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This week's Newsletter: Article: Multi-year contracts will NOT fix your churn Upcoming Podcast Interview: How Sales can move the needle on churn Article: Why I never use "Yellow" customer health status Recent Podcast Interview: CSM TALK ep11: Greg Daines Quote of the week: If you sense your customer is at risk... MULTI-YEAR CONTRACTS WILL NOT FIX YOUR CHURN! Our latest research might shock you... Many people assume that longer-term contracts increase overall retention. Here are 4 PROBLEMS with this line of reasoning: ❶ It assumes many customers stay only as long as their contract lasts. Most SaaS companies cannot survive and grow unless most customers stay for at least 4 years or more. In that case, multi-year contracts will have little impact because they are already shorter than the average customer lifespan. 📈 Our latest research reveals that customers with multi-year contracts stay only an average of 6% longer, or about 3 additional months overall, in companies with customer half-life over 4 years. ❷ On the other hand, if your churn is very high, then multi-year contracts could have a big impact, but the problem is they are much more difficult to sell! 📉 Our data shows that in companies with high churn (less than 3-year half-life), the lifespan of multi-year customers is 45% longer on average! But only about 10% of customers sign up for them (compared to 17% in low-churn companies). 👉 The increase in lifespan from multi-year contracts is insufficient to overcome high churn and get your company back to healthy growth. ❸ But there's another problem: You can't be sure that these customers stayed longer BECAUSE of the multi-year contract. Customers who purchase multi-year contracts tend to be those who would stay without them. In other words, most customers buy multi-year contracts only after they've committed to your platform for the long term. ❹ There may be one group where longer contracts result in longer lifespans. I call them the "DISCOUNT HUNTERS." This group of customers is highly price-sensitive and uses multi-year contracts to get a cheaper deal. So what's the problem? Unfortunately, these customers consistently have higher churn rates overall because they tend to fail at a high rate, and are always chasing the latest bargain. Most of them will churn at the first opportunity. In the meantime, they tend to expend less effort to be successful and cost more to support than they are worth. In short, these customers are NET LOSERS, and multi-year contracts only serve to extend your losses on them. ✅ 3 TIPS FOR DECIDING WHAT YOUR COMPANY SHOULD DO: 1️⃣ For high-retention companies, multi-year contracts have minimal impact on overall retention. Ensure that the discount you offer is small to match the modest impact. 2️⃣ If you have high churn (customer half-life of less than 36 months), then multi-year contracts can move the needle as long as you can figure out how to sell them effectively. I recommend bundling them with upgraded onboarding and expertise services to ensure customers get measurable results. 3️⃣ In general, avoid offering steep discounts for multi-year contracts that attract those "discount hunters" who cost more than they're worth! Upcoming Podcast: How Sales can move the needle on churn! With Chad Rawlings REGISTER: https://cvent.me/xr309Z WHY I NEVER USE "YELLOW" CUSTOMER HEALTH STATUS 🚦 and what I recommend instead... Here are the 3 reasons I don't use "Yellow" customer status: ❶ I'M HYPER-SENSITIVE TO RISK As outsiders, we see only glimpses of what's happening inside our customers. ➜ If you sense an account might be at risk, you are almost certainly right, and it's likely worse than you think. Over my career, I've become extremely sensitive to the slightest hint of risk because my experience is that they usually turn out to be real, and by the time the risk is obvious, it's often too late to address it. ❷ BIAS FOR ACTION For most people, yellow means "wait." If we sense a risk that a customer might eventually fail and churn, we should always act on it. In most cases, the risk informs precisely what we should do about it. Treating every risk as something that should be actioned immediately is vastly more effective than taking a "wait and see" approach. 👉 The cardinal sin of customer success isn't churn; it's *unexpected* churn. 👈 ❸ SOONER IS ALWAYS BETTER It takes time to resolve issues and get customers back on track. The customer's willingness to engage with us to make key changes is a highly perishable resource. As a result, our impact diminishes rapidly as time passes. 🚦 For all these reasons, I don't include a "yellow" status when building a customer risk system. 🚨 One immediate consequence of this approach is that it increases the risk sensitivity, resulting in many more "Red" accounts. This can create a lot of anxiety for CSMs and AMs. But... ✅ It's less miserable than constantly dealing with unexpected churn! ✅ Early risk detection and quick intervention are among the most impactful customer success processes. The reality is that many of your current "Red" accounts are already unsavable. Most customers fail long before they churn. That's why I recommend building systems that prioritize identifying account risks early and actioning them immediately. My clients quickly find that the earlier they intervene, the easier it is to address them and move customers back to "Green"! Recent Podcast Interview: CSM Talk ep. 11: Greg Daines I joined Kevin Reinhart to talk about the simple initiatives that can increase customer lifetime value up to 6X! Episode 11 on Spotify - https://lnkd.in/eTd5W8Kc Episode 11 on YouTube - https://lnkd.in/eRDiqgtu QUOTE OF THE WEEK: If you sense an account might be at risk, you are almost certainly right, and it's likely worse than you think.

