As investors have been saying over the last 6 quarters, NRR is one of the most important metrics for SaaS companies to focus on. While expansions are a critical part of that equation, companies must also minimize churn as much as possible. In a recent discussion among CROs, diverse strategies for mitigating churn emerged. In this blog, we share some of the ways they are redefining approaches to churn management.
Tailor Solutions Based on Customer Size and Needs
Since smaller businesses were more impacted by uncertain market conditions this year, they were the first to tighten their belts. In doing so, many cancelled tools they consider to be “nice to haves.” Mitigating churn in this segment, some companies designed strategies to better articulate and showcase the value of the software when fully utilized. This included organizing group discussions and offering complementary re-implementations. However, a case-by-case assessment is crucial to this strategy. It allows businesses to focus on the clients with genuine potential for long-term engagement and value.
Minimum Deal Sizes and Customer Segmentation
Implementing minimum deal sizes emerged as a strategic move to focus GTM on the ICP that best aligns with the company’s objectives. Doing so helps companies avoid spreading resources thin across customers who might not contribute significantly to the bottom line. This approach also allows for more effective utilization of customer success and account management resources.
Additionally, segmenting customers is important for customer success strategies. For smaller customers, assigning a dedicated, hands-on customer success representative is often a poor allocation of resources. Rather, for these accounts, the focus should be on self-service customer support through chat bots and resource libraries. On the other hand, large customers should receive more attention with a dedicated account manager, renewals manager, and potentially even an executive sponsor from the leadership team.
“One of the first things I always do is split accounts and identify who can be a self-serve customer. I only assign customer success reps to the accounts with large deals. This account manager ensures that the deal renews, with upsell and cross sells whenever possible.”
Onboarding Success and Usage Monitoring
Onboarding customers successfully is one of the most important indicators of customer health. Investing early in customer onboarding cannot be emphasized enough. New solutions that track customer usage offer an automated way to flag potential at-risk customers. These tools provide early warning signs, enabling proactive intervention and tailored support to address issues before they escalate into churn.
Aligning Sales and Customer Success
The discussion also revealed the challenges of maintaining synergy between sales and customer success teams. Instances where customer success did not report into the CRO led to internal conflicts and hindered an optimal customer experience. While delineating responsibilities is essential, the need for clarity of responsibilities between AEs and AMs when it comes to expansion selling is apparent.
“We used to have the sales team and the account management teams separated, with siloed leaders and different ways of being compensated. You would have two people cross-selling hard, a multimillion-dollar deal, trying to kill each other. It is just the worst experience ever. It was culturally terrible.”
Conclusion
Businesses are taking varied approaches to mitigating churn. From segmented approaches, specialized roles, to tools and collaborative team structures, churn management is a multi-faceted objective. There is no one single “silver bullet” solution. Nevertheless, to increase NRR, every company should define a clear churn management strategy tailored to their business model and customer base.
