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No Churn: 6 churn factors to keep an eye on

Yesterday’s meetup with Mikael Blaisdell offered some interesting insight on how retention truly impacts your company’s revenue. In the example he shared, Company A had an 80% retention rate while Company B had a 95% retention rate. After 5 years – with all other factors being equal and constant – Company B’s revenue was double that of Company A. This effectively made people stop and think, what can we do to increase that retention rate and keep it growing year after year?

“Retention is a cumulative beast,” he says, “it is almost entirely driven by growth.”

If no churn is your goal, first start by calculating your churn rate – every company needs a starting point. Then identify the churn factors and work to keep your customers away from it. Blaisdell said many companies don’t even know what their churn rate is because no one is tracking it – shocking! It doesn’t matter how many sales deals are made if the revenue tapers off after signing.

Pay attention to these potentially “deadly” churn factors:
1. “Divorce” – when senior management from the customer side changes, so may the vendor’s contact. The new person may have their own loyalties to other services.
2. Failure to adopt functionality – implementation could be a make or break factor, it’s important to make this first step successful or all may be lost.
3. Decline/Death of a business
4. Mergers – sometimes the bigger company has the bigger say
5. Error – sales people say what they need to get the product sold and sometimes overselling may lead to overpromising
6. Poaching – another similar service may steal your customer away

Ideally, your customer success managers (CSMs) to know what’s best for your customers. They are the trusted advisors who constantly monitor and developer customer profiles, and can help pinpoint who are target prospects and when flags are raised.

There was debate over where CSMs should fall in an organizational chart and who they should report to. How has your company handled this? I’d love to hear your thoughts.

Ellis Luk

I'm the marketing and communications manager at Totango - but you can call me Chief Content Officer. When I'm not writing, you can find me obsessing over memes, debating grammatical usage or getting distracted by the latest Tumblr gif blogs. Customer love starts with a friendly hello!

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