🍿Watch me demolish NPS in 7 minutes ↓ I recently participated in a LinkedIn Live debate on NPS hosted by Lihong Hicken (CEO of TheySaid). QUICK SUMMARY: 1️⃣ The vital question: IS NPS USEFUL? 2️⃣ Research reveals ZERO relationship between NPS and customer lifespan. 3️⃣ By far, the best predictor of customer retention is customer RESULTS. 4️⃣ NPS does not correlate with customer results. 5️⃣ NPS is NOT USEFUL to subscription companies! 🎦 Click below to watch my take-down of NPS THE OUTCOME OF THE DEBATE: We won the debate poll (narrowly)! https://lnkd.in/gWHtphT9 The "Blue Team," also included Dave Jackson and Manil Vasantha, and we faced an uphill battle against an audience that preferred NPS in a pre-debate poll. The "Red Team," including Bill Cushard, Adam Mullen, and Colby Bock expertly defended NPS and made some insightful points! This outcome proves the tide is turning (a little bit!) against the old ways and toward the new era of Customer Results Led Growth!

This week's Newsletter: Article: 3 actions to start holding customers accountable Recent Webinar: Using Results to Hold Your Customers Accountable Article: 3 reasons you should show customers their bad results Upcoming Speach: The Future of Customer Success New Podcast Interview: CSM TALK ep11: Greg Daines Quote of the week: There are no technology projects... 3 SIMPLE ACTIONS TO START HOLDING CUSTOMERS ACCOUNTABLE Yesterday I spoke about my method for holding customers accountable (link to video below). Making customers successful is all about getting them to change their behavior to produce measurable results. So, how do you get customers to change? It seems like a daunting task because CHANGE IS HARD! ❓ Wouldn't it be fantastic if you could commit your customers to change and then hold them accountable? Here are the 3 simple steps I've found enable me to hold customers accountable and drive meaningful improvement: 1️⃣ It starts with MOTIVATING customers to change. It's a huge mistake to assume customers know WHY they are doing this and what results they are expecting. Some customers do, but most don't. It's essential to start by defining the results that justify the change: ✅ Write down in simple terms what is the BUSINESS RESULT that the customer expects and exactly how it will be measured. ✅ Once you have that agreed, then write down what the customer will have to DO - what actions they will have to take - in order to achieve that result. (A simple tool for this exercise is my Customer Results Strategy Canvas, which you can download using the link below in the comments) 2️⃣ The next step is to COMMIT the customer to take the actions. Now that you've motivated them by showing the key results they will achieve; it's time to commit them to take the defined actions. Here's my simple commitment script: 💬 Ask them if they will do the key actions. 💬 Ask what they will need to do and who they will need to involve. 💬 Ask when they will get them done, and schedule a follow-up meeting. If they say they can't do any of the actions, then this is the moment to help them figure out what it will take: → Do they need leaders to authorize changes? → Do they need engagement from other departments? → Are they missing essential tools? Whatever is needed must be solved. Help your customers think through how they will make change happen, and supply them with any advice and support they need. Remember: 👉 Technology does not produce results. Customer behavior change produces results, and technology makes it possible and scalable. 👈 3️⃣ The final step is to follow up and hold customers ACCOUNTABLE. This may seem intimidating, but it's actually very easy... ✅ Meet with your customer and quickly review the Results Strategy that you wrote down in Step 1. ✅ Show them their results. If they are not progressing, clearly call it out. ✅ Identify the actions they failed to accomplish and ask them why. Remind them that each incomplete action is essential to the results they expect. ✅ Ask them what it will take to get them completed and offer to help. ✅ Now, simply commit them again to a new plan and target date, and schedule a follow-up meeting. This is how I've become a key driver of customer process change. Try it, and let me know how it goes! I recently covered this idea and showed exactly how I do it on a webinar hosted by ClientSuccess.com. Follow the link below to watch the session. ↓ Recent Event: Using Results to Hold Your Customers Accountable Hosted by Client Success → View the Event Here Watch the session where I present my 2023 CS100 remarks on the importance of using customer results to hold customers accountable. 3 REASONS YOU SHOULD SHOW CUSTOMERS THEIR *BAD* RESULTS "What if the results are terrible!" ↑ This is the most common reaction when I teach people to measure and show their customers' results. It's understandable. We know that far too many customers are NOT getting good results with our products. So, how could highlighting any customer's bad results be a good idea? HERE ARE MY TOP 3 REASONS: 1️⃣ MEASURING BAD RESULTS IMPROVES RETENTION 📈 Our research consistently shows that customers with poor measured results STAY TWICE AS LONG as customers who are not measuring! It makes sense because many customers have never measured their results, so they see this as progress. They understand that measuring is the first step on the improvement journey. 2️⃣ BAD RESULTS MOTIVATE CUSTOMERS TO CHANGE 📈 The data reveals that measurable results are the fundamental reason customers renew and expand. Customers with measured results stay 6 TIMES LONGER on average than those that don't measure. 👉 The primary reason customers don't get results is because they don't change their behavior/processes. 👈 Showing your customers their poor results is a powerful way to get their attention and motivate them to make essential changes. Change is hard, and you need all the leverage you can get! 3️⃣ SHOWING BAD RESULTS FOSTERS CUSTOMER BONDING I've always been intrigued by these customers with bad results who keep renewing. Interviewing many of them is how I stumbled upon one of the most fascinating customer insights... 💡 Many customers feel that when a vendor shows them their bad results it demonstrates they are serious about helping them achieve their objectives. Too often, customer success is seen as a "fair-weather friend" who only shows up to take credit or to sell something. 👉 Measuring and materializing customers' results is the most powerful way to demonstrate that you are truly customer-centric. 👈 ►► And revealing BAD results is the most sincere moment to do it! These are the biggest reasons I have learned never to miss an opportunity to show customers their bad results. Upcoming Speach: The Future of Customer Success - Silicon Slopes November 17th, 2023 @ 11:30am MT Hosted by Silicon Slopes - Utah Customer Success Meetup Join us for food, networking, and some big ideas about the future of Customer Success. I'll be showing why it's time for a total revamp of the discipline and even propose a new name for what we do! I hope to see you there! Register here New Podcast Interview: CSM Talk ep. 11: Greg Daines I joined Kevin Reinhart to talk about the simple initiatives that can increase customer lifetime value up to 6X! Episode 11 on Spotify - https://lnkd.in/eTd5W8Kc Episode 11 on YouTube - https://lnkd.in/eRDiqgtu QUOTE OF THE WEEK: There are no technology projects, only business projects.

