You barely notice high churn on the way to $2m-$3m ARR. You are just growing so fast, and are so new.
It starts to impact growth somewhere in the $5m+ range. Numbers are often still OK though.
At $10m ARR, high churn starts to stop growth
At $20m ARR, it can end your startup
— Jason ✨BeKind✨ Lemkin ⚫️ (@jasonlk) April 25, 2021
Q: What can you do to lower your customers’ churn rate?
A few basic thoughts:
- Have every customer have a named customer success rep. Every customer. Yes, this is hard if your price point is low. But it can be done. If every customer knows “Casey” is her rep, and who she can turn to … churn will go down.
- Measure NPS constantly, and set quarterly goals to drive it up. If you don’t measure it, you can’t improve it. If you haven’t measured your NPS yet, you may be surprised that it is lower than you think.
- Segment your Customer Success — and Sales — teams. Different size customers need different approaches. If you segment your CS team, you can get folks that specialize in different deal sizes and customer needs. And if you segment your sales team by deal size, the smaller customers will get better attention upfront. Leading to less churn. Don’t lump your smaller customers together with the big ones — or they will churn at a much higher rate.
- Stop with churn-and-burn deals. Selling deals you can’t service is worse than not closing them at all. More here: 5 Tips To Minimize “Churn and Burn” Behavior in Your Sales Team | SaaStr
- Do phone support. No one wants to pick up the phone. But customers that need help want their call answered. More here.
- Answer all tickets in < 5 minutes. Yes, it can be done.
- Visit as many customers via Zoom and in-person as you can. You can’t visit the tiny ones, but at least visit all the bigger ones. The more you visit, the fewer that churn. Zoom isn’t the same as in-person, but it’s much better than not connecting directly. Try to do 6 customer Zooms a week. More here.
- Do a weekly webinar for all prospects and customers — every week. This is another chance for folks to get their questions answered.
- A wiki or answer database is NOT enough. Technology alone is NOT enough. Don’t use cheats. There are no shortcuts. People need help from people. Self-service is great for solving some problems, but not for a lot of them. Don’t be lured into thinking technology alone is the answer.
- Add a great free trial. If your free trial experience is truly awesome, customers that might churn will select out during the free trial. That’s not all bad.
- Finally — let them go. In fact, make it easier to go. Yes, churn is painful. But if you treat them well on the way out, they may come back at some point in the next decade. If you don’t, they’ll never come back unless they have to. More here: You’ll Lose Customers. It Hurts. But Don’t Let Them Become Angry Ex-Customers. | SaaStr
And a related, bonus point:
12. Do more customer marketing. How much of your marketing time and budget is focused on getting folks to know more, love you more, and buy more from you? Not enough. More on that here.