Churn can just mean goodbye for now
Don’t abandon hope all ye who enter here (churn-ville). A solid win-back playbook is essential for every SaaS company. In fact, best-in-class SaaS companies revive 30%+ of their churned revenue. Here is how I deployed my first win-back playbook, and why I have deployed one at every company since then.
“ best-in-class SaaS companies revive 30%+ of their churned revenue. ”
Seemingly out of nowhere, a celebrity launched a competing product at ⅓ the cost of our solution, when I was leading CS for a wellness app. Overnight this competitor deployed an aggressive sales team targeting our clients in Q4, going into hundreds of Jan 1 renewals. Within a 1-month window from their launch, 20% of our customers who had been healthy accounts all year long, were notifying us they were churnning. After all, if they were getting a 2x ROI with us, and the competitor was promising the same outcomes with a 6x ROI it was hard to justify staying.
First order of business when the news hit of our new competitor with significantly lower pricing, we met as an exec team and decided that we were not going to try to compete on price. We were baffled at how they could make their pricing work while affording a relatively huge sales team. There was no way we could make that work. We knew this likely meant we would lose some business, and got on the same page with our board about that.
Next, I made sure the CSMs were ready to have a positive conversation, with customers who would churn. No bridge burning allowed no matter how much it personally hurt after they’d invested in the relationship for a year or more. We would approach it with empathy, and do our best to make the transition smooth. Did they need to export historical data? No problem, we would approach it with the same urgency as a request from a current customer.
Each customer who was leaving was invited to share feedback with us through an impartial party (not their CSM) to get their honest opinions. Internally we held a post-mortem with a cross-functional team on the few that had any concerns beyond our pricing. Most told us they loved the product and the CSM, but just couldn’t justify the expense if there was an alternative.
From a CS Ops perspective, I left the accounts assigned to the CSMs that had owned them with a $0 renewal to track against. If they could bring it back next year, it would count positively towards their NRR bonus. Dumping them back into the SDR queue makes no sense. The CSM is best suited to revive the relationship. Top SaaS companies can revive 32% of their churned customers. I wanted to set us up to be in that quartile.
We sent a recap business review when we removed access, to remind them of all the value we generated together and how delightful it was working with us. Then we wished them well.
I set the expectation that my CSMs would check back after implementation with the competitor, and each quarter thereafter for the first year. We would estimate when their QBR would be and then try to check in a couple of weeks after that.
“The grass isn’t always greener on the other side.”
The grass isn’t always greener on the other side. At our first touch point about 6-weeks after they started their contract with the competitor we checked in. Angry former clients told us that what they saw in the demo had no bearing on the product. It was very bare-bones, difficult to use, and missing many of the key selling points they had been most excited about keeping. Several had asked to cancel and had to threatened legal action to unplug and come back to us in the first 90 days. Others were optimistic that the features would come.
By the midpoint in the contract, most of our former customers had realized you get what you pay for, and were ready to come back. At that point, we started offering early access at no extra charge if they would sign the contract for next year early. That way we ensured the churn for the competitor regardless of discount tactics they may deploy at renewal time or last-minute promises of feature releases. We won back every customer save one, who had the celebrity founder on their board.
It isn’t always as cut and dry as this experience, but this first foray into win-back playbooks inspired me. Since then I’ve added some additional points
Did they leave due to a missing feature? Remember to tell them when you build it.
Was pricing the issue? Inform them of promotions or new lower-cost packages/ products.
Did the decision-maker change jobs? Restart the conversation if a nay-sayer leaves.
A fan who was out-voted on keeping your product that changes jobs could be a fantastic lead for the sales team to go after at their new company.
Introduce the idea of coming back well in advance of the annual financial planning cycle.
If a former client declines to return, try to glean market insights about what makes the competitor better after the former client has been using the solution for a while. This might be different feedback than what they thought would be different coming out of the sales cycle with the competitor. Share this feedback internally to encourage investment in the areas of our business that matter most to customers.
If you don’t win back the account after a year, or if the CSM they have a relationship with leaves, put the opportunity back in the sales queue.
If resources are scarce, take a digital approach to these follow-ups with a drip campaign going out at strategic times. Try using surveys to capture feedback, and consider incentivizing participation with a gift card, swag, or raffle entry. For low-touch pooled accounts, it can make sense to have a single CSM or CSA just assigned to work on churned customers. Assuming you’ll revive ~12% of the revenue can be a great way to justify the headcount for this.
Don’t leave money on the table. Establish a win-back playbook before you need it. According to ChartMogul ~10% of revenue growth in SaaS can be attributed to reactivation.