This week's Newsletter: Article: You can't have high customer retention without expansion Article: Here's another reason why retention requires expansion Upcoming Event - Nov 14: Using Results to Hold Your Customers Accountable Upcoming Speach - Nov 17: The Future of Customer Success Quote of the Week: The most important feature of any product... YOU CAN'T HAVE HIGH CUSTOMER RETENTION WITHOUT EXPANSION. Here's why and what to do about it... I say it often: 👉 Companies that focus on retention tend to have poor retention. Companies that focus on expansion get retention for free. 👈 📈 Our research shows that customers who expand stay 3 TIMES LONGER than customers who stay at their original level. There are multiple reasons why expansion is essential for retention, which I've discussed in other posts. Here's one I haven't spent time on... 🔑 The key is to see it from your customer champion's perspective and understand what your product is really FOR... • Customers sign up to get results. • When measurable results arrive, your champion uses them to demonstrate that they are having an impact. • This is how people advance in their careers while driving their companies' initiatives. • When it comes to renewal, showing measurable results is KING.👑 🎞️ Now play the movie forward → • Next year, they show the SAME value. Maybe it's still appreciated, but it is NOT as impactful as the first time. • It's more difficult to make a splash. • What they need is something MORE. What's next? • You cannot expect your customer to be indefinitely satisfied with the same results. See the problem? You aren't just producing valuable results for the company; you are supplying vital bragging rights for your decision-maker. Every cycle (usually every year), your decision-maker needs a win. What's new? What's next? 🛑 If they can't see clearly WHAT'S NEXT for them, then the renewal is in jeopardy. 🙋🏽‍♀️ Okay, but why does that have to be expansion? Can't we just keep showing more results? • Yes, and it can work well for a while. • But it's impossible to keep this going indefinitely. • Eventually, to achieve significant gains, customers will need to do something different. This also explains why a change in your key champion or point of contact (POC) is so dangerous → ► Any new leader naturally needs to show a new and better impact. If you don't have a "What's Next" to offer them, they'll happily find another vendor who does. Remember that RENEWAL IS A FORWARD-LOOKING DECISION. 👉 Customers don't renew because of what they accomplished. They renew for what they're going to accomplish next. 👈 This is also why companies need to have clear expansion pathways. Companies that sell "all-in-one" solutions eliminate one of the most essential retention tools: a series of opportunities for customers to get more/different results through expansion. Among other things, expansion pathways must be a primary consideration for product design and the foundation of the product roadmap. The best way to manage the expansion motion is a separate topic. What's important to understand is how inseparable expansion is to retention. Here's another reason why RETENTION REQUIRES EXPANSION... In my last article (above), I explained why expansion is essential to motivate customer retention. Here's another reason expansion is not optional... It starts with the 3 Laws of Customer Retention: 1️⃣ Customers stay to get measurable results. 2️⃣ Customers get results because they change their behavior. 3️⃣ Customers change because they know why and how to change. 🔑 The key is Law 2. Remember... 👉 Technology doesn't transform organizations. Behavior change does, and technology makes it possible and scalable. 👈 WHAT DOES THIS HAVE TO DO WITH EXPANSION? 💵 When a customer subscribes, they put down real money against the promise of improvement. Committing money signals the importance of the improvement, not just to the vendor but, more importantly, to THEMSELVES. That commitment represents a serious - and perishable - intention to do something new and different. This is why onboarding is so important; there must be real urgency to tap that energy to get customers to change. 🥱 But, the customer's commitment and energy to change inevitably dwindles over time. We know they won't continue to renew unless there's continual improvement and new "wins" that they can achieve and brag about (see my last post). ► Customers don't renew for what they achieved but for what they will achieve NEXT. However, customers don't achieve significant new results unless they make significant new changes. ✅ THIS IS WHERE EXPANSION COMES IN: In order to drive the customer process change necessary for big new results, the customer must have significant new motivation! It's NOT enough to show your key contact what they could achieve. You have to lay out a vision and get buy-in from the organization and top leadership. 🎯 Expansion is how you generate the organizational energy and commitment for the customer to go after something new/bigger/better. 💰 And this is also why it's critical for customers to PAY for what's next. Customers need to signal to your company - and especially to themselves - that it's important and they are committed. Money is the universal signal of this commitment. This is why I argue that we must charge for significant improvements in value, even if we don't care about the money! The paid expansion process is essential to the customer's own process for identifying a significant opportunity and for mustering the energy, resources, and commitment to win. 🛑 This reveals another problem with All-In-One solutions/pricing: The all-in-one approach naively assumes that because all the features are "in the box," customers will expertly and effortlessly move up the adoption curve, perpetually achieving meaningful wins along the way. Nope. Customer results require change, and significant results require significant change. Change is hard. You need every tool you can get. 🔑 The customer expansion process is essential to driving the kind of change that produces big customer results! Upcoming Event: Using Results to Hold Your Customers Accountable Hosted by Client Success → Register Here Join us live as I present my 2023 CS100 remarks on the importance of using customer results to hold customers accountable See you there! Upcoming Speach: The Future of Customer Success - Silicon Slopes November 17th, 2023 @ 11:30am MT Hosted by Silicon Slopes - Utah Customer Success Meetup Join us for food, networking, and some big ideas about the future of Customer Success. I'll be showing why it's time for a total revamp of the discipline and even propose a new name for what we do! I hope to see you there! Register here QUOTE OF THE WEEK: The most important feature of any product is to measure the results it produces for customers.

