Customer Churn

A Cautious Tale of Customer Churn

Does customer churn creep up on you? It shouts “boo” from under the bed, and startles the life out of you. Well if not, it certainly should! There is nothing worse than putting large amounts of money and effort into customer acquisition, only to see that customer churn long before they reach their potential lifetime value.

So why am I writing about this? Well, last week, I became a churn statistic twice. And what’s worse, I had absolutely no idea I was going to stop using my service providers. Obviously, neither did they.

Could they have stopped me from joining the churn-ranks? Absolutely! But due to the inefficiencies in their sales funnel management, a lack of communication, sprinkled with a bit current-customer complacency. They got tossed aside. 

As a Sales Leader, I often look at my own experiences to see how the sales organizations I deal with, fail. So in this post, I thought I would use the cautionary tale of my recently deceased providers to highlight how a lack of consistency in service and message can severely cripple your Revenue Engine.

I’m Still In Your Sales Funnel

Many organizations forget that a customer is still a participant in their sales funnel. This was certainly the case last week. I had been a customer of these providers for several years, and no doubt neither of them viewed me as a prospect, nor a potential churn statistic. Nevertheless, in both instances, we were getting close to renewal, and I did need a few things updating.

My closeness to renewal and my need for additional services meant that I was definitely in their sales funnel, but they did not realize this. The quality of the support I received showed complacency. 

Let’s face it guys. A renewal equates to a sale. Significant monies change hand. At this point in time, your service must be impeccable. If not, I may just shop around.

Inconsistency of Message is Suicide

In sales, your facts have to be well, facts! I know we live in a world of alternative facts, but in sales, facts are essential. If I am told that I can have something, for a price, I better well get it.

As I said, I required additional services. I talked to both sales and customer success teams to ensure that I could get what was needed. Did I need to upgrade? If so, how much would it cost? Will this impact my current solutions in any way? What will the likely timeline be? Etc. Etc.

Yes, I did my due diligence! 

What is startling, or not so, if you are a revenue engineer. Is, that in both cases, this is where it all started to unravel. Yes, you guessed it. Once I parted with my renewal money, these facts turned out to be, alternative.

Don’t Promise Value That You Can’t Deliver On

Yep! If your facts turn out to be alternative, you’re going to piss people off. Moreover, a pissed off customer is likely to be a churn statistic in the making.

We buy based on value and trust. If I no longer have trust in you to provide that value, then I am likely to look elsewhere.

Asking for More Money is a Bad Idea

So I’ve committed to re-new based on inaccurate information. I’m not happy. The last thing I want to hear is that you can fix the issue if I upgrade to a more expensive service. Firstly, you told me I could have it at no extra cost. You’ve already damaged my trust in you. Now you want me to part with more money. 

I’m stupid. I really didn’t want to shop around, interrupt my service, or re-train in new technology. So guess what. I paid up.

Don’t Promise Value That You Can’t Deliver On

We’ve just been through this, haven’t we?

Asking for More Money is a Bad Idea

Really!!!! Are we back here again?

Note. Sales are recursive. We go through the same sales process multiple times. See the Revenue Engine

Time to Churn

As I am sure you guessed, I still had a problem. In fact, in both instances, I went through this same cycle multiple times.

It became time to look for alternatives. I found providers who offered the same service and in every case at a lower price (As I was now a new lead, I was shiny, I could get a discount). And switched.

The great thing about service providers is that they, err, provide a service. Once you’ve committed to the change, it really is not that difficult after all.

From Advocate to Enemy Number One

In one week, two companies turned me from being a customer advocate, into a disgruntled customer extraordinaire. If asked, I will tell this story to others. I will probably turn a couple of their potential leads off. There is nothing worse than a customer scorned.

The Takeaway

Out of every 100 leads, on average, 1 becomes a revenue-generating customer (forrester). I really shouldn’t have to say anything more!

In both of the instances I found myself in, neither companies recognized the investment they had already sunk into me as a customer. Rather than viewing me as an asset who would re-new, they treated me as if I was worn out. When things went wrong, their response was to double down and ask for more money. Somehow, they thought that my reliance on them for their service and the trouble it would cause me to switch would deter me from churning. They were entitled. They were also wrong.

When you look at your sales funnel, understand that it is not just new leads that reside within. Existing customers, those of us who have already trusted and bought into your value proposition offer greater revenue potential. If you forget this, then your customer lifetime value is going to be short, and your revenue engine will stall. 

The takeaway? Check under your bed, to ensure that customer churn is not creeping up on you.

Chris Fletcher Founder huerdo Inc

Chris Fletcher is one of the founders of Huerdo Inc. She is an International Master Coach, and previously was the general manager and SVP of sales for Europe, Middle East, and Africa at SAS Institute. In her current role, Chris is responsible for developing and leading The Revenue Engine Sales Method team that helps Huerdo’s clients get out of first gear.

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Customer Churn

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