Learning From Customer Defections

Last month, I lamented that many customer success organizations are focused mostly or only on at-risk customers, leaving them with few resources to address onboarding and retention proactively (and therefore more successfully). With that, I thought I would turn my laments into something more useful: how to learn from customer defections.

The idea is to (1) track defections (2) analyze them by cause and (3) fix the root cause. In no particular order:

• Is the customer simply a poor fit? For instance, you are selling a recruiting platform and the customer recruits just a handful of new hires per year, too few to benefit from the service. If so, fix the prospecting process.
• Was the customer oversold? For instance, the customer was made to believe that, as a result of adopting your wonderful accounting platform, they could do without a CFO — but what they are getting is a 60% decrease in Accounts Payable workload, a great benefit, but not what they expected. If it is a systematic overselling problem, the sales process needs fixing.
• Did the customer fail to adopt the product or service? If the customer purchased hundreds of seats but only a handful of users actually logged on, it could be a fit problem (the customer should not have purchased so many seats in the first place), but it is likely to be a failure of the onboarding process.
• Are there too many product issues? This could be that the customer is hitting many bugs, or bugs that are not fixed at all, or swiftly enough, or that the customer is asking for features that are not on the roadmap. The root cause is an unbalance in assigning engineering resources towards the needs of new customers. Fix the unbalance (or ignore it, strategically, to acquire a new type of customers, understanding that old ones will churn.)
• Was the service experience poor? Fix the gaps in the support, services, or customer success processes.
• Are we not meeting the customer’s goals? This is a much more complex issue. Are we trying to understand the customer’s goals in the first place? Many vendors, and many customer success organizations, fail to do that. And when they do, they often fail to capitalize on that knowledge and help the customer meet their goals. Fix the customer success process, especially for sharing best practices.
• Is the customer going out of business or hurting financially? There may be little the vendor can do about that, but if it is a recently-acquired customer, there may be a way to avoid soon-to-be deadbeats in the future. And if it is an established customer, see the point above.

Customers often defect from a conjunction of factors and that should be captured, too. Defections hurt; learning from them transforms the loss into a gain. What do you do to analyze defections?