This week's Newsletter: Article: My 5-Minute Method for Driving Customer Results Upcoming Event - Nov 8: NPS Debate hosted by TheySaid Upcoming Speach - Nov 17: The Future of Customer Success Quote of the Week: Conventional methods... My 5-Minute Method for Driving Customer Results Customer results are everything! 👉 Customers with measured results stay 6 TIMES LONGER. 👈 But there are obstacles... 🛑 Most customers don't know how to define success with your product. 🛑 And if they don't know what success looks like, they definitely don't know how to measure it correctly. This is why many customers are hesitant to engage on the topic of results in the first place. 1️⃣ The first realization is that you can't just ASK customers what success looks like; you have to show them how to win. This radically simplifies the process so it can be done for EVERY CUSTOMER! Remember that you (your company) are the experts on how your product produces business value, precisely what kinds of results customers should expect, and the best way to measure them. So start by defining what they are. 2️⃣ The second part of the solution is to make engaging with customers about results simple, easy, and fast. This is why I created the CUSTOMER RESULTS STRATEGY CANVAS (CRS), which answers the FOUR key questions: ⓵ KEY RESULT: What is the customer's key business result? This is the business value your product produces. For example: • Increase email sales • Reduce employee churn Business results are NOT tasks like installing the solution or getting people to use it. Business results are the compelling reasons to buy and renew your solution. ⓶ RESULT METRIC: What is the best way to measure it? This is how the customer will know when they win. Use the best metric that properly measures the key result. In many cases, it is important also to have: • a BASELINE of the metric before your product, and • a TARGET of what "good results" would look like. ⓷ TOTAL SOLUTION: What solution is needed to achieve the result? This is where you identify the elements of your product that the customer will need to have/use to get good results. The purpose of this is to ensure the customer has the tools they need to win. ⓸ RESULT BEHAVIORS: What must the customer do to achieve the result? This is the MOST IMPORTANT element because customers fail when they don't change how they work to take advantage of how your product produces results. If they don't change, they won't get results, and they will churn. Everything in the CRS Canvas leads to this and enables you to commit customers to the key changes they must make to win. ► HOW TO INTRODUCE THE CRS CANVAS TO CUSTOMERS: ✅ Start by filling out the canvas with the customer's key result(s). Don't show up with an empty canvas. If you don't know, put the top 2-3 most likely. ✅ Send it to your customer and tell them you'd like to review it to ensure you have it right. ✅ Walk them through it and make appropriate changes to get alignment. ✅ Continue to review and update for the life of the customer. It usually takes just a few minutes and sets you and the customer up for long-term success! Download the CRS Canvas and Guide Here Upcoming Event: Debate - Is NPS a Vanity Metric? Hosted by TheySaid on LinkedIn - Register Here NPS IS DYING. Join us next week, and I'll show you why - and I'm bringing the receipts! NPS has risen to the king of customer feedback methods and spawned an entire industry of NPS survey providers. It's been a good ride for the NPS peddlers, who've found virtually limitless uses for net promoter surveys. But it's all coming to an end. More and more companies are ending their NPS programs and reclaiming the money for more effective customer efforts. And there's a very good reason: 👉 NPS DOESN'T WORK! 👈 The data are in, and they utterly demolish the false premises - and false promises - of NPS. Join us next week on Wednesday November 8th for a Linkedin Live Debate: "Is NPS a Vanity Metric?!" Both sides of the debate will be expertly represented. But only one is correct. Register for the LinkedIn Live Event Here See you there! Upcoming Speach: The Future of Customer Success - Silicon Slopes November 17th, 2023 @ 11:30am MT Hosted by Silicon Slopes - Utah Customer Success Meetup Register here: https://lnkd.in/d9WX4e56 QUOTE OF THE WEEK: Conventional methods produce conventional results.

