“I had grasped the significance of the silence of the dog, for one true inference invariably suggests others…. Obviously the midnight visitor was someone whom the dog knew well.” — The Adventure of Silver Blaze
In The Adventure of Silver Blaze, Sherlock Holmes is called upon to investigate a missing horse and (what else?) a murder. You might know this particular story as the one with “the curious incident of the dog in the night-time.” If not, it boils down to this: when the horse was stolen from the farm in question, the dogs didn’t bark to alert the owners. This struck Holmes as curious and eventually led him to believe that the horse was stolen by someone that the dogs knew well. Otherwise, they would have barked, and the horse thief would have been caught in the act.
I won’t spoil the ending, but I recommend you give it a read the next time you’re wondering why in the world customers are churning. Believe it or not, there’s a remarkable parallel between the “curious incident” and the kinds of churn problems I see on a daily basis. Like in the story, no one is barking.
When we think of unhappy customers, we picture demands for refunds, phone calls with executives, and Customer Success teams bending over backward to appease them. And while we’re all paying attention to the most unhappy customers, many disappear quietly into the night-time, simply declining to renew their subscription.
So how do we find the source of the problem, then? We have to follow the clues.
Traditional Churn Signals
We’ve all heard the phrase “the squeaky wheel gets the grease.” For B2B SaaS companies, it’s really easy to dedicate time and attention to only the squeakiest of wheels.
In an attempt to measure customer satisfaction, it’s common to offer opportunities for feedback on a regular basis. Most commonly, we see this through surveys, testimonial and review requests, and access to the support team.
These feedback mechanisms actually capture the extremes on both ends, the happiest and unhappiest. Look at any company’s Yelp reviews and you’ll see lots of 5-star and 1-star ratings. It’s much rarer that you will see 2-4 star reviews. Similarly, ask your support team, and they’ll tell you without hesitation who the most unhappy customer is at that time. They’ve probably had a dozen conversations with them in the last week and are frantically trying to address every support ticket they’ve submitted. Talk to the product team, and they know which customers graded the product the lowest on the most recent survey.
But ask your team who the customers are that are just kind of unhappy, and they probably won’t have such a firm answer.
This is because the most commonly used avenues to assess customer health also require the most effort on the part of your customer. They have to raise their hand and take time out of their days to tell you all about their complaints.
Many others will take the path of least resistance and churn without warning, surveys be damned.
Is Contacting Support Actually a Good Thing?
Conventional wisdom might tell us that customers contact support when they’re unhappy or have a problem. But as we’ve seen, some unhappy customers simply won’t reach out.
So can we consider support tickets a good indicator of customer engagement then? Absolutely.
I recommend reviewing the quantity of support tickets and enhancement requests per customer regularly. It’s a little like Goldilocks and the Three Bears. You don’t want too many support tickets, and you don’t want too few. Your goal is to look across your entire customer base and determine what’s just right. A fair amount of support tickets means that your customers are engaging with the product. Too few may signal that they’re not regular users. Too many may signal the product wasn’t a fit for them in the first place.
The exact number will be different depending on your industry, product, and a million other factors. So you’ll want to look at the median number of support requests for your customers (I’d advise against using the average here since outliers could easily pull your number in one direction). Then you can start to examine where your customers fall in comparison to the median. Too far in either direction, and the churn risk increases.
Getting Ahead of Silent Churn Indicators
Customer Success as we know it began as an attempt to help customers see value sooner, but it’s mostly a one-to-one interaction. As businesses scale, they have to turn to customer health indicators to help improve the experience of many customers at once.
The best way to do this is to measure “activation” indicators relentlessly. Activation simply means that your customer has started using your product and has achieved value through it. If you measure the percentage of active customers, meaning they’ve made it through onboarding or implementation and have begun using your product in earnest, you can work to improve that percentage and help your customers find value as soon as possible.
Measuring the Right Data
- Product Usage: You can learn a lot about your product by watching customers use it, even for a few minutes. Identify which features in the product are key value-driving ones, and monitor how often your customers utilize those. Whether they’re using the most valuable features is a better indicator of health than simply logins and should inform your definition of an “active” user. Once you’ve defined “active” according to product usage, you’ll be able to measure derivative metrics like daily, weekly, and monthly active users (DAU/WAU/MAU).
- Time to Value: The sooner your customers see value, the less likely they are to churn. You should keep a close eye on overall time to value, often measured by looking at standard onboarding or implementation timeframes and looking for ways to shorten them. If it takes longer to get certain customers up and running than normal, that could be a warning sign.
When combined with the traditional methods of measuring customer success like surveys and support tickets, the data mentioned above helps tell a complete picture of customer health. And as you can tell, that means working across almost every department in your company.
Who’s Responsible for Retention?
Unfortunately, leaders can’t delegate customer retention away. As the only member of the team with a hand in every department, it’s up to the CEO or company leader to be the Sherlock Holmes of the group — to examine all the clues and evidence and to consider the evidence that might be missing.
Your team has been trained to hear the complaints of unhappy customers and to respond. It’s your job to look beyond the most vocal customers and to make sure the quiet customers are heard, too. Otherwise, they might disappear into the night-time and you’ll be none the wiser as to why they did.
Ready to get to the bottom of your customer churn problem? Let’s talk.