What types of churn categories really matter? Your guide to the top 5
Determining the top churn categories to track...Oh boy. Does this topic make you cringe? It makes me cringe. The thought of wading through dozens of churn categories, intricately nested, with attempt after attempt to capture every piece of detail that matters. Shudder.
There’s the big question- what types of churn categories really matter?
Tracking churn is so important. And, it’s possible to do this systemically without causing headaches.
Ultimately, you want to track churn reasons in a way that helps you address business problems over time.
This is hard. Take it from Ben Handzo, Product Manager at Bird, who put it like this, “Every customer who churns feels like a special case; but the only way to solve your big business problems is to put churn into large groups big enough to drive prioritization of change.”
Wise words- it’s important to gather data that will help drive change. In order to do that, you can’t dilute the overarching reasons customers churn into microscopic, unusable reasons.
How to get started with the top churn categories to track:
Bucketing churn reasons should give your team actionable insights into potential changes to the product, service or overall customer experience to help ensure customers stick around.
Are customers leaving because the product didn’t fit their needs? Was it too complicated to use? Too expensive?
But it’s a slippery slope. If you start tracking the churn reason, “Price,” I bet soon your sales team is going to want more insight into this. How high is the price barrier? Big, or small?
Now your marketing team is getting interested- is the price too high because they don’t see the value? Or because they’re being poached by a competitor at a lower price point?
All of a sudden, the single category of “Price” becomes, “Price- Not seeing value, “and “Price- too expensive for budget,” and “Price- transitioning to competitor” and the list goes on.
So, how do you stick true to churn reasons that will be helpful without going overboard?
Here’s some guidance on the top churn categories to get you on the right track.
5 essential churn categories to track in SaaS
#1
Price
You will be constantly iterating on your price point, strategy and models. So it’s important to track anytime a customer leaves as a result of price. More often than not, churn as it relates to price is going to be because your product is too expensive. Price is one of the top churn categories you should be tracking.
Since Price is a big category, you might want to break this one down a tiny bit. The best way is to pick 2-3 of the most common sub-categories and track these accordingly. For example, the Price bucket could include, 1) Price is too high for customers, 2) Customers leave you for a lower-cost competitor, or 3) Customer downgrading their tech stack. These all provide helpful nuance, so this is a good place to add a little extra detail in your categories.
#2
Product fit
Arguably the most essential churn reason to track, it’s important to know when your customers aren’t receiving the value and utility out of your product they expected. This feedback should be distributed and gobbled up by nearly every team. Product, marketing, sales, customer success, professional services- there are a lot of ways to adjust a product to drive further value or enhance the overall customer experience to ensure value is being achieved through educational and support resources.
This one gets tricky- it’s easy to get caught in a trap where you want subcategories for every feature that may not be perceived as valuable. This can easily get overwhelming, and often, customers may not be speaking in the same language as you are. If a customer says their issue is with your Permissions feature (and you categorize it as such); the issue may not be with the feature at all, but something else completely unrelated (such as access to support information about how Permissions works; or their accountant just had a crappy experience the first time they logged in, and this translated to a Permissions issue in the eyes of your customer).
Including dozens and dozens of Product churn reasons specific to features can get overwhelming and dilute the overall story. My suggestion is to keep this one simple- categorize this churn accordingly, and do whatever you can to get detailed feedback from customers.
#3
UX/Ease of use
Technically speaking, UX could fit under the Product churn category. But I think it’s useful to keep this separate, as the way to solve UX challenges can require different people, projects, skills than iterating on product features.
You might have the most robust, feature-rich product in the world, but if people can’t figure out how to use it, and create habits around your product, they’ll leave. The delicate balance of utility and usability is so important, and it’s good to track when usability challenges beat out utility.
There’s also a lot of value in learning about UX challenges for support and customer success teams. Sometimes a little extra guidance, training, or providing more robust resources can overcome usability challenges. So be sure UX is in your churn reasons.
#4
Customer experience
Believe me, I know better than anyone how tough it is to experience someone churning over “poor customer service.” There are few teams harder working than Saas customer support teams (you all deserve hero badges and raises), but there are always situations that pop up where customers just don’t like the experience they have. This can be a hard one to quantify, but it's a top churn category you should be tracking.
Make sure you’re tracking customer experience as a churn reason. But don’t bother going deep into subcategories. If there is a real issue with your customer service processes or customer onboarding experience, more often than not, your managers and team leads are keenly aware. Save your precious churn reasons for other areas of the business that really require outside feedback to unearth issues.
#5
Customer business change
There is always some subset of logo churn that just cannot be avoided. Customers go out of business, sell their company, stop doing whatever they need your product for. So it’s good to have a churn reason that can capture what often leads to “unsavable churn.” This can be a hard pill for execs to swallow because of course, we all want to save every single customer. But in a large-scale B2B customer base, the effort to try and save someone who is struggling with price or has an issue seeing the value of the product is going to win every day over trying to save someone going out of business.
Now, be careful not to be too liberal with this bucket. There’s usually always a story you could build around how, technically, any type of churn could be a “business change.” So just build some good definitions and parameters around this, and use this to capture all the unavoidable, and completely normal, customer churn that happens as a result of their internal business circumstances, not because of your product.
Churn reason organization FTW
There’s no reason for your churn reasons to get out of hand. Keeping consistent, manageable churn categories will help deliver feedback on areas to improve, build your Ideal Customer Profile, and ensure your teams are focusing on the right work to help drive value and success to your customers.
It’s easier said than done. Put someone in charge of being the enforcer anytime someone at the business wants to add another churn reason. Work with your team to determine the top churn categories to track. Really dig in and make sure adding any categories will be valuable in the long run; and if so, celebrate this awesome iteration on your process. If not, you just saved your SalesForce admin a whole bunch of headaches trying to wrangle dozens and dozens of churn reasons for each Board meeting.
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