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Learn a step-by-step strategy you can use to reduce churn at your B2B company.
When you look for advice to reduce churn, the answer is often “it depends”. But Asia Orangio shared a step-by-step framework that just about any B2B company can apply to their unique situation.
First, distinguish between qualified and unqualified churn.
Qualified = churn among your ICP/target audienceUnqualified = churn among users outside your ICP
If you’re a product-led company (esp w/ a freemium model), not all churn is created equal. You’re bound to get users trying your product who you never intended to serve. So focus on addressing qualified churn.
The next distinction to make is between voluntary, and involuntary churn.
Voluntary = users intended to cancel
Involuntary = users didn’t intend to churn: card expired, team member never renewed contract, etc.
Put a system in place to flag and address involuntary churn before it happens. This might be as simple as receiving a Slack alert when a card fails to charge, or when the account is x days from expiration and hasn’t been renewed.
Then it’s time to deal with voluntary churn: users who decided, “I’m not getting the value anymore.”
Asia cited 3 categories of voluntary churn:
1) Perceived value = “I thought I was going to get x, but instead, I got y.” The user isn’t getting the value they thought they would.
2) Realized value = “Now that I’ve gotten what I intended, it’s different than what I was expecting”. Doesn’t meet their needs or expectations.
3) Ongoing value = “This worked well for a while, but I just don’t need it or value it anymore.” Their needs have changed over time, and they no longer get ongoing value.
To find which of the three your company is facing, get qualitative data:
First, set up a survey that users fill out when canceling or ending their service with you that asks why they’re leaving.
Next, conduct exit interviews (usually in exchange for a gift card to increase response rate) where you ask:
“What was the job you were hoping to hire the product/service for?”“What led you to use this product?”“What did you get out of it?”“What went wrong?”
From these answers, you can put together a picture of which type of churn is most frequent. If they hired it to do something you don’t do (perceived churn), you probably have a messaging or targeting problem up-funnel. If the thing they hired you for “didn’t work like they wanted” (realized churn), you might need to improve your product or your marketing messaging about how you approach solving their problem. If they don’t get ongoing value (ongoing churn), you might need to add new features or change your pricing & packaging to account for this dropoff.
Finally, combine these insights with quantitative data by analyzing the company size, revenue amount, job title, etc of companies that are churning. This will help you paint a firmographic picture, and refine your targeting over time. You may learn that certain job titles, or company sizes churn at a much higher rate, and shouldn’t be included in your ICP.
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