Why Marketers Need to Think About Churn

January 30, 2017 Sam Brennand

Churn

As marketers, we’ve gotten pretty good at measuring stuff.

From ROI, CAC, and CPC, to CPL, CRO, and Content Scores, the list of things we report on seemingly goes on and on and on.

As a group, we’ve become very adept at linking our efforts to the bottom-line impact we deliver. And over time, we’ve been pretty successful at proving that marketing should no longer be thought of as a cost center. Instead, marketing deserves to be viewed as a revenue-driver that actively adds value.

But for a group that has become so good at measuring so much, far too often we forget about one incredibly important number that we have a direct impact upon: customer churn.

What is “churn” anyway?

Churn refers to the number of customers that — for one reason or another — choose to stop using your platform, product, or service.

In SaaS environments, churned customers are those who choose to stop paying your monthly subscription fee. In other B2B marketing environments, churned customers might simply be those who choose to buy something once but never come back for more.

In every case, churn is very, very bad.

Imagine you’ve got two companies: Company A and Company B.

Both are growing monthly sales at the same pace, but Company A’s churn rate is 5% while Company B’s churn rate is 20%. To illustrate the incredible toll that bad churn can take, all you need to do is project revenue over a few years. Over a five-year period, for example, Company A’s revenue will exceed that of Company B’s by a whopping 40% (this awesome white paper from SAAS Capital has a complete breakdown if you’re interested in reading more about the economics of customer churn).

To highlight the point, according to research by Emmet Murphy and Mark Murphy, reducing churn by as little as 5% can increase profitability by 25% to 125%, and a 2% reduction in churn can have the same impact on an organization as a 10% reduction in costs.

Startling stuff.

Whose responsibility is churn?

In most companies, it’s the job of the Customer Success team to keep tabs on (or at least report on) churn. Here at Uberflip, our Customer Success team reports on a number of different churn statistics on a monthly basis. Churn is our north star and zero is our target.

But churn can’t just be the domain of the Customer Success team. Churn is ultimately everyone’s problem.

When churn is high, it doesn’t matter which department you work in — you’re essentially just spinning your wheels. As we saw in the example above, the difference between a good churn rate and a bad churn rate can be monumental from a revenue (and ultimately, profitability) perspective.

As marketers, it doesn’t matter how many sparkling new MQLs we regularly add into our funnels. If churn rates are high, we’re cooked.

What Marketing can do about churn

As marketers, we’re uniquely positioned to help Customer Success teams combat churn.

The skill set of a great marketer is one that naturally lends itself to the art of customer success. Great communication skills, technical marketing skills (e.g. SEO), knowledge about how to create great customer experiences, and the ability talk to customers, shape a narrative, and drive conversations are all directly tied to reducing customer churn.

Just because we typically associate marketing with bringing in potential customers, that doesn’t mean marketers can’t have a hand in keeping them around.

Here are a few specific ways Marketing teams can help combat churn.  

1. Set the right expectations with prospects

Customer success is, like most things in the business world, a game of expectations.

If a customer was promised something that your product or service just can’t deliver, that’s a major problem. At best, it leads to an unhappy customer and a poor start to a relationship. At worst it leads to insta-churn.

And who’s responsible for those early stages of the buying journey? The marketing team.

Historically, prospective buyers’ expectations were carefully managed by salespeople that controlled the flow of information. Today, we know things are different. Because it has now become the marketing team’s job to find, engage, and educate prospective customers through content, in almost every case it’s the content that is now shaping those expectations.

And sadly, when it comes to top of the funnel content, far too many marketers still resort to hyping instead of helping. And when that happens, prospects become customers with an unrealistic set of expectations about how your product or service is going to help them.

Ultimately, customers will judge your product or service based upon the expectations that were set early on in their buying journey. Your product or service might indeed be revolutionary, game-changing, and innovative, but there’s a lot to be said for humility.

Words to live by: underpromise, overdeliver.

