5 Reasons Why Your CSMs Get Unexpected Churn

Continuing our 5 Reasons series, this month we tackle the painful issue of unexpected churn. Sure, losing a customer is painful, but it’s particularly problematic if you were not expecting it. So how can we do a better job of anticipating churn? Here are 5 root causes and suggestions for working around them.

1. They are not looking at the right metrics

Many CSMs are starved for good metrics. They may have exquisite details on how many users logged on yesterday, used a specific feature, launched campaigns, closed cases, or whatever your product does. But that’s all about activities, not results. Getting to results requires effort and finesse. How much additional revenue does a new campaign generate? What savings does the client expect from your new AI translation tool? This is information that the CSMs can gather and use to transform activities into results. Bonus points if you can actually inject the information into a customer dashboard for maximum transparency.

Lesson: Create metrics that capture results, not just activities.

2. They don’t understand their clients’ business objectives

The question is not whether the client will renew; the question is why the client will renew. That is determined by the client’s strategic objectives, which many CSMs don’t really know. While having a relationship with executives (point #3, below) would help a lot in gaining an understanding of business objectives, the CSMs can learn a lot from other contacts. But they must know to ask, have time to ask, and be knowledgeable about the general business environment.

Lesson: Train CSMs to discover and record business objectives.

3. They are not talking to the decision makers

This is a very common reason why unexpected churn occurs: the CSMs don’t have relationships high enough in their customers’ organizations and are not privy to decisions. Their contacts may be perfectly happy with the product and the relationship, but they don’t control the purse strings and they may be blindsided by strategic changes.

At a minimum, CSMs need to know who the decision makers are. And ideally they need to have some visibility to them.

Lesson: Train CSMs to identify and create relationships with decision makers.

4. They do not welcome bad news

Most CSMs are optimists: things will work out; they will turn the customer around; the PO will be signed. Good CSMs are realists: poor customer experience will negatively impact renewal; we need executive-level contacts to rescue the relationship; the customer was over-sold and will only renew part of the contract. They don’t give up, they are not doomsayers, but they embrace reality rather than a dream.

That’s on the side of the CSMs. CS leaders can make it worse, by willfully ignoring bad news and simply flogging the CSMs to do more. If the leaders don’t welcome bad news, they will likely get rosy news, until quarter-end that is.

Lesson: Ferret out bad news.

5. Their incentives focus on growth rather than churn

I have a number of clients who have a stated strategy of zero churn: they do not want to lose a single customer (before you decide it’s a crazy goal, zero churn makes a lot of sense if your market is bounded, for instance). These vendors give their CSMs a target of zero churn, perhaps alongside other targets, but avoiding churn is a prominent goal.

For most vendors, however, the goal is growth and they give the CSMs a single target of increasing revenue by X%. Looking at it from the perspective of the CSM, I may be able to meet and even exceed my target by increasing my larger accounts’ ARR while neglecting smaller accounts, that may churn as a result.  If that’s not what you want, you need to set a churn target as well as a growth target.

Lesson: Set a churn target.

What do you do to fight unexpected churn? Please share in the comments.

(And if you need help, we can help.)