When to let churn happen | Framer’s Oscar Carlsson
Oct 20 2021
Holding on to a customer just because they pay you a lot of money can be a negative. If the fit isn’t there, they’re likely going to churn anyway. Your resources are better served acquiring new customers or better yet, reinforcing value to customers who already fit the product profile.
On today’s episode of Retention Talk, I speak with Oscar Carlsson, Head of Growth over at Framer. Along with knowing when to let certain customers churn, we talked about leveraging data across the entire stack, having an outcome-focused product roadmap, and many more retention-heavy topics.
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Key points discussed in the episode
"We had to let some of the bigger enterprise customers churn and bet on other ones with the promised future that we would be able to attract more customers and we would be able to solve the need that they had in a better way.”
Leveraging data across the entire stack
Empowering your teams across the board to take ownership of certain metrics will help create a data-driven culture, fostering experimentation and data driven decision-making.
Letting certain customers churn
Though it sounds counterintuitive, letting certain customers go is a good thing. You want to focus your efforts and resources on those customers that are going to provide a higher lifetime value.
Having an outcome-focused product roadmap
Rather than worry about different features and capabilities, Oscar described how the entire company was aligned about segmenting their buyer personas and the outcomes they were working toward. This led to a laser focus for the entire company to radically shift, not only the distribution channel, but their product itself.
Customer churn (or customer attrition) refers to the loss of customers or subscribers for any reason at all. Those reasons fall into two main categories: active or voluntary churn and delinquencies or involuntary churn.
Active churn occurs whenever a current customer actively chooses to leave your product, whether it’s because they didn’t see the value, get their support ticket answered, or simply just don’t need the product, which can mean they were a poor fit. And as Oscar described, there are certain moments when churn can be a good thing. The key is to understand your customers and identify which ones are worth making an effort to keep. And it all starts with implementing a retention strategy.
Setting goals allows you to measure your progress through your retention process as you loop back from individual experiments, as well as set an end-point for the process. You set the goal at the start so everyone on the team knows what they are aiming for, and what you want to accomplish.
Once you’ve set these goals, then you can start the process of looking over your existing data and feedback and defining the questions you need to ask and designing the right experiments to answer them.
2. Ask the right questions
For your process to work, you need to generate the right questions. You’ll have a good idea of what areas of your company are causing churn problems from user feedback and internal data. Segment customers by how they use your product, and target specific experiments at them.
3. Develop your hypothesis
Once you know the questions you want to ask, build them into a workable hypothesis. The point of developing a hypothesis is that it forces you to think about the questions you’re asking in more detail.
Think about the impact any experiment is going to have on churn to help with your decision making, turning the multitude of questions you have assembled into specific ideas you can action and test. This is a way to understand your choices and how you can progress with your process.
4. Test & analyze your ideas
Every company is going to be different, and every experiment will be different, but what is important is to get the minimum viable test up and running as quickly as possible. Don’t overthink the experimental design or over-engineer a solution. You’re looking for quick results, so you can learn from them and move on, either refining that experiment, or moving on to the next.
It’s also vital that you invest in analytics that’ll actually help you measure and analyze what happened. If you are building a process, you need the analytics in place to measure every single step your customers make so that you have the data to justify your hypothesis.
5. Refine, reject, repeat
Your experiments will provide actionable learnings that you can use to move your service forward. If you see a decrease in churn, but think the same idea can do better with some tweaks, then you can refine your process and repeat your experiments, reducing churn incrementally with each new idea.
Once your experimental phase of the process is over, review your objectives, systematize your learnings, and optimize your process ready for the next challenge.
If you’d like more insight into your own retention—or even a free retention audit where we can benchmark you with actual relevant data—reach out to me at email@example.com.
This is a ProfitWell Recur production—the first media network dedicated entirely to the SaaS and subscription space.