Understanding Customer Attrition in a COVID-19 World
The world has changed. Businesses are under pressure because of the COVID-19 pandemic. The global economic slowdown is creating cash-flow challenges and many B2B solution providers are experiencing an unprecedented spike in customer attrition, or churn.
In this new environment, it’s easy to blame higher-than-normal churn rates on COVID-19; but proactive business leaders don’t just sit back to watch this crisis run its course. Rather, they acknowledge that the pandemic may simply be shining a spotlight on pre-existing issues. That is, perhaps a surprising number of customers were already teetering on the edge of attrition long before the pandemic hit.
As you think about customer churn for your own business, there are some questions to ask. Ideally, you’re able to ask these questions directly to your departed customers as you conduct to what many refer to as a post-decision or churn interview. Doing so will help you identify the root causes of customer attrition and uncover opportunities to improve retention rates and decrease churn rates—despite COVID-19.
Were You Replaced with a Competitor, or Was the Budget Cut Completely?
The answer to this question tells a lot and helps you understand how much of the decision was truly attributed to COVID-19. Even if they “downgraded” to a competitor, that’s still revenue you’re losing. Knowing where the money went helps you understand what is actually happening in your market.
How Were Things Before COVID-19?
How in danger was this account prior to COVID-19? Were there pre-pandemic signals on this account? Was this buyer getting the value they expected (or more than they expected) from your service or product? If the value wasn’t there, why not?
What Was the Series of Events that Compounded the Decision to Leave?
There is rarely a single event that drives a customer to leave. What were the tipping points in the timeline of their decision? When did those tipping points occur relative to this pandemic?
How Easy Was the Decision?
Not everything is getting cut. It’s valuable to know how close you were to the cut line and what may have helped you stay above that line. Remember: You are competing for budget against a lot of other solutions. It’s useful to know what items were kept—it tells you who you’re up against when competing for wallet share.
What Happened to the Original Champions?
People fight for budget. Unfortunately, COVID-19 has led to layoffs. If your champions lost their jobs, then you should not be surprised that the account was lost.
Would Your Customer Consider Your Solutions Again in the Future? If So, When Can You Circle Back?
More than anything, the answer to this question helps you understand how much COVID-19 has affected your buyer’s churn decision. It also helps you determine the playbook for winning back the account when the time is right.
Proactive business leaders recognize the strategic values of insights like these. As you take a disciplined approach to regularly interviewing departed customers, you will surface actionable insights that can help your executive team navigate the current economic climate and lay the foundation for higher customer retention rates in the future.
Now is the time to look in the mirror and honestly assess your strengths and weaknesses as a business. By doing so, you can make adjustments now that will ensure you survive the next 18 to 24 months—and thrive beyond.
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