15 important things about churn ...

I assume you know Saas, GTM, PLG, enterprise, mid-market, small market, cloud, on-prem, china internet, World internet, services and so on which means you are a Saas professional and not a noob who has just started. Being noob is good, I am an expert noob because every five years I become noob as it excites me. 

Here are 15 important things about churn … 

1 - Logos leak - churn means some of the logos may exit. Even updating the website by removing the churned customers is costly. 

2 - Revenue leaks - whatever stage of the company, revenue, product, your age, emotions you are in; this hurts. Try canceling your cell phone service; they will call you 6-7 times, offer discounts and so on … 🙋 

3 - Users churn - with logos and customers, the users the customers came with are also gone. Users, adoption, transactions and behavior data is the most important sh*t for any software ever built and sold … 

4 - Customer journey breaks - churn usually happens when pieces of the customer journey did not comfort the buyers, enterprises and/ or users. I have written about customer journeys before. Think about at least acquisition, adoption, service/ support and finance/ compliance/ legal. These are a must … 👏 

5 - Customer lock-in is gone - if the customer is churned, they are thinking about churning for half of the contract terms. We should proactively pick up churn signals. Software is sold only on the assumption of customer lock-in and margins. Separate conversation about margin. 

6 - Switching cost mounts up - this is on both sides; on the customer side as well as on the software partner side. Example - you changed the houses, did the furniture a year back and now we need to do it all over again. Point noted. 

7 - Change management heats up - you onboarded a software, communicate across the company, optimise your workflows accordingly, make some compromises (yes- think like shifting from iPhone to Droid) and it takes time. If a customer churns, both sides have to work at it all over again and make some compromises again … 🏸 

8 - Team morale is impacted - I have seen this again again. As they solve customer challenges, specific team members build relationships with the customers over time. With churn, those relationships between people are kind of gone. I have seen some team members kind of crying once their marquee customers are churned.  

9 - What happens to market sentiment? Once a customer signs a deal with a software partner, the news spreads. If the relationship goes well, both are benefitted and if not; sentiment about both becomes cloudy in the market. Trust me, everyone knows; I have seen it in multiple geographies. 

10 - Careers are impacted - The impact can be good or not so good. In case of higher churn, some of the careers are impacted. Reasons for churn may be a lot different in different situations, but it does not matter … 💡 

11 - Innovation, organisation learning goes for a toss - On average, enterprises spent more than 3 months to onboard Saas and mid/ small companies spent on average 1 month plus. This time spent, the accompanied learning and the innovation opportunity cost goes for a toss. 

12 - Training time - During the journey, multiple teams see the demo, ask questions, answer email, onboards the software, do planning, train themselves and get ready for the long haul. The value of this training will evaporate unless the team members switch jobs with that knowledge. 

13 - NPS and Customer loyalty reduces - This is obvious. The challenge about churn is that it is death by a thousand cuts; so a bit hard to gauge upfront. 

14 - Finance, P&L becomes challenging - churn causes unpredictability in revenue, spread of revenue is disturbed if a big customer churns, industry insights are gone if the churned customer had significant usage, CAC bloats up, and customer turnover costs go up … 💰 

15 - Causes emotional burnout - You work with a customer for months and years; it is very hard to see them leave and meet them again and again in industry events or similar. Hmm - not sure how to measure this emotional roller coaster? 

So these are 15 important things about churn. 

Some more to take a note -

• Sometimes it is good that customers churn. Example - if you have construction software then, good churn will happen as the construction projects are completed. 

• Beware of customers signing up for trials and using the products for months and then churning. This is expensive. Do you have a money back guarantee? 

• If there is a change in your business model, some of the customers may not like it and churn. It happened with Adobe. It is painful but good in the long run. 

A lot of these apply to User churn as well … 🏍️ 

I hope this helps.

Here is a refreshing quote -

"Your most unhappy Customers are your greatest source of learning".

by Bill Gates.

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Swagat Irsale is a Growth and Scale Advocate. He works with start ups and scale ups and helps them grow revenue and build enterprise products which users use.

Connect with him for work, partner opportunities.