NEW DATA INSIGHT: Integration is a strong predictor of customer results
2023 Churn Benchmark Report: 10 Key Churn Factors to Understand in 2023
QUOTE OF THE WEEK: The most important question in business...
WHAT DOES THE DATA SAY: "It's a really good early predictor of success when customers integrate their solution with other systems."
Many solutions are capable of integrating or connecting to other systems, usually to enable more or better results.
The question is:
❓Does integration impact customer results?
I took this question to ChurnRX's huge customer retention benchmark database, filtered it down to companies with integration options, and then divided customers into two groups: those who had integrated and those who had not.
📊 The results are fascinating...
⦿ Customers who connect the solution to another system have double [2X] the average lifespan of those who do not!
⦿ Integration is one of the earliest indicators of ultimate customer retention.
WHY INTEGRATION MATTERS →
► Integration matters because it's frequently a key factor in achieving results, but also because it is often essential to MEASURING results. And measurable customer results are the most important driver of long-term customer retention.
► Integration is especially valuable as a rare LEADING INDICATOR of customer success. What makes it a leading indicator is that it's a step that happens BEFORE customer results arrive. Leading indicators are almost always early customer behaviors or actions.
💪 This all makes it important to track customer integration during onboarding and to add to the customer health score!
CHURN CHEAT #1: They were never a "customer"
🤥 There's a lot of dodgy behavior when it comes to customer churn. It's such a big deal that it's no surprise people will find every way possible to fudge, contrive, and generally obfuscate things in their favor. I've been keeping a list of the dirty tricks and will be exposing them. Here's the first one...
CHURN CHEAT #1: THEY WERE NEVER A "CUSTOMER"
Companies use this dirty trick to make churn 'disappear' simply by declaring that those customers who leave before a key milestone were never really "customers," so it doesn't count as "churn."
For example, they use the justification of a FREE TRIAL to suggest that these aren't real "customers" because they haven't yet paid anything.
These are really just "leads," and this is just all part of the "sales process."
But the problem is there's a real cost to acquire these "leads" which won't be recouped if they don't stay.
In every conceivable way, these are customers:
✅ They were acquired through marketing and sales efforts → just like a "customer"
✅ There was a real cost to get them to this point → just like a "customer"
✅ They are using the product → just like a "customer"
✅ It costs the company to provide them the access → just like a "customer"
✅ Usually, the company also invests in support → just like a "customer"
✅ They can choose to stay or leave → just like a "customer"
✅ The company loses money when they leave → just like a "customer"
THESE ARE CUSTOMERS, REGARDLESS OF WHAT YOU CALL THEM!
Either way, it's still necessary to do what it takes to make them successful enough to "convert" to become "customers."
And the only way to do that is to understand them and why they stay and leave in order to create processes that greatly improve their results. → Just like what you do for customers!
Don't fall for this obvious con.
CHURN CHEAT #2: Redefining "Cancellation"
Another dirty trick for hiding churn is to label churned customers something other than "canceled."
An example is when companies classify customers as "paused" or "on hold," which is a favorite that always seems to reappear during hard economic times.
The pretense is that these customers are merely "taking a break" for the moment, and a "pause" in their subscription is "doing them a favor."
This is a classic churn deflection method made famous by the cable companies: they force customers to call the company to cancel, and then they coerce them into agreeing to put their subscription "on hold."
WHY IS THIS DODGY?
☒ By deflecting cancelation requests from the churn numbers, it obscures (or at least delays) the most vital of all customer feedback signals.
☒ Classifying customers as "paused" isn't valid because there's no proof of any real change in the customer's intent.
🤥 I've even seen companies brazenly justify this tactic on the excuse that some canceled customers eventually resubscribe and therefore counting all of them as churn would "distort" their churn numbers.
The question of how to count customers who churn and then later rejoin is certainly a valid one to address. However, it's impossible to make a sincere case for this approach as the appropriate solution.
👉 CHURN IS THE TRUTH! 👈
✅ Churn is the ultimate pain signal in any business.
✅ Like your hand on a hot stove, it's there to alert you to grave danger.
✅ Anything that obfuscates churn will limit your power to improve.
Download your copy of the 2023 Customer Churn Benchmark Report
Learn what benchmarks have impacts on customer churn, such as Customer Satisfaction, Customer Size, Sales Discounts, and more!
QUOTE OF THE WEEK:
The most important question in business is: WHY DO CUSTOMERS STAY?