By Jeremy Gillespie
As much as we don’t want to admit it, customers are sometimes going to cancel. The real problem is that many companies simply let customers walk away with the click of a button. Yes, there are warnings, and you should have systems in place to re-engage people when they show signs of churn. In this post, however, we’re going to focus on how you can optimize your cancellation process to retain more customers, or at the very least gain value insights from their departure.
Optimize Your Cancellation Process
You’ve worked hard to get your customers and spent resources on giving them the best experience possible. Optimizing your cancellation flow can do wonders to keep (and potentially delight) customers who are considering leaving. The two ways you can successfully handle objections during cancellation are:
- Show users what they’re losing by leaving
- Give users a compelling alternative to cancelling
A dramatic, but good example of showing users what they’re losing by leaving is Facebook. Their famous cancellation flow shows you all of the friends and photos you’ll be leaving behind.
With B2B or SaaS companies, a common way to offer an alternative to cancelling is to allow users to pause their plan, give them a discount, or downgrade to a free plan. All of of these options allow you to continue to engage them and provide additional value over time.
3 Steps To Retain Customers Who are About To Churn
Unfortunately, those options won’t help you to retain everyone. Here's how to gather data, analyze it, and use it to prove value and win them back.
Step 1: Know why they're leaving
This is the low hanging fruit that many companies miss out on. Whether it’s manual or automated, you need to capture what has prompted a customer to leave. There are many ways to collect this information:
If you have a self-service cancellation flow, an in-app survey is highly recommended. Immediately after a user has hits “Cancel,” present them with a survey asking them why they're leaving. Use a list of preset options, but allow the flexibility to input a different response. Using presets will get you a higher response rate and make reporting simpler. Using preset options also allows you to route users as they progress through the cancellation flow and present them with the best offer. For example, if a customer is leaving because the service is too expensive, you can allow them to downgrade or give them a discount.
Another way to approach this is through email. Most companies send a confirmation email. A better option is to build an automated email sequence sent 2-3 days after they’ve cancelled asking them for fill out a short survey. Depending on your bandwidth and the reason the customer left, you may want to set up an interview to gain a deeper understanding of their decision-making process. Email is a great way to get that scheduled.
Pro-tip: Pair an email survey with an in-app survey to increase your response rate and gather more information from departing customers.
Step 2: Offer a solution based on the churn reason
Once you’ve begun gathering data, you can analyze common reasons why customers are leaving and see patterns. Typically, you will classify them as:
Priced Out - If customers are leaving because the product is too expensive, that indicates that you may be acquiring the wrong customers or that your pricing strategy isn’t aligned with those businesses. Obviously, the easiest way to address this is through discounts or downgrades, but this is a slippery slope. You may retain them for a short time, but the overarching problem is still there. If this is your most common cancellation reason, think about how you can provide more value or consider other pricing strategies.
Outgrown - There are certainly times where your product might not fit the needs of a business anymore. In other instances, customers may think they’ve outgrown your product, but are unaware of features or functionality. At this point, you have a few options:
- Offer a trial of a more robust plan (if available)
- Provide additional training and support to get the most out of your product or service
It’s important to note that if you have a lot of customers outgrowing your product, there’s an opportunity to expand your offering to serve these customers.
Stolen - Most CS professionals have seen situations where there is a sudden or unexpected switch to a competitor. In these cases, often the best way to keep the customer is by presenting them with a discount or upgrade. While this might retain the customer, you still need to understand which competitor value propositions or features appealed to them. You will need to address those within your product to prevent this from continuing to happen.
Neglected - Some customers leave because they do not feel they’ve received the support or help needed to be successful. If this is the case, you will need to work on being more proactive. Setting up systems to flag accounts that may feel this way or holding weekly trainings is a good way to stay in front of this.
Step 3: Never stop providing value
Many companies develop a defeatist attitude as soon as a customer pokes the “Cancel” button. You have just gathered feedback and segmented these customers, so use this information to win them back. When a customer leaves, put them on an automated sequence to deliver high-value content to them based on the problem your product solves and the churn “bucket” they’re in. For example, for customers who have outgrown your product, make sure they’re informed of new features you’ve launched and what’s on the roadmap for the future.
No Customer Left Behind
Having some customers leave is inevitable, but that doesn’t mean you need to lay down and let them walk out the door. Engage them on the way out, learn from their experience, persuade them to stay, or at the very least do everything you can to prevent it from happening in the future.
Looking for more tips on how to reduce churn in your organization? The Success League is a customer success consulting firm that offers online training and workshops, including our upcoming class on Renewals & Churn (5/31). For more information on this and our other classes and workshops, please visit TheSuccessleague.io
Jeremy Gillespie - Jeremy is a growth marketing expert who loves using complex data to build creative retention solutions. By leveraging data and technology, he excels at creating innovative retention and expansion marketing programs for businesses of all shapes and sizes. Jeremy is a founding advisor to The Success League, and is also the founder of Built to Scale, a Bay Area consulting firm focused on helping businesses build scalable customer acquisition and retention programs. He holds a BA from the University of Pittsburgh and MBA from Point Park University. He's a proud former Pittsburgher, currently living in San Francisco.