This week's Newsletter: Article: Stop Celebrating CS Heroics! Interview: Data-led retention: Why happy customers don't stay Quote of the Week: You can't prevent churn if you can't... STOP CELEBRATING CUSTOMER SUCCESS HEROICS! 🦸🏻‍♂️ Why rescuing customers sucks and what to do instead↓ Seth Godin recently wrote this: "There are lots of rewards for heroic saves at work. But heroic saves undermine the desire to build better systems." ► This is the fundamental problem with Customer Success Heroics: they take the place of SYSTEMS AND PROCESSES. First, heroics consume an enormous amount of time and energy, and engaging in dramatic "customer rescues" is incredibly distracting. 😮‍💨 This saps energy away from the less grandiose efforts needed to build the processes that would prevent most customer crises from happening. But the other problem is that CUSTOMER HEROICS DON'T WORK! While celebrating that latest "customer save," we tend not to notice the many other customers that quietly failed. 😵 Our research indicates that only a small fraction of "customer rescues" result in a renewal (probably less than 10%-15%). But it's actually WORSE than that! → 📈 The data shows that most "successfully" rescued customers will churn within the next cycle or two anyway! HERE'S WHAT TO DO INSTEAD: 🛑 STOP CELEBRATING customer success heroics! Stop feeding that instinct with praise and validation. 👉 The right way to view a customer rescue is not as a people success but as a process failure. 👈 Instead, focus on how the customer got to that point and build process... ⓵ Identify the consistent FACTORS that lead to customer crises. ⓶ Design preventative UPSTREAM systems and processes. ⓷ Build systems to detect the risk early BEFORE customers become frustrated. Recent Interview: Data-led retention: Why happy customers don't stay - and what to do about it October 4th, 2023 @ 11:30am ET Hosted by Debra Wilson @ Brainstorm. We discussed how customer results data can help Customer Success teams ruthlessly prioritize their client efforts. To view the interview register here → QUOTE OF THE WEEK: You can't prevent churn if you can't predict it.

This week's Newsletter: Article: Most Customers Don't Know What They're Trying to Achieve! Upcoming Interview: Brainstorm Inc: Data-led Retention Quote of the Week: Your company is perfectly designed... MOST CUSTOMERS DON'T KNOW WHAT THEY ARE TRYING TO ACHIEVE! Here's why and what to do about it... Measurable business results are the ultimate driver of short and long-term customer retention. 👉 Customers who achieve measurable results stay *6 times longer* on average! 👈 Great! → So all we have to do is figure out what key business results our customers are trying to achieve and help them do it! ❌ But there's a big problem. You've likely experienced this... ❓What happens when you ask your customers about their business objectives? Most customers will say something like: 🤷🏻"We want to get the solution installed." Obviously, that's NOT a business result. Implementation or adoption are not the ultimate predictors of retention. In the absence of a properly defined business result, we face 2 formidable obstacles blocking the path to customer success: ⓵ First, customers seldom achieve results they're not measuring. The old axiom still holds: "You can't improve what you don't measure." The journey to good results is paved with key customer behavior changes. But change is hard, especially for organizations, so it's essential to keep the end goal in mind, or customers lose their way. ⓶ Even if they achieve the results, customers won't know it without tracking them. Our research shows that measuring results is as important as the results themselves. In one study, we found that customers who were measuring but getting poor results stayed more than twice as long as customers who were not measuring (many of whom were getting results)! HOW TO IDENTIFY KEY RESULTS FOR MOST CUSTOMERS: ✅ Start by TEACHING your customers what results they should expect rather than by asking them. Once they correctly understand the potential results, they can recognize what's important for them. Realize most customers have come to your company precisely because they DON'T know what they are doing. They are here to do something better, meaning it's NEW to them in significant ways. Assume they don't fully understand their potential results and start by teaching them. ✅ The good news is that, even though customers often don't know, we should know what results our product leads to and how to measure them. RIGHT!?!? Unfortunately, in my experience, many companies "know" their product's measurable results only in vague terms. They haven't been defined and written down CLEARLY. ► What's needed is what I call the "Customer Results Framework": the key business results customers can achieve, how to properly measure them, and what it takes to achieve them. Without a Customer Results Framework, many customers will focus on implementation or adoption and ultimately experience disappointment and eventually churn. For most companies, this is the critical missing step that I spend a significant portion of my time helping them create. Upcoming Interview: Data-led retention: Why happy customers don't stay - and what to do about it October 4th, 2023 @ 11:30am ET Hosted by Debra Wilson @ Brainstorm. We will be discussing how customer results data can help Customer Success teams ruthlessly prioritize their client efforts. Register here → QUOTE OF THE WEEK: Your company is perfectly designed to produce the churn you are getting.

