High churn? You should take a look at your customer experience
Too many SaaS companies have been lost to the ever-looming wrath of customer churn. The silent killer that creeps up on your business and eats it up from inside.
Definition: Customer churn or customer attrition refers to the loss of customers over a period of time. This loss of customers can be from various underlying reasons contributing to customers eventually losing interest in your brand or product and moving to another provider or stopping using the product altogether fueled by irrelevancy. Churn is inevitable: on average, companies see 5-7% churn but it can vary across industries. But anything above 10% is concerning. It’s exponentially more expensive to acquire new customers than to retain existing ones because, over time, the customer acquisition costs (CAC) can cause you to struggle to see any sort of growth in profits.
Too many SaaS companies have been lost to the ever-looming wrath of customer churn. The silent killer that creeps up on your business and eats it up from inside. Business meeting discussions show an upward graph in customers (your sales team bagged 10 new accounts this month) but somehow the revenue chart has deteriorated or not grown at all. Churn is like cancer for your business, and the worst part is - you won’t be able to stop it in time if you don’t identify the core of the problem: why are my customers churning?
Why are your customers churning?
Your customer has outgrown the product
Sometimes it has more to do with the growth and maturity of your customers than it has to do with you. And this is one of the few reasons why churn can be a good thing because you don’t want irrelevant customers to stick around. Customers who don’t need your product anymore will churn away.
Your product is no longer valuable
Sometimes it has to do with the growth and maturity of the product. If you don’t invest in the product/don’t listen to the growing needs of your customers - it will eventually cause them to look for a product that listens to them. You might have a good product but everything becomes obsolete if it doesn’t evolve with time. Really listen to your customers’ problems and inculcate that into the product to prolong customer relations. Either you evolve or your customers will.
Customers are irrelevant, to begin with
Maybe you haven’t cracked the right market yet, or haven’t figured out your niche yet. This can be a very common reason surprisingly because the digital playground is vast and it’s easier than you think to cater to the wrong audience without even knowing it. You might attribute it to a bad product or service but signs like pattern-churn i.e. losing most or all customers in a similar time period or losing most or all customers because “they didn’t get the outcome they expected” from the product, can be reason to consider that your customers are irrelevant.
Your product is too expensive
Sometimes it can be as simple as your product being out of your customer’s budget. You can either consider more competitive pricing if you have the leeway or if you think your pricing is justified, focus on getting customers who will realize the value in your product to deem it worth the money they pay.
Your competitor does it better
A hard pill to swallow can be the fact that your competitor's product does it better than you do. If you look at it the right way, this can be an opportunity to improve your product and add features/solve a problem that your competitor isn’t solving. Great customer relations can potentially trump better products in some cases but don’t think for a second that your customers owe it to you. You get paid for service and results, not loyalty.
Your customer service is just…bad
Let’s discuss this in more detail.
Bad customer experience is causing customers to churn
Customer expectations are already at an all-time high which means your job as a provider is to be at par if not better than your competitors. The digital age has accelerated and accentuated how customers want your brand to interact with them which adds to the already saturated market where every company has something competitive to offer consumers. Customer experience has become a lot more important than you would think and a lot of it has to do with advancing technology. Resultantly, bad customer service has significantly more weightage now in a customer’s decision to go a different direction. Let’s discuss some of these reasons.
Poor onboarding ruins the first impression
First impressions are not overrated. And when it comes to customer support, first impressions are created through onboarding. The onboarding experience is often the first significant interaction a customer has with a brand. A smooth and welcoming onboarding process sets a positive tone, while a cumbersome or confusing one can immediately sour the relationship. During this critical phase, customers form their initial opinions and expectations about the service or product. If they encounter difficulties such as unclear instructions, technical issues, or lack of support, their enthusiasm can quickly turn to frustration.
A well-designed onboarding process helps customers understand the value and functionality of a product or service. It should be intuitive, informative, and engaging, ensuring customers feel supported and valued from the start. Companies that invest in creating a positive first impression can significantly enhance customer satisfaction and loyalty. This initial success builds a foundation of trust, making customers more likely to stay and explore additional offerings.
