Markus Rentsch’s Post

These are some great thoughts from Markus - a few points to add: 1. It is incumbent upon the CS leader to highlight the bad customer fit early - create a "draft review" process that provides a feedback loop to leadership at sale close and after onboarding if expectations aren't correct; 1b. Those changes are sensitive - you don't want to sacrifice sales velocity by making too many changes at the top end, but you'll find some glaringly obvious ones. At times from a small subset of the team; 2. Churn usually becomes the focus "issue" when that tipping point is met where new sales simply can't outsell churn without scale on the sales team (either productivity per rep, or headcount) - damage is already done by this point, and a churn review by cohort is the only way to know if changes are having an impact; 3. The "leaks" are often placated, at least temporarily, by discounts, credits, value adds, or rapid iteration process change - not sustainable for sure, but it becomes hard to attribute improvement to a single change. Outside of the ICP, product, performance, and value creation - CS leaders need to look at onboarding process, and frequency of interaction. There are always improvements to be found, while focusing on those external factors; 4. A quick look at trajectory of onboarding NPS vs. overall NPS can tell if you're making the right moves.

If someone gets fired over high churn rates it should be the CEO and not the CSM leader. As the leader of the company you do not get to pick the good and "outsource" responsibility for the bad and the ugly. It's easy to make the CSM leader the scapegoat but it's not going to change a thing. You need to understand that 1. Churn does not reflect the CSM team's but the company's performance. 2. Churn can only be solved where it has been caused - Acquiring bad-fit customers --> Marketing & Sales - Product capabilities, stability, usability --> Product & Engineering - Slow and unsatisfying support --> Customer Support - Lack of proper training, education, and guidance --> Customer Success Management 3. CSM leaders can't hold any other team accountable for their (non-) contribution to eliminate the reasons for churn - only you can. 4. CSM teams are responsible for the part of churn that is under their control and the churn analysis/customer exit interviews 5. Churn is high in the beginning because your business lacks of experience/maturity and customer insights. 6. If it does not go down as you grow, you need to pull the brakes until you fix all the major leaks. 7. If you are waiting too long churn will destroy your business. You can replace the lost revenue with new acquisitions. But as it's up to 25x as expensive you will never make any profits and run out of cash. It's time to take full responsibility and make dealing with churn your top priority. PS: The opposite of churn is Customer Value-Led Growth. Learn more about it in my weekly newsletter --> https://lnkd.in/dtC7MEjP

It's been said that churn is not a Customer Success problem - it's a Sales and Product problem. But is it true?👇 As always, it depends. But yeah, it's mostly true. If you've been in CS any period of time, you're probably tired of explaining why churn is not a CS problem. It's a constant battle in most organizations. Did you ever wonder where this notion came from? How did CS become the scapegoat for churn? Because CS in most companies is created IN RESPONSE to customer churn. --> Companies grow quickly through new logo acquisition. --> Leaders are not concerned with post-sales. Renewals are a given. --> Companies succeed for a while, until customers start leaving after their first or second renewal. --> CS is spun up to stop the bleeding. --> Churn slows, but then hits a wall as CS delivers the bad news. And that bad news... --> CS can't fix churn. --> Sales is making promises the product doesn't deliver on. --> Product isn't addressing big gaps that customers say matter to them. _______________ Yes, our customers' success is an organization-wide responsibility. But let's be real. Not every function across your org has an EQUAL role in your customers' success. I talk to hundreds of CEOs and CS leaders. And in most of those companies, the underlying causes of churn can be traced back to Product or Sales. I'm not letting anyone off the hook here. CS plays a major role as an orchestrator across the company to articulate and proactively manage customer outcomes. So does Marketing, Finance...all down the line. But if your Sales and Product leadership isn't focused on long-term customer retention, you're wasting your time on things that won't make a difference. How do you start? 1️⃣ Get your leadership together and align on what your customers' success means across the org. What is your single north star measure? 2️⃣ Define the behaviors you need in each function across the org, starting with Product, Sales, Marketing and CS. 3️⃣ Define the measures to hold each function accountable. This is all an interesting academic exercise until you get to #3. This is where you'll see whether your leadership team really gets it, how committed they are, and how open to change they are. Even if you check all these boxes, changing how people behave and how we measure them is never easy. But at some point, we have to start thinking and acting differently. Life is too short to settle for incremental improvements, when what we need is something dramatically different. P.S. Want to chat more? DM me. 📩 Want more? Try my free newsletter. Click the link in my profile. ♻️ Repost if this helped or inspired. 🔔 Follow me, Bob Mathers, for more

Most companies have no idea how under-staffed CS is. They have high churn and poor expansion. This is why. 𝗧𝗵𝗲𝗿𝗲 𝗶𝘀 𝗻𝗼 𝗖𝗮𝗽𝗮𝗰𝗶𝘁𝘆 𝗣𝗹𝗮𝗻 𝗳𝗼𝗿 𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿 𝗦𝘂𝗰𝗰𝗲𝘀𝘀 Customer Success is likely the department in your organization that needs capacity planning the most. It’s notoriously under-resourced and under-staffed. CS people are stretched across so many accounts that there’s no possible way for them to do what they need to do for every single customer. 𝗧𝗵𝗶𝘀 𝗹𝗲𝗮𝗱𝘀 𝘁𝗼: - Poor customer experience - Renewals being lost or missed entirely - No bandwidth for expansion initiatives Capacity in this regard isn’t the number of accounts reps are currently carrying. It’s not about ARR under management (which has nothing to do with how difficult a customer is). It’s about the activities a CS person must carry out with each and every account in order to maximize their success with your product. 𝗖𝗦 𝗮𝗰𝘁𝗶𝘃𝗶𝘁𝗶𝗲𝘀 𝗶𝗻𝗰𝗹𝘂𝗱𝗲: - QBRs - Report backs - Account planning - Check-in meetings - Identifying at-risk customers - Identifying customers with upsell potential - Etc. Most people are amazed at the number of these items. Add prep/execute/follow-up for each item and suddenly there’s a lot to do. If the company doesn't know how long these activities take and if they have the right staff and resources... These activities will be missed. And retention and expansion will suffer. More on how to do this this in the 📰 𝙍𝙚𝙫𝙊𝙥𝙨 𝙒𝙚𝙚𝙠𝙡𝙮 📰 here: https://lnkd.in/dyaYWK_9 ✌️

