Preserving Profits: 8 Ways to Mitigate Churn

Customer churn is an issue that all businesses need to face head-on. Simply put, churn in B2B markets is the rate at which customers stop buying from a company over a set period. By understanding your churn rate, you know how well you are meeting customer needs, delivering a positive customer journey, and ultimately offering products customers want.

Today though, customer churn is getting harder to manage for advisors. Increasing customer churn is a trend we’re seeing increase with SaaS sales especially.

“Subscription revenue growth is fundamentally a function of net new sales and plan upgrades, less downgrades and churn. And while new sales have been volatile, the most consistent trend of the post-COVID slowdown has been increasing churn."- ProfitWell

According to the ProfitWell June 2023 report, these are the highest churn rates in the history of the SaaS Churn Index, which tracks retention going back to 2019. In our recent State of the Union, our guests talked about customer churn trends and uncovered strategies to fight churn to boost profitability and increase wallet share. Let’s dive in.

Webinar speakers

• Laura Jaffrey, Senior Education Manager
• Mike Onystok, Vice President of Strategic Sales
• Chris Donlan, Principal Solution Architect

So, can you put a dollar amount on decreasing churn and customer retention? VP of Strategic Sales Mike Onystok and Chris Dolan, Principal Solution Architect, shared some interesting statistics. A recent Forrester study shows that advisors can unlock new revenue and increase profitability by 5X with the right churn mitigation approach. A Forbes article reveals an increase in customer retention by 5 percent can lead to a company’s profits growing by 25 percent to around 95 percent over a period of time!

This is a pivotal strategy for unlocking extended customer possibilities and increasing a Customer’s Lifetime Value (CLV). With loyal customers well-acquainted with your brand, you can uncover an upsell path, such as introducing valuable add-ons and premium subscription tiers.

Use these comparison guides to enhance the customer experience

Jump to 5:13 in the webinar to watch the segment. Or, watch the full webinar here. 

To enhance cross-sell and up-sell discussions, Laura Jaffrey, Senior Education Manager for AppDirect, introduced two sales resources during the webinar. Currently the comparison guides cover these critical business areas:

• SD-WAN SASE 

• UCaaS 

• CCaaS 

These guides let advisors see all the different platforms and providers in the marketplace so you can access the unique capabilities of top-tier providers and compare them to find the right solution for your customers. Advisors can also use these tools to identify gaps in their existing tech stack and complementary solutions. Use these sales resources to enhance customer service, add value, improve experiences, and ultimately reduce churn.

To find the comparison guides, head to the resource kit page or watch the webinar. 

Best practices—8 ways to mitigate churn

So, what are the best strategies to combat customer churn and stimulate growth? Read on to explore proven methods for fostering loyalty and boosting profitability.

Jump to 11:26 in the webinar

1. Understand the importance of churn mitigation

The stakes are high when it comes to delivering consistent, high-quality customer experiences. That is because customers are willing to walk away when expectations aren’t met. A PWC study reveals 32 percent of all customers would stop doing business with a brand they loved after one bad experience

In fact, one of the best ways to improve profitability is to focus more on reducing churn with those existing customers. As in most areas of sales, customer retention is more cost-effective than customer acquisition. Acquiring a new customer can cost five-to-seven times more than retaining an existing one.

2. Build strong customer relationships

When approaching a renewal with customers, delivering exceptional support is a must. Gartner reports that 84 percentof buyers are looking for superior support services during renewal stages. By staying in frequent contact with your customers, you can become a trusted source for them. 

Mike recommends finding ways to both check in with customers to ensure they’re happy but also to see if there are additional products or services that might benefit their business. Take a look at current businesses processes, needs, and challenges to see if there are any solutions that might help the customer solve their pain points. Read our blog about building strong customer relationships and how to diversify and expand the services you sell.

3. Leverage data for churn prediction

How else do you reduce churn rate and increase retention? In short, use data to spot potential vulnerabilities. This might involve customer feedback meetings, NPS surveys, and monitoring customer account activity. If you use analytics tools to monitor account activity, you can set up alerts for early warning signs of disengagement– and then speak with the customer about their options before they decide to leave.

AppDirect can help you to build your own customer engagement and churn prevention team by looking at:

• Whether the account is growing or shrinking

• If the customer is adding services

• A customer’s annual revenues/business size

Data will help you stay ahead of the game. Rather than waiting for customers to drop off, you can be proactive and find ways to re-engage with them, and possibly even purchase additional services by listening to their other challenges and business goals.

