This week's Newsletter:
3 BUSINESS IDEAS THAT DIED IN 2023: Should We Start Holding Funerals for Dead Ideas?
Death is hard. It isn't easy to move on when you lose someone close to you. This is one reason we have funerals: they help us come to terms with death so we can move forward with living.
I think we should consider holding funerals for dead ideas. When you've held an idea closely for a long time, it can be surprisingly difficult to let it go. We need a way to accept the loss to make way for the useful.
💀 That's why I'm declaring the time of death to be 2023 for these three ideas...
⓵ Customer Satisfaction & NPS (R.I.P.)
2023 demolished our most cherished business belief. Until now, everyone knew that: 🙂 Happy customers stay, and 🙁 Unhappy customers leave.
Untold billions have been spent, and an entire customer satisfaction and surveying industry has been created to "surprise and delight" customers over the past decade or more.
But the promised customer loyalty never arrived. Though customer satisfaction scores have improved significantly, customer loyalty has steadily decreased.
If this idea really worked, it would have worked!
New research points us in a much more productive direction: companies that drive and measure customer results have vastly higher customer retention and expansion.
👉 Measurable customer results are the new "delight." 👈
⓶ Nail It, Then Scale It (R.I.P.)
2023 was pretty brutal for tech and SaaS companies. Sales collapsed, and customer churn appeared to spike up furiously. For many companies, the disaster materialized at the level of their basic unit economics.
But on closer inspection, it's clear the problem was always there and merely became impossible to ignore lately.
"Scaling" meant taking advantage of the fact that the cost to deliver in SaaS effectively trends to zero over time.
However, CAC and other costs have been steadily increasing for years, devouring the promised benefits of scale for many companies.
Meanwhile, widening the target market aperture has decreased customer fit, a major reason customer lifespans have been getting shorter. The result is... not good.
Growth is imperative, but our simplistic view of how it works has left behind a trail of business destruction. It's time to let this one go.
⓷ QBRs & "Touching" Customers (R.I.P.)
2023 was when people woke up to the reality that simply talking to your customers doesn't work.
The poster child for this is the Quarterly Business Review (QBR), which also became the most obvious casualty in 2023. Companies use HUNDREDS of vendors and can't talk to them all even if they want to (they don't).
It's now painfully obvious that there's no inherent value in simply "touching" customers. It's not about "low touch" or "high touch" or any kind of "touch"!
It's about driving, measuring, and materializing customer results.
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LISTS OF "CHURN FACTORS" ARE USELESS. Here's why 👉
You've seen the lists of "Churn Factors" containing literally dozens of different items organized into headings like Product, Services, Expectations, Value, etc.
🗑️ Throw these lists away. They're useless.
WHY? Because all these "factors" came from customer exit surveys.
Here's the thing: when you ask a lot of different customers why they left, you get a LOT of different answers. They're all plausible, but they're useless because...
When you chase these issues down and solve them, churn NEVER GOES DOWN.
I know because I broke my brain on this for years. I'd resolve the biggest "problems," but it wouldn't make any difference. In 25 years I've NEVER seen this approach work for any company.
WHY DOESN'T IT WORK?
I eventually wondered if I was looking at the problem all wrong. What if, instead of asking why customers leave, I flipped the question on its head and asked: ❓Why do customers stay?
Bingo! I hit the jackpot with that question. 🏆
What I learned fundamentally changed everything and led to new methods that have revolutionized my results.
📉 Once I understood what really drives churn, I was able to bring it down quickly. I've been repeating it and getting the same results ever since.
WHAT DID I LEARN?
► It turns out that there are NOT a lot of reasons that customers stay!
In fact, it ultimately comes down to MEASURABLE RESULTS:
📊 Data shows that customers who get measurable results stay 6 TIMES LONGER than customers who don't!
→ Even when they are frustrated with the product.
→ Even when they are disappointed in your services.
→ Even when they're "unsatisfied!"
This is my simple principle:
👉 Customers don't leave when they have a reason to leave; they leave when they no longer have a compelling reason to stay. 👈
Here's another way to test the logic of "churn factors"...
⦿ If [ insert "churn factor" here ] is a compelling reason to leave, why do so many other customers stay?
Successful customers use the same product, receive the same services, and have the same competitive alternatives. Why don't they leave?
The problem with exit surveys is:
► Failed customers can't tell you about something they didn't experience; they can only talk about what they did experience.
And what they did NOT experience is MEASURABLE RESULTS.
So instead, failed customers talk about the product, service, price, competition, etc.
Because these complaints are usually valid, it's easy to believe they cause churn. But they are not the REAL reasons customers leave.
But here's the ultimate way I know all these "churn factors" are bunk:
✅ Whenever I help a company start driving, measuring, and materializing results to its customers, churn goes WAY down! And quickly.
So here's my simple rule to know if something is a REAL CHURN DRIVER:
👉 Anything that gets in the way of customers achieving measurable results drives churn. 👈
QUOTE OF THE WEEK:
Anything that gets in the way of customers achieving measurable results drives churn.