Acquiring a bad-fit customer is acquiring churn. It can't be said often enough. Customer Success Managers can make all the difference but they are not magicians. If - the product does not fit the customers' needs - they lack basic skills and knowledge - they are not willing to put in the effort required - they don't follow the advice they will never become successful. They will only pile up costs and frustration the longer they stay and in the end churn anyway. But it does not stop there. Because your CSMs could have spent the time growing high-quality customers and creating additional demand instead. Add the loss of potential referrals on top and you’ll get staggering opportunity costs. If you want to improve the quality of your customers as a CSM you need to take action. Marketing and Sales only work with assumptions about the Ideal Customer. But only you as a CSM who is working with dozens or hundreds of customers understand who they really are. PS: Check out this FREE Notion Guide on how to identify your Ideal Customer as a CSM --> https://lnkd.in/eQzAgwmm

Here’s how I’ve seen a lot of customer success teams attempt to mitigate churn - 1. Note potential flight risk 2. Log it. 3. Wait and see what happens 😑 The expectation is that someone else is reading that sheet, and presumably will take action. The reality is…nobody reading the sheet thinks they need to act. This is an example of a reactive, inefficient approach to risk mitigation, resulting in an administrative exercise if anything. My LinkedIn Sales Solutions team follows a proactive process that’s clear, consistent, and tracked. We’re aligned on what must be accomplished, who’s taking on those tasks, and how we measure progress. For every 12-month renewal above $100,000, we’ve defined a framework to identify risks: Do we have sufficient activation? Do we have sufficient adoption? Do we know who the executive sponsors are? Do we know who the decision makers are? Have we delivered a value review to them? When something’s off, we flag it, and create a plan. And my team knows I’m inspecting everything. I’m sending questions and comments, they’re constantly updating the records. We’re all accountable, and on the same page about what must be done. Don't just do something to do something - ensure that the administrative processes you instill have accountability and measurable outcomes.

The question I use to know if my customer will churn (you can steal this) CSM’s are scared of churn; I get it. -It affects your stats -Your bonus too -Mental health -Job security And 99% of the time its avoidable. But what if you could see it coming from a mile away? What if your client actually told you where they were looking? Well, this is the question to unlock that for you. “If we went out of business tomorrow, what competitor would you go to and why” What does this do? 1. Their answer tells you what their 2nd option is 2. Their response also gives you insight into the competitive landscape of your industry 3. Their “why” gives you product, cost, or serviceability insight into what your clients are looking for Then you can adjust your approach based on what is needed. Let me know if the comments what other ways you find out if a customer is looking elsewhere; i’m keen to learn from other CSM's!

Markus has the right of it. Having the right customer is not only good for your business, it’s the right thing to do for the clientele you’re working with. In my experience, I see this so often due to pressure on sales to close deals and that “pressure” exists because the ideal market likely wasn’t identified and cultivated from the beginning. We all know product-market fit is an art as well as a science, but good foundations collapse the timeline and keep the business from trying to catch up when they’re really depleting their resources and those of their customers.

I have the Ultimate Churn Buster Just kidding... But, In today’s competitive market, ensuring your product reaches the right customers is paramount. It’s not just about making a sale; it’s about ensuring those customers derive genuine value from what you offer. This begins with a deep understanding of your product’s functionalities and how they can address specific customer needs. Identify Your Ideal Customer Profile (ICP): The journey starts with identifying your Ideal Customer Profile (ICP). These are the customers who will not only benefit the most from your product but will also drive your organization toward success. Your ICP is the foundation for building your sales and growth strategies. Build Your Sales and Growth Process Around Your ICP: Once you have a clear ICP, tailor your sales and growth processes to attract and engage these ideal customers. This focused approach ensures that your efforts align with those most likely to gain significant value from your product. Deep Customer Discovery and Functional Mapping: Upon acquiring customers, invest time in deep customer discovery. This involves understanding their unique needs and challenges. By mapping your product’s functionalities to these specific needs, you create a clear plan for driving customer success. Track Progress with Relevant Metrics: Developing a success plan is only half the battle. The other half is tracking progress using metrics that matter to your customers. This ensures that both you and your customers can see the tangible benefits and improvements brought by your product. I am sharing an example below for an EHR product and a simple way to map customer needs to the functionalities of the product as well as tracking metrics.

Why is it so important to Retain existing customers…? While acquiring new customers is important for business growth, retaining existing customers is equally important. 1) Cost-effectiveness: It typically costs more to acquire a new customer than to retain an existing one. Retaining customers reduces the need for extensive marketing and sales efforts aimed at acquiring new customers. 2) Loyalty and Trust: Repeat customers are more likely to become loyal to a brand and trust its products or service. This loyalty can lead to long-term relationships and higher customer lifetime value. 3) Feedback Loop: Existing customers can provide valuable feedback that can help improve products or services. 4) Predictable Revenue: A base of loyal customers provides a steady stream of revenue, making sales forecasts more predictable and stable.