How to Learn From Customer Churn (And Make Your Business Better)
Your ex-customers represent a huge opportunity to improve your business. Here’s how.
“I don’t believe in you.”
While it might not be what their emails actually say, every time a customer leaves us for a competitor, I replay the voices of those who have always told me that I wasn’t good enough.
Frankly, it sucks.
It’s always sucked, and it always will suck.
Our team works insanely hard every day to build the best customer service software on the planet, and seeing people love the product creates an incredible euphoria; validation that what we’re doing is working.
But when someone rejects our hard work?
It just sucks.
This isn’t a post about how you should embrace customers leaving, or be happy about it. That argument can be made, but it’s not how I feel.
Instead, today I want to talk about how I deal with losing customers, and most importantly, how I learn from it and get better.
How to Leverage Customer Churn to Improve Your Business
There isn’t a business in the world with more than a handful of customers—that I know of—that experiences zero churn over the long term.
You’ll always have customers leaving, and the larger you grow, the more customers will leave (if your churn rate stays the same).
Reducing churn is a massively important undertaking for most of us, and it’s something we’re doing a lot of work on (more on that in another post).
But no matter how hard you work at it, you’re still going to lose some customers.
It’s a fact of life in this—or any—business.
And if you want to succeed, you’ll need to learn how to leverage that churn into making your business better.
Understand WHY Your Customers Are Leaving
Sometimes, customers leave because of their condition: they’ve outgrown your business, or they signed up before they were ready, or they’re going out of business.
There’s little you can do about reasons like that.
But much of the time, customers leave because of you.
- Your product didn’t address a particular need for them
- They ran into too many bugs or issues
- They didn’t get the service or customer success support that they wanted
- You failed to prove why you’re better than a competitor
These are all things that you can do better, if you choose to prioritize them (more on that later).
How do you actually pinpoint the reasons your customers are leaving?
It’s probably simpler than you think: all you have to do is ask.
The Customer Exit Survey
At first, we had no system in place for collecting feedback from customers who closed their accounts.
But after seeing it from countless apps I signed up for and canceled, I decided to give customer exit surveys a try.
We studied dozens of surveys and put together one of our own.
It’s a personal email with just a single question:
Not only did this perform multiple times better than other scripts we tested—including multiple choice surveys—but it gets a nearly 14% response rate.
That’s 14% of our ex-customers, who aren’t even doing business with us anymore, still taking the time to respond and help us do better.
We’ve gotten some incredible insights from this email.
Specific bugs that our active customers weren’t telling us about.
Hang-ups in our user experience that we didn’t catch.
Workflow inefficiencies for use cases that we had never considered.
To figure out what to actually improve on, it’s important to track the responses you receive and identify trends.
We track trends using Groove labels.
But you can do this using Gmail labels, Trello, or even a simple spreadsheet that documents your known issues and has a column for tallying the number of responses that center on each issue, as well as the ex-customer name and email address who reported the issue.
Doing this will help you understand what you’re losing the highest number of valuable customers to, so that you can act accordingly to fix what’s hurting most.
And once you do, then you can act on it.
You might also find useful:
Winning Customers Back After They’re Gone
The reason it’s important to track not just what’s causing your customers to leave, but who left due to each particular issue, is because it’s a massive opportunity to win those customers back later on.
We did this with a recent feature release, when we launched our Olark integration.
We reached out to the dozens of customers who have cited the lack of live chat as their reason for leaving.
This simple exercise took us less than an hour, and netted us more than a handful of re-engaged customers.
How to Apply This to Your Business
Customer churn is an inescapable reality. It hurts, and I don’t know of any way to make it hurt less.
At the same time, it’s also a huge opportunity to get better.
I hope that this post helps you leverage that opportunity and grow your business.