This week's Newsletter: Article: How Quickly Do Customers Need to Get Started? Upcoming Interview: Brainstorm Inc: Data-led Retention Churn Cheats #11: "90%+ Accurate" Churn Predictions Upcoming Appearance: CS100 Summit 2023 @ Sundance Quote of the Week: Companies that focus on expansion... How Quickly Do Customers *REALLY* Need To Get Started? (What the data revealed surprised us all 👀 →) We've always known that getting customers started quickly is important to their long-term success. But few realize HOW QUICKLY we have to move! 🔬 We recently conducted a churn analysis using data from a SaaS/B2B company tracking daily customer utilization for several years. This unique data set allowed us to ask a fascinating question: ❓ How soon can you tell a customer will succeed or fail? ❓ The answer is astonishing... 📈 The data show that customers who did not achieve a minimum usage threshold within the FIRST 10 DAYS had 4x higher churn in the first year than their faster peers! ⦿ Customers who started within 10 Days: 4% churn @ 12 months. ⦿ Customers who started after 10 Days: 40% churn @ 12 months. 📉 After 4 years, 87% of the customers who started within 10 days remained vs. only 6% of the slower starters! Interestingly, increasing the time threshold from 10 days to 30, 60, and 90 days, did not improve the results to any meaningful degree (less than 1%)! What it all means is: 👉 Getting customers started quickly is not important → it's CRITICAL! 👈 WHY DOES SPEED MATTER SO MUCH? 1️⃣ Success depends on customer MOTIVATION to make key changes in how they work. Their energy for these changes naturally wanes as time passes. 2️⃣ Like anyone else, customers tend to get DISTRACTED by other tasks and problems. This is particularly a problem for leaders whose continued involvement is often essential for success. 3️⃣ If the implementation process is complicated, the element of DISCOURAGEMENT often comes along with inevitable bumps along the road. HERE'S HOW TO ACCELERATE CUSTOMER SUCCESS: ✅ SCHEDULE the kickoff call *before* the customer closes. It often takes too much time to wrangle customers together. Cut this time down by setting it up during the sales process. 💡PRO TIP: Build a process to gather all the essential information you need from the customer before the kickoff call. ✅ STANDARDIZE or "templatize" your implementation so that customers have *fewer* steps to start. Choose their typical starting settings, and configure the features they will likely use. All of these choices and configurations can be explained later after the customer has momentum. 💡PRO TIP: If there are several distinct use cases, build starting templates for each and ensure the use case is captured clearly during the sales process. ✅ Eliminate time spent upfront on product TRAINING. Most new customers do not need to know the detailed ins and outs of every aspect of your product right at the start. Video/codify your product training and make it easily available so that customers can access it and guide themselves as needed. 💡PRO TIP: Focus on helping customers make the fundamental BEHAVIOR changes they need to achieve first results. Upcoming Interview: Data-led retention: Why happy customers don't stay - and what to do about it October 4th, 2023 @ 11:30am ET Hosted by Debra Wilson @ Brainstorm. We will be discussing how customer results data can help Customer Success teams ruthlessly prioritize their client efforts. Register here → Churn Cheats #11: "90%+ Accurate" Churn Predictions People like to brag about their ability to accurately predict customer churn. But these predictions are almost always useless because they predict churn much too late to save customers! Accurately predicting which customers will churn is essential to building a process for helping customers succeed at scale because... 👉 You can't prevent churn if you can't predict it. 👈 However, preventing churn takes time because customers invariably need to make behavior changes to get back on track to achieving results. And it's virtually impossible to get customers to put in the necessary effort to make changes after they've become frustrated and discouraged. That's why → RESCUING CUSTOMERS DOESN'T WORK: 📈 Our research shows that ... ⦿ Only a small fraction of "rescue" attempts lead to a renewal. ⦿ The majority of "rescued" customers will churn soon afterward. 🚨The only way to prevent churn is to intervene BEFORE customers know they are failing! WHY DO ACCURATE PREDICTIONS FAIL? The problem with most customer health scores or churn risk metrics is that they rely on LAGGING indicators of customer failure. In other words, these signals arrive only AFTER the customer has already failed. For example, we know that when customers stop using your product, or when they stop responding to you, they are highly likely to churn. These are accurate predictors of churn, but they unfortunately arrive too late. That's why the ability to predict churn 90 days out is a cheat: it cannot be used to prevent churn at scale systematically. WHAT'S THE SOLUTION? ✅ The key is identifying and tracking the LEADING indicators of success and churn: 1️⃣ Instead of focusing on the 'accuracy' of your churn predictor, focus on surfacing the EARLIEST signs of ultimate customer failure. Our research shows that most customers show signs of failure within days of starting. (see the data here: https://lnkd.in/ghrBc_SY) 2️⃣ The best early indicators of customer success and failure are customer BEHAVIORS. Study your most successful customers to identify the consistent behaviors that were essential to their results. 3️⃣ Systematically TRACK a few of the earliest key behaviors, and when they achieve their first measurable results. Our data show that customers who achieve any measurable result, even if small, stay much longer than those who don't. 4️⃣ Immediately identify all customers who fail to make any essential behavior change and react QUICKLY to help them get back on track. Upcoming Appearance: CS100 Summit - Sundance, Utah Sept 25-27, 2023 This is my favorite event of the year and I never miss it. Come join us and be inspired! There are just a few tickets left for this exclusive event. Use code: "CS100Daines" to save $500 off your ticket price. Buy your ticket today: https://lnkd.in/gHjsf_GU Full agenda, speakers and topics are live now: https://lnkd.in/gZmUY4nz See you at Sundance! QUOTE OF THE WEEK: Companies that focus on retention tend to have poor retention. Companies that focus on expansion get retention for free.

