In uncertain market conditions, churn can feel inevitable - companies aren’t looking to increase their spend on software. Many companies are still facing budget cuts, headcount reductions and uncertain forecasts for 2024. The last thing on their mind is how to spend more money on software. As a result, many B2B SaaS companies are facing higher levels of churn, from all types of customers, even healthy ones or those they wouldn’t expect.
Here are 10 ways you can not only protect your organization from churn, but set up for expansion down the road:
- Conduct Regular At-Risk Account & Churn Reviews
Schedule monthly cross-functional meetings to understand any recent churn that’s occurred and to review at-risk accounts to determine what “save plays” may be most effective. Identify patterns in these accounts to apply key learnings throughout the customer lifecycle. Do we need to change our upfront scoping with AEs? Do we need to refine our onboarding process? Making this cross-functional is key - customer health isn’t just a CS problem, every department can be a part of the solution.
- Use Your Customer Health Score as a Leading Indicator
Customer health scores can look quite different depending on the product you deliver, your organization maturity, and the scale of your customer base. To get started, you likely need to test what is a significant indicator for your customer base and adjust over time as customer behavior & feedback evolves. In general, using a combination of qualitative and quantitative components to your health score can provide great balance. Some sample components can include:
Quantitative: % of licenses utilized, # of days until go-live, # of support requests
Qualitative: customer fit score, customer sentiment (from your CSM), onboarding experience (from your onboarding team) - Streamline Customer Onboarding & Ongoing Education
Onboarding can make or break your renewal so it’s important to cultivate a great experience, and a great hand-off from Sales. Map out your current onboarding process and who is involved, and look for gaps and inefficiencies that could be automated. Are there aspects that are done 1:1 today that could be done 1:many or done with a self-paced learning tool? You want your customer education to be scalable and repeatable so that you can continue to grow your customer base sustainably. This approach to training can also make it easier to onboard new stakeholders when new individuals join an organization or a key stakeholder departs. - Revisit Your ICP
When you’re starting out crafting your ICP, it’s likely driven by what you’re seeing in pre-sales. As you continue to scale and mature, think about what you are learning post-sale that tells us what customers are best for us. Account for what you’re learning from churn reviews, who’s expanding (or contracting) with your platform, and customer health trends. You have the benefit of more customer data points every day, so utilize these to understand where to focus your time and energy. You also don’t want your ICP to expand into everyone - when you’re growing quickly, some customers that may have been a fit just a couple years ago, aren’t anymore. - Drive 1:Many Customer Engagements
When your team is stretched thin across a large customer base, it can be difficult to drive the 1:1 engagements that you would optimally want to. Though these 1:1 touchpoints are still important, particularly amongst your target customers, think of ways that you can get customers to engage in other ways, not only with your team, but with each other. You want to be able to focus your CS team on more strategic engagements and not leave the team overstretched. For example, instead of CSMs doing 1:1 demos of new features, consider having your Product team host a quarterly or bi-annual product showcase, even offering 2-3 webinar slots where customers can join when it’s most convenient for them. - Optimize Your Customer Journey Touchpoints
Work with your customer-facing teams to map out the entire customer lifecycle - the different touchpoints you have, who owns them and what they cover. Where are we missing an opportunity to better engage? Where are our most pivotal handoffs that we need to ensure go as perfect as they can? Where are we spending time today that isn’t a good use of it? Bringing light to how customer interactions all come together can help your various teams understand why their role and piece of the puzzle is important. When we connect the customer journey from pre-sale to renewal, we create a connected responsibility.
- Focus on Multi-Threading Stakeholders
Losing a key stakeholder, having a customer reorganization or other stakeholder changes can be incredibly detrimental to your ability to retain an account. Having multiple stakeholders, ideally across teams, and engaging with decision-makers can help mitigate the risks of unexpected stakeholder changes. Help your champion network within their organization and bring in connections to other teams. Learn who they regularly collaborate with or would like to be better connected with internally and use that as a starting point. Monitor your usage data and see who is most active in your platform - they may sit on another team, and could be a future stakeholder, or expansion opportunity.
- Arm Your Customers with Data
Provide champions with the data they need to make a business case for your platform - make it easy for them to explain the value they’re getting from your platform and why it’s essential to their tech stack. The more you can support your customers for their own internal conversations, particularly with tangible data, the more likely it is for those conversations with their economic decision maker, executive team, or manager to go smoothly. Arm them with utilization data of how their full team is leveraging the platform, and quantify the value of that usage. Tying this back to the positive business outcomes that were set in the pre-sales process helps justify the cost of your tool.
- Proactively Gather Customer Feedback
You have quarterly check-ins with a customer and they have no concerns or issues they’re raising. Now they’ve told you they’re canceling their contract and there were a couple product limitations that contributed to the decision. Sound familiar? You may need to reposition the questions you’re asking or give CSMs a starting framework to use, because it can be challenging for a customer to raise difficult conversations or issues when you have a close relationship with them. Take advantage of offline opportunities to survey as well - after webinars, events or pulse checks, customers may have feedback to share. - Ensure Your Pricing Sets You Up for Expansion
When your business is growing quickly, it’s hard to make time for pricing & packaging, but it can be a huge growth lever, even in challenging times. Take a look at your core pricing model and ask yourself if it truly allows you to drive expansion in your customer base. For example, if you have a flat rate per user pricing model, your expansion only comes from adding additional users, which can be difficult when teams are downsizing or at least not hiring as quickly. Not all customers are going to grow in the same way so aim to have multiple ways that a customer can expand with you - maybe not only by adding users, but by upgrading their feature tier or paying for a higher level of ongoing support. Implementing a flat price increase is much harder in this market, but making larger scale pricing & packaging changes is much more achievable.
About Our Team
Five Elms’ Value Creation team helps empower portfolio companies throughout their growth journey with best practices, functional expertise, and a network of resources. The team is comprised of ex-SaaS operators and functional experts who have lived and breathed the challenges of high-growth companies at this stage of growth and beyond. These team members work closely together to support portfolio companies across their entire investment lifecycle to ensure successful outcomes for management teams.
About The Author
Lauren Janek is a member of the Five Elms’ Value Creation team, leading the Strategic Operations pillar of the team. She spends her time working closely with Five Elms’ portfolio companies to identify and execute high-priority strategic & operational initiatives. Lauren has spent her career focused on B2B SaaS and joined Five Elms from LogicGate, a GRC software company, where she was responsible for leading its Strategy team and driving cross-functional strategic initiatives. Prior to LogicGate, Lauren worked in investment banking at William Blair focused on sell-side M&A transactions in the software & broader technology sectors.