late – the customer’s mind is set and reversing that decision is very difficult. The aim for any SaaS business is to address the risk of churn before the customer has already mentally decided that they are going to stop using your service or shop somewhere else.
The first challenge is to find a way to identify valuable customers who may be on the verge of leaving your service. You may not always be successful in retaining customers, but it will at least help you gain useful and relevant information as to why they are leaving – whether it’s because of dissatisfaction with the product, changed business needs, or another reason you haven’t even considered.
Firstly, we can identify two key characteristics that will help us identify a group of customers who are slipping away:
These are paying customers. We want to focus on a potential loss to revenue, and as such will filter out everyone but paying customers.
They have not used your service in a while. A sign of a customer on the verge of leaving is likely to be ceasing use of your product or service for a significant period of time. Be careful to set this timeframe relevant to your own user base – too long and you might contact customers too late, and too short and you might bug customers while they’re on vacation!
These two assumptions will not catch everyone at risk of churn, but will build a group that will help you find the most valuable customers who may be on the verge of leaving.
Last Seen is a default property used to identify when the last time a user was seen online. This property already exists in all, and can be seen immediately after setup in the property list.
This filter is a useful heuristic for finding unhappy customers or those who have lost interest in your service and will catch the vast majority of customers at risk of churn. The number of times a user has signed in is relative to your business. For us, we expect our customers to check GoSquared daily once they are fully set up. After some experimentation, we found two weeks was a sufficiently long time without access to warrant attention.
Monthly Recurring Revenue from a customer is a key metric that many SaaS business track closely. Track MRR as a custom property in People CRM to see how much each customer is paying you per month.
If the Subscription MRR filter is set to “greater than 0”, People CRM will filter out all but your paying customers. You can modify this by querying ‘less than x’, ‘exactly’ or ‘is not’ in the filter set-up, enabling you to target specific groups of paying users.
For an ecommerce businesses or one where there isn’t a recurring payment you can look at transactional data. For example, if you expect your top 10% of customers to be purchasing as least once every two weeks from your store you can set up a filter for transactions “Not within last 14 days”.
Tip: To display Subscription MRR and other properties and events in the list view of a Smart Group, click on the settings icon next to the ‘ID’ to add more columns.
What can I do with this information now?
Once you’ve set these filters up and have a list of users, save them as a Smart Group and you will have a collection of users who are still paying but have not logged in to use your product for a while now.
With this Smart Group, your team can swiftly reach out to people who may be slipping away before it’s too late. Use the People CRM profile view to understand exactly how each user been using your service so that you can resolve their problems. Reaching out to these customers in a personal and well-timed manner enables you to turn customers who are walking out the door around. Your high churn risk customers can start to feel valued and successful while using your service.
You can export any Smart Group as a CSV file to be used in a variety of services, including MailChimp to allow you to email your customers. The export will include data such as “First Seen” and “Engaged Time” so that you can run your own analysis in a spreadsheet app like Excel, too.
Keep in mind when approaching customers that they are not guaranteed to be leaving your service - he or she might have gone on an extended holiday, and looking forward to signing back in when they return! Nevertheless it won’t hurt to check in and inquire as to how things are going - there’s just no need to presume.
You don’t need us to tell you that each business is unique so experiment with different filters to gain a solid understanding of what a dissatisfied customer looks like for you. We hope this how-to guide presents a starting template for addressing churn and building stronger relationships with your customers. If you have any questions about how you could be doing more to please your customers please get in touch with us and we would be more than happy to help.