4. Tailor customer success programs

By using data and knowing your customer well, you can start to build a service that goes above and beyond selling solutions. If you know the customer’s business well, their pain points, and existing systems and processes, you can recommend the most valuable solutions.

Asking the right questions and getting familiar with customers’ tech stacks can help you identify any gaps or room for improvement. For example, if you’re looking to have conversations with customers about cloud and SaaS or Lifecycle management challenges, consider key discovery questions to expand the conversation into these areas.

Ask the right questions:

Cloud infrastructure

• What are your disaster recovery and business continuity plans?

• What are your plans for scaling and securing mission critical workloads?

SaaS

• How many SaaS applications is your company using today? How are you buying and managing those applications?

• How do you deploy and secure SaaS apps for your remote workers? What challenges does that present?

Lifecycle management

• How difficult is it to onboard new vendors or bring in cloud apps for employees?

• Are you finding your team's bandwidth or workload stretched?

• How much time does your IT team spend deploying and supporting new technologies

Access full list of questions in this Cloud Sales Guide

5. Create a culture of customer retention

Jump to 23:33 in the webinar

The speakers also revealed these tips to build a culture centered on customer retention:

• Prioritize proactive churn prevention—Tackle concerns head-on to prevent churn, showing customers you're invested in their success.
  

• Maintain open communication—Regular check-ins and updates foster trust, reinforcing your commitment to their satisfaction.

• Deliver tailored value—Enhance loyalty through personalized, value-added services that align with customers' unique needs.

6. Look at the full picture

Regardless of the vertical, all customers need help with multiple areas of their business—which spells a huge opportunity for advisors. In the learning center of AppDirect, linked below, you will find an infographic displaying all of these solution sets that you can show to customers to demonstrate just how many areas you can support them with.

• Energy

• Managed services

• Security

• Cloud

• Connectivity and SD-WAN

• Mobility and IoT

• SaaS

• Customer experience

7. Have business and solution-focused conversations

Customers may vary in their understanding of technology, but one thing all your customers will understand is business. Try to approach customers with a business-focused agenda rather than a technical one.

By talking about business impact and benefits rather than features and platforms, you speak your customer’s language, and you get to the bottom of what they really need and want.

Another resource in the advisor Learning Center learning center, called ‘Technology Wheel Discovery Questions,’ includes a set of questions to gain a better understanding of how to support customers. Sign in to your Marketplace account to view the full list of questions.

Jump to minute 27:00 to hear speakers talk about the Technology Wheel

Technology Wheel Discovery Questions—Sample

Energy

• How would you like a cost effective energy solution that could provide you with significant savings that you could apply towards another critical business project?

Connectivity/SD-WAN

• How do you currently communicate with all of your different locations?

• Tell me how you would like to enhance that experience of sharing data?

Managed Services

• How do you currently communicate with all of your customers given the staff that you have on hand?

• What would it mean to your business if you could complement what your staff provides today, from an outside perspective.

> Sign in to your Marketplace account and navigate to the Learning Center to access the full list of questions

8. Branch out and expand share of wallet

A common theme throughout this webinar is that churn prevention is key. Taking a proactive approach and building customer engagement also gives you the opportunity to expand your wallet share with each customer. If you can nail this, you can become a full-stack technology advisor.

For example, you may be very familiar with areas such as connectivity and you want to scale your business, and expand into selling SD-WAN, security, or IoT solutions. However, if your customer requires support with both of these areas, they will look elsewhere. This is especially true considering, a staggering 69 percent of organizations seek a one-stop-shop for their tech needs (Source: AppDirect market research, McKinsey & Company, Econsultancy, Techaisle). By leaning on technology and provider experts like those at AppDirect, you can solidify your position as a trusted advisor, offering expert guidance and support across the customer's complete technology stack.

To help we have along with solution architects, and sales specialists and more, who understand the big picture and the complexity around deployment, implementation, and support. They can help support you with those conversations and provide guidance to help you expand your potential profitability.

For more on how you expand solutions conversations and position yourself as a strategic advisor, tune in to the full webinar for churn reduction strategies and example conversations. Or get in touch with your Channel Manager who can connect you with an AppDirect Sales Engineer.