Unresolved issues and dissatisfactory customer support
When customers encounter problems, they expect timely and effective resolutions. Unresolved issues—whether due to slow response times, inadequate solutions, or lack of follow-up—can significantly damage the customer relationship. Customers who feel ignored or undervalued are likely to churn, taking their business to competitors who offer better support.
Ignoring customer complaints can lead to negative reviews, social media backlash, and a damaged reputation. For instance, a telecommunications company that frequently fails to resolve connectivity issues might face a mass exodus of frustrated customers. On the other hand, a proactive approach to resolving issues can turn a negative experience into a positive one, fostering loyalty and advocacy.
Distasteful interactions with customer success managers
Usually, customers get assigned a customer success manager (CSM) as a POC for all company interactions and updates. A CSM becomes directly responsible for representing the entire brand’s image through these touchpoints with the customer. If these interactions lead to longer turnaround time and eventually longer resolution time, the customer gradually starts pulling away from the company.
They know there are options, plus now the overall tolerance isn’t as lenient as it used to be in the pre or early-digitization era. Enough of these distasteful interactions can accelerate a customer’s desire to look for another product and move on.
How to solve these problems with AI
There are a lot of factors that can catalyze bad customer experience. Some of these, in fact, most of these can seem trivial but they fill up the cup pretty fast and spill over beyond your company toward customers. Bad customer experience also stems from not prioritizing your teams - they become dysfunctional, too many hierarchies lead to friction, miscommunication runs rampant in siloed teams, and eventually, customers face the problems of bad team dynamics. Let’s see how some of these issues can be solved with AI almost instantly -
Self-serve for customers with automated chat support
Almost 60% of customer queries are repeated. This means more than half of your customer support team’s time is spent on resolving queries that they don’t necessarily need to spend their time on. AI agents can automate this process with automated chat support that can handle most if not all of the repeat customers’ queries through self-serve support. Customers can directly talk to an AI agent without the need for human agents and resolve queries instantly and accurately.
Instant and accurate 24/7 support for your teams
CX teams need to be swift, transparent, and collaborative because as customer-facing teams, they have a certain responsibility to uphold and foster the brand. Time is a defining factor when it comes to customer support and the quicker you can resolve something, the better the customer experience. AI agents are 24/7 assistants that are available where you are. They can enable you to resolve queries instantly by asking questions to the AI agent and not have to wait for anyone. What’s more, these answers are accurate and personalized as per brand tone and voice.
With Threado AI, you get assistance on Slack - where most of today’s teams communicate and collaborate, the Web - as a chatbot on the website or within the product, and the Chrome app - an extension that sits on top of Chrome and can assist seamlessly in resolving tickets without having to move between tabs and apps.
A single source of truth by connecting your data sources
A company usually has data across different sources, apps, tools, and internal docs. These can be through structured and unstructured data, scattered across the board. CX teams spend time searching and curating answers from these sources, which honestly can be avoided through AI agents.
Threado AI, for example, integrates with some of the most widely used tools like Zendesk, Intercom, HubSpot, Freshdesk, Salesforce, Google Drive, Confluence, Notion, and Slack. Threado AI understands not just help docs but also the conversations through tickets, conversations, and internal docs to answer contextual queries such as customer information related to accounts, help support agents resolve complex concerns, and onboard new customers faster without the hassle of tutorials and videos.
And by listening it doesn't just literally mean listening. It means paying attention. Identifying churn signals early on is the root of preventing it. Whether they’re dissatisfied with the product or have just outgrown it. Have they found something better or your product isn’t conforming to their growing needs? Is it something trivial like not needing your product anymore or something much more layered like bad customer experiences? More often than not, underwhelming experiences leave a sour taste and account for the majority of the reason why a customer churns. If you have great customer relations, it can trump all other reasons for churn - if not perpetually but at least for a while. It gives you the leeway to figure out the problem and solve it before it’s too late.
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