30 Reasons Why Customers Churn

Wouldn’t it be nice to anticipate which customers are likely to churn so you can (1) forecast renewals more accurately (2) lavish appropriate retention techniques on at-risk customers so you can (3) minimize churn? This post is shaped like a laundry list, a long list of clues that your customers may not be renewing. Use it to analyze your data and identify the factors that really make a difference for your customers.

Note that I make no attempt to identify independent variables. This is a compilation of interesting factors to help you identify which ones you are currently tracking and which ones you may want to start tracking.

1. No one signed up. Yes, someone bought the product or service, but no more than a handful of users have shown up. Easy to measure automatically and unobtrusively for SaaS solutions, harder for on-premise solutions, I feel your pain.

2. They signed up, but they are not active. So you got that first small step in the direction of adoption, but nothing happened beyond that. Perhaps the new users were signed up “automatically” and are not even aware that they can use the product/service.

3. They are are not accomplishing much with the product or service. The product should yield marketing campaigns but none went out, track cases that are not logged, or process transitions that are not happening. Users are “playing around” but not accomplishing anything.

4. The users are all business analysts, but the end-users are nowhere to be seen. Usage is not reaching to the masses, endangering your license count — and is a sign that adoption is flagging.

5. The users are all end-users, the business analysts are not adopting the product. The reverse of #4: the little people are adopting, but if you don’t get the power users, it may be a struggle to keep the customer.

6. Some countries are not using the tool at all. It could be a knee-jerk reaction to orders from headquarters, but if a customer has a worldwide presence you want to see worldwide adoption.

7. They are not using a particular, sticky feature. They may be using the product overall, but they are using features that are not differentiated compared to your competitors, so they could be tempted to switch.

8. They have not made any meaningful customization of the product. We have all seen over-customization nightmares, but a customer who has made no customizations at all may not be very committed, right?

9. They did not get trained. Whether they paid for training or not, trained customers are making an investment of their time and are more likely to use the product or service, and use it correctly, to boot.

10. The people who are actually using the product or service did not get trained. An investment was made but it was not directed properly. Could be related to #2, 3, 4, 5, 6 above.

11. They did not use your implementation services. Some customers think they can DYI, but not everyone can (or is trained properly, see # 9 and 10).

12. They did not use a certified partner to implement. Perhaps you rely on partners for implementation. If the partner certification program is meaningful, using a certified partner should make a difference in adoption and long-term success.

13. They log a lot of support cases. Be sure to benchmark this one against (1) the size of the customer and (2) its phase in the lifecycle, since pre-production or early-production customers tend to need much more help.

14. They log almost no support cases. Hearing crickets? No news may mean that nothing can go wrong, since nothing is getting done. Cross-reference with #3.

15. They have encountered a lot of bugs. That should be easy to see from the support-trakcing system.

16. They encountered some critical bugs. One critical bug can ruin the whole relationship…

17. Their cases too a long time to resolve. Especially if combined with bug issues, as in #15 & 16.

18. They logged lots of enhancement requests. This one could go both way, since enthusiastic users do have lots of ideas for the product, but lots of requests also suggest that the product is not meeting the needs of the customer.

18. They logged several enhancement requests that did not get implemented. If so, not only is the product not meeting current needs, it may not meet future needs either!

19. They don’t participate in the online community. Serious users do.

20. They are making snarky comments in the online community. They care enough to participate, but they are speeding bad vibes. Common when mixed with # 15 & 16.

21. They did not attend the Users’ Conference. See #19.

22. They threw a fit at renewal time last year. It could be that last year (last quarter, last month) had special, one-time circumstances but a customer who had a rough renewal in the past is more likely to have another.

23. They are not returning calls from the sales rep. Maybe they hate his/her guts (bad) but maybe they are flirting with the competitor’s rep (very bad).

24. They are not returning calls from the renewals rep. A variation of #22, with shades of #21.

25. They are not returning calls from the Customer Success Manager (CSM). This is more dire than #23 & 24, since CSMs aren’t selling anything.

26. They are on credit hold. Cut them off, what are you thinking?

27. They went bankrupt. Enough said.

28. They were bought out. Acquisitions can be a wonderful revenue expansion opportunity. Or not.

29. A key executive changed. S/he may bring the system s/he had been using at the old firm to the new firm, even if all the other indicators are positive.

30. They bought at the end of the quarter. Customers who buy at the end of the quarter may be receiving strong incentives from sales reps eager to make quota. Several of my clients have reported that their dedication to the product is significantly less than that of less pressured buyers.

Are you using these or other clues to predict renewal dangers? Do tell!