Breaking Down Customer Churn Reasons (Quadrant of Churn)

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While CSMs put their heart and souls into their customer relationships, there will always be instances of customer churn. As a voice for your customers in your organization, it falls to you to understand why this churn occurred, if there was anything you or the team could have done to prevent this churn from happening, and document how to catch these kinds of risks in the future.

Although not all customer churn is avoidable, some common churn reasons can be expected and recognized.

Here are some common customer churn reasons broken down into four quadrants:

Expected + Unavoidable

Need: if a customer no longer needs your product or service, it will be obvious they will no longer need (or want) to pay and continue the relationship.

No Ownership: all vendors need an internal ‘owner’ or someone leading the charge on their side to ensure everyone understands the value of their investment. If there is no owner, it can be hard to fight your way back into the good graces of a customer.

Expected + Avoidable

Product: any customer in a relationship with a SaaS vendor expects the product to function correctly, meet their needs, and continue to grow with their business. If your product isn’t meeting these criteria, it’s time for a conversation. Make sure you consistently check in with your customers to spot these product issues before they snowball and cause churn.

Competitive: there will always be competition in your field, regardless of your product or service. If a customer approaches your team with the news that they are shopping competition, work with them to see if anything can be done to save the relationship.

Lack of Value: at the very beginning of any customer relationship, most likely during the handoff from sales, there will be a clear outline of the value a customer expects to see from your platform or service. This could include anything from ROI to SLAs, but if your team is slipping on these, there will be issues. Staying on top of your project plan and checking in consistently with customers can help avoid any significant problems that could lead to churn.

Customer Fit: sometimes, although it happens rarely, a vendor team will identify a customer as a wrong ‘customer fit,’ and the relationship will dissolve mutually. While this is expected, it can be avoided by ensuring solid alignment between your sales and customer success departments.

Unexpected + Unavoidable

State of the Business: sometimes, it is just entirely out of your hands as a CSM when a customer churns. If a customer’s business cannot handle the relationship, or if things happen financially that prevent your partnership from continuing, you can do nothing.

Unexpected + Avoidable

Poor Experience: bad customer experiences often come out of nowhere. Too often, they are mishandled by internal teams, which, unfortunately, can cause a customer to churn. Your team can prevent churn by catching bad experiences early on and doing whatever it takes to make things right.

Price: this reason is unexpected because up until the customer voices their frustration, they will have been paying the price for your product or service. One way to get ahead of these kinds of issues is to check in with your customer executive or decision-making team on a semi-annual or quarterly basis so that this issue doesn’t come out of nowhere.