This week's Newsletter: Article: Stop "Touching" Your Customers Upcoming Interview: Brainstorm Inc: Data-led Retention Upcoming Appearance: CS100 Summit 2023 @ Sundance Quote of the Week: Customers renew for what's next... Stop "Touching" Your Customers! One of the worst ideas in Customer Success is the "Touch Model": Here's why and what to do instead... The Customer Touch Model is a nearly universal notion that views CS in terms of how often you talk to your customers. But this is the WRONG PARADIGM, and it has done a LOT of damage to the credibility of CS. Here's why... ⓵ The "touch model" idea is entirely INWARD-LOOKING. It's all about what WE are doing. This is the opposite of being customer-centric. It focuses our energy on having meetings as if that's what matters to customers. ► INSTEAD: Focus on what the CUSTOMER IS DOING. Orient everything you do to the customer's effort and behavior rather than your own. Remember → 👉 Customers achieve results because they change their behavior. 👈 It's not OUR efforts that matter, but theirs. Thinking in terms of our "touch" cadence is backward! ⓶ Customers DON'T WANT to be "touched"! I recently wrote a popular post calling out the dismal failure of QBRs. The short version: the problem is that QBRs are not really FOR the customer. And customers know this very well, so they are not interested. This problem applies to ALL of our customer interactions. Customers know we're doing it to check a box! I call it INAPPROPRIATE TOUCHING! Does this mean we shouldn't interact with our customers? Of course not! What matters isn't the frequency but that interactions are ALWAYS value-adding! ► INSTEAD: Design your customer interactions entirely around improving customer results. 👉 We have no business interacting with customers unless the interaction can measurably improve their results. 👈 ❗️But isn't there something to be said for building relationships?? Yes, but what kind of relationships? You don't establish trust and respect by wasting your customers' time but by ensuring they achieve measurable results. ⓷ "Touching" the customer DOESN'T WORK! There's no evidence that the frequency of customer meetings improves retention. It's deceptive because high-value customers consistently have much higher retention, and these customers tend to get the "high touch" treatment. But when we compare small and large customers who get the same treatment (high or low touch), the difference in retention doesn't change. What about SATISFACTION? Frequent interactions consistently improve customer satisfaction scores. BUT → It doesn't matter because customer satisfaction has ZERO impact on customer retention (see my previous posts on this topic with data). ► INSTEAD: Focus on materializing customer results and prescribing key customer behavior changes. Design your customer interactions to do just 2 key things: ✅ Measure and Materialize the customer's results EVERY TIME you meet. ✅ Show them what THEY CAN DO right now to improve their results. The pacing for interactions should become a natural outcome of the customer's path to results! Upcoming Interview: Data-led retention: Why happy customers don't stay - and what to do about it October 4th, 2023 @ 11:30am ET Hosted by Debra Wilson @ Brainstorm. We will be discussing how customer results data can help Customer Success teams ruthlessly prioritize their client efforts. Register here → Upcoming Appearance: CS100 Summit - Sundance, Utah Sept 25-27, 2023 This is my favorite event of the year and I never miss it. Come join us and be inspired! Use code: "CS100Daines" to save $500 off your ticket price. Tickets prices increase after today — Friday, September 8th. Buy your ticket today: https://lnkd.in/gHjsf_GU Full agenda, speakers and topics are live now: https://lnkd.in/gZmUY4nz See you at Sundance! QUOTE OF THE WEEK: Customers don’t renew because of what they've achieved; they renew for what they’re going to achieve next.

This week's Newsletter: Article: Has your churn rate suddenly spiked? New Podcast: The Customer Success Playbook (ep #8) Upcoming Appearance: CS100 Summit 2023 @ Sundance Quote of the Week: Mindset shift from function to purpose... Has your company's churn rate suddenly spiked? It's probably an illusion. Here's why... I've been getting a lot of calls from panicked leaders telling me their churn has suddenly gotten much worse. But it's USUALLY not true. WHY? The reason has to do with how churn rates are calculated... ► THE DENOMINATOR PROBLEM The problem is that Customer Churn Rate doesn't JUST measure churn; it also measures growth! → Churn Rate is an equation: ⦿ The numerator is lost customers (churn) ⦿ The denominator is total customers CHURN -------- TOTAL This means that your Churn Rate can go up or down based on changes in sales (denominator) even if churn didn't really change! This is why so many companies appear to have dramatically rising churn lately. For most, it's not because churn went UP but because sales have gone DOWN. There's a simple reason for this... 👉 CHURN IS DELAYED 👈 This means that some amount of time passes between when customers join and when they leave. The delay varies between companies, but it's always there. So when sales suddenly go down, it causes the denominator to stop increasing immediately. BUT churn from the past is still arriving and won't go down in response to lower sales for some time. In the meantime, the Churn Rate will spike up because the numerator is growing faster than the denominator. IN OTHER WORDS: ℹ️ The denominator changes in response to sales BEFORE the numerator changes in response to churn, and the churn rate goes up. This is the primary reason so many companies are seeing sudden churn increases lately. 📉 Our SaaS Churn Benchmark data show that new customer sales are dramatically down across the SaaS industry. 📈 But the data do NOT show significant increases in real churn overall recently, just the steady increase that has been going on for several years. Nearly every churn analysis we've done for companies recently revealed that churn has not gotten significantly worse. That demonstrates that you cannot rely on Churn Rates! HOW DO YOU KNOW IF CHURN IS REALLY GETTING WORSE? The way to solve this problem and determine if churn is changing is to use cohorts and survival curves. Looking at customer cohorts removes the sales distortion, and comparing cohorts to each other shows if churn is actually going up or down. 🔗 You can get my complete guide to measuring churn using cohorts, which includes a template here: https://www.gregdaines.com/guide-to-churn Or just contact me, and I'll do it for you! New Podcast Interview: Customer Success Playbook Episode 8 with Greg Daines - 23 Ways to Reduce Churn (September 4, 2023) Greg emphasizes that business has fundamentally changed and old ideas about customer retention no longer work. Customer success at scale is challenging and even seemingly similar customers can have different outcomes. Greg stresses the importance of data in justifying best practices for customer retention. Listen to the interview here: Customer Success Playbook ep. 8 Upcoming Appearance: CS100 Summit - Sundance, Utah Sept 25-27, 2023 This is my favorite event of the year and I never miss it. Come join us and be inspired! Use code: "CS100Daines" to save $500 off your ticket price. Tickets prices increase after today — Friday, September 8th. Buy your ticket today: https://lnkd.in/gHjsf_GU Full agenda, speakers and topics are live now: https://lnkd.in/gZmUY4nz See you at Sundance! QUOTE OF THE WEEK: The key mindset shift is from focusing on what your product does → to focusing on what it’s FOR..

