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Five Tips For Startups To Reduce Customer Churn

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By John Rode, Senior Director of Demand Gen at Preact

Finding new customers costs time and money. At a minimum, it involves launching a marketing campaign and identifying and following up on leads. Given the investment involved, it makes sense to do all you can to keep your existing customers on board. But many companies, including startups, focus almost exclusively on finding new customers instead of fighting churn.

Focusing on finding new customers makes sense at the beginning, when a company is just starting out and needs to build a customer base. But as the company grows, it’s important to make the transition from acquisition to retention. A continued focus on acquisition isn’t an optimal strategy from a financial standpoint due to the costs involved, and it can also negatively affect brand management since dissatisfied former customers can dampen sales. To avoid that scenario, startups need to fight churn.

Here are five ways to reduce customer turnover:

1. Build a sales business case for long-term customer success.

From the very beginning, sales should be building a business case for your product with prospects. This strategy helps customers understand the core value your solution delivers. The approach has obvious sales benefits, but it’s also effective churn prevention: If your prospects buy into your software at an ROI-level, they become more “sticky,” partnering with you to achieve their business goals. This approach is much more effective than slamming new customers through based on a feature-sell sealed with a special deal.

2. Onboard like your business depends on it (because it does).

The first experiences your customers have with your product are critical to their long-term success – and yours. Do customers find it easy to learn? Do they recognize the value it delivers? Has the customer completed the key steps that create “stickiness”? The more you invest in your onboarding process, the more momentum customers will gain down the stretch, and the less you will have to reinvest in reselling come renewal time. Bottom line? Don’t skimp on onboarding.

3. Monitor behavior early and often.

As a startup, you need to know the precise moment your power-users and key contacts start going sideways in your software. Because you’re at a relatively early stage, customer frustration and confusion will happen. And you need to be there to smooth them out. Watching their adoption of key features and usage frequency provides great insight. This is also the best way to understand how engaging your features are. Feed this info back to the product team so they can react quickly.

Most of the time, when customers are frustrated or confused, they won’t say anything. Like any relationship that’s on the rocks, it’s the unspoken words that can be most damaging. So, bring the disappointments out into the open. If you’re monitoring the behavior of your customers, you likely also have a customer health score. Use this score to identify customers who are in need of some outreach love.

4. Strategically react to feature requests.

Customers always ask for more. Customer success must balance these requests with the need for the product team to remain focused. Consider earmarking a share of engineering time to deliver on customer requests. You don’t have to do them all, but if you don’t do any, it doesn’t bode well for long-term success. And of course be strategic in selecting the features you work on – pick the ones with the widest applicability.

5. Always be selling the vision.

As a startup, you’re essentially partnering with your first customers. That means you’re on a mission together, so you better make them feel that way. Certainly you’ll frequently need to discuss specifics with them, but be sure to constantly bubble that up to the higher-level vision that they bought into at the beginning. This will help smooth the near-term bumps. Clearly your vision is the best thing on the market, otherwise your customer would not have selected you. Just be sure to remind them of that.

It’s critical for every business to keep customers happy, but that’s especially true in the startup world. This is why it’s so important to establish your value proposition early, make sure customers reap the benefits as soon as possible and keep an eye on your customer relationship status. Monitoring customer behavior is vitally important, as is making data-driven decisions about your customer success strategy.

As a startup, it pays to be responsive to customer needs, and you’ll need to sell customers on your business to keep the relationship going. Remember, if your customers don’t succeed, you won’t either. So make sure you gain traction and establish momentum together.

 

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John Rode provides Preact prospects with the insight and knowledge they need to be successful – before they even become customers. Whether as a blog post, eBook or infographic, John’s demand generation content is geared to be as helpful and informative as possible. John has over 15 years of experience in demand generation and product marketing for a diverse set of SaaS companies ranging from business intelligence to online presentations to time tracking and predictive analytics.

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