2. Develop amazing customer-focused content

There’s not a marketer on the planet that hasn’t heard the stat that it costs five times (5X!) as much to acquire a new customer as it does to keep a current customer.

Based on that information, you’d expect that most of an organization’s marketing resources would be geared towards making their current customers as successful as possible, right?

Well, you’d be wrong. In most cases, Marketing teams are still primarily focused on acquiring shiny new logos through prospect-focused content. Some “customer marketing” roles have begun to spring up here and there on forward-thinking Marketing teams, but by and large it’s a role that’s still in its infancy.

Which is a shame, since really good customer-focused content can help to answer common questions (and thus solve common problems), help to drive product or service adoption, help to improve the health of your customer base, help to create brand advocates, and can help to foster a sense of community among your customers.

Customer Success teams will naturally step up and try to fill this content gap, but creating great content takes time and time’s a luxury in short supply for most Customer Success teams. As powerhouse content creators, that’s where Marketing teams can step in and help.

Here at Uberflip, our Customer Success team creates an incredible amount of content (most of which can be found on our Knowledge Base) with the help and support of our amazing Marketing team.

For example, one very successful program we run is a monthly webinar series that is exclusively for Uberflippers. We frequently source ideas from customers through our advocate marketing platform, the Uberflip A-List, and conduct webinars to demonstrate how to best use the Uberflip platform to create amazing content, increase engagement with that content, and ultimately drive more leads with that content.

3. Help the Customer Success team master automation

When marketing automation tools like HubSpot, Marketo, Eloqua, Pardot, Act-On, and MailChimp first launched, they completely changed the way that Marketing teams operate, allowing even small teams to reach huge audiences at scale.

New customer success tools like Amity and Totango are now doing for Customer Success teams what marketing automation tools did for Marketing teams several years ago. It’s now easier than ever (if not possible for the first time, in many cases) to understand which customers need our attention and why, and to do it at scale for a customer base that could number into the tens of thousands.

But a lot depends on how quickly Customer Success teams can master the art of automation. As experienced automation experts, marketers have a lot they can teach Customer Success teams about going about things the right way.

At Uberflip, we use Amity as our customer success management tool and HubSpot as our marketing automation tool. We’re still fine-tuning our processes, but over the last few months the marketing automation experts on our Marketing team have worked with our Customer Success team to develop automation rules that allow our team of six to do the work of a much larger team.

For example, we developed a HubSpot workflow to automatically engage an at-risk customer through HubSpot-driven emails, all based on information about their health status that’s pulled in real-time from Amity. We’re also working to understand for the first time how marketing content consumption (i.e. blog posts read, webinars watched, eBooks and white papers consumed) influences the health of our customers.

Needless to say, it’s been an exciting few months for us.

Marketing can also use customer success management tools like Amity or Totango to understand more about why customers are churning and what a healthy customer looks like. That invaluable information can then be used to make smarter marketing investments moving forwards.

For example, a customer success management tool makes it easy to do something like perform a cohort analysis of churned customers by acquisition channel. This information can then help the marketing team to maximize CLV by only investing in channels that have proven less likely to produce a churned customer.

It’s time to add churn to the Marketing Dashboard

Far too many marketers think their job is done once they hit the publish button on their latest blog post, conducted their latest webinar, or designed a great marketing automation workflow. But the job of a marketer doesn’t stop when an MQL becomes an SQL. For that matter, it doesn’t stop when an SQL becomes a customer.

A marketer’s work is never done. Especially when we’re so concerned about measuring the bottom-line impact we have on our organizations.

Churn is an incredibly important metric, and as we’ve explored, marketers are in a unique position to influence customer churn. By creating the right expectations in top-of-the-funnel content, authoring amazing pieces of customer-focused content, and helping customer success teams harness the power of automation, marketers are also well-positioned to reap the rewards that low churn can bring.

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About the Author

Sam Brennand

As Uberflip's VP of Customer Success, Sam is focused on helping customers amplify their content marketing to tell better stories and generate more leads.

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