Greg Daines is the founder and CEO of Churnrx.com. He holds multiple advanced degrees in business and economics from MIT and Cambridge University. This episode is a discussion about Greg's ebook 23 Ways to Reduce Churn in 2023. LINKS: Buzzfeed iTunes Spotify Discussion Points Greg emphasizes that business has fundamentally changed and old ideas about customer retention no longer work. He mentions that customer success at scale is challenging and even seemingly similar customers can have different outcomes. Key Insights Greg stresses the importance of data in justifying best practices for customer retention. He criticizes commonly used metrics like churn rates, stating that they are often distorted and don't provide a clear picture. Final Thoughts The episode aims to provide actionable insights for customer success professionals, with Greg's eBook serving as a resource for reducing churn in various stages of the customer lifecycle.

This week's Newsletter: Article: There are no Hand-offs, only Hand-downs! New Podcast: The Hyperengage Podcast (ep #82) Upcoming Appearance: CS100 Summit 2023 @ Sundance Quote of the Week: From reactive to proactive... There are no HAND-OFFs in enterprise customers, only HAND-DOWNs! WHY LEADERS DISENGAGE & HOW TO SOLVE IT ↓ 🫥 A huge challenge in managing enterprise customers is that the key business owner frequently disengages, and it can be challenging to get them back. WHY does this happen? The process is consistent: ⓵ The key owner makes the purchase decision. ⓶ They hand responsibility for execution DOWN to a leader, manager, or administrator. ⓷ They expect to reengage when everything is running. BUT they never reengage because... ❌ They assume they don't need to be closely involved in implementation. -and- ❌ They expect to be informed when the time comes. This is where it all goes wrong because both of these are false → ❗️ THE KEY BUSINESS OWNER MUST STAY INVOLVED Implementing new enterprise solutions is hard, and there are frequently obstacles that can't be solved without the key owner's involvement. The loss of their engagement is a MAJOR risk factor and driver of customer failure. ❗️ THE TIME TO REENGAGE NEVER COMES Customer implementation teams tend to focus on technical implementation and often don't have a clear idea of when to re-engage their business owner. In fact, they frequently resist it. HERE'S A 7-STEP PROCESS FOR MAINTAINING OWNER ENGAGEMENT: 1️⃣ Establish the key BUSINESS RESULTS with the business owner right from the start. 2️⃣ COMMIT them to stay involved to ensure the process succeeds in producing those results. 3️⃣ Promise to show them their measured results progress EVERY TIME you meet. 4️⃣ Organize the implementation plan to get to the FIRST MEASURABLE RESULT (even if small) as quickly as possible. 5️⃣ If the first result will take a long time (more than a couple weeks), build the results DASHBOARDS first so the key owner can anticipate what's coming. 6️⃣ Consider running a separate, and shorter, cadence meeting with the key business owner so they don't have to be involved in all aspects of the work. 7️⃣ Start every meeting with the owner by showing the dashboards (even if they are empty!) and clearly describe the key next actions to get to results. This process is astonishingly effective because what business owners are MOST interested in are their *measurable results*. If they think they can safely disengage until their results arrive, that day often never comes. 👉 You have to give customer leaders a compelling reason to stay engaged as they eagerly await the results and understand their role as a key agent of change. 👈 New Podcast Interview: Ep#82: Strategizing Customer Retention and Expansion w/Greg Daines (August 21, 2023) Adil Saleh, in conversation with Greg Daines, highlights the significance of understanding why customers stay in the startup landscape. Greg delves into the nuances of customer retention over traditional metrics, while Taylor Kenerson highlights the risks of chasing ideal customer personas. They discuss the power of real-time data, the importance of genuine customer feedback, and the journey of startups that transform into industry giants. The trio emphasizes the need for startups to focus on actual customer behavior, adapt based on feedback, and prioritize long-term success over short-term gains. Listen to the podcast here: Hyperengage #82 Upcoming Appearance: CS100 Summit - Sundance, Utah Sept 25-27, 2023 I'll be speaking at this event with a number of other fascinating guests. This is my favorite event of the year and I NEVER miss it. Come join us and be inspired! Meet a few the 2023 Speakers Greg Daines, CEO, ChurnRX Kari Ardalan, Head of Digital & Scale Success, Qualtrics Kristi Faltorusso, Chief Customer Officer, ClientSuccess Jeff Beaumont, Sr Director, Customer Success Operations Kristy Muir, VP, Investment Senior Associate, Pelion Ventures Dave Blake, Founder & CEO, ClientSuccess Check out the full agenda and speaking topics: https://lnkd.in/gPE-5CCN QUOTE OF THE WEEK: The conventional approach to customer success is reactive and supportive. The effective approach is proactive and prescriptive.