5 reasons customers churn

My experience on working around them

Author

Gary Chan
October 22, 2024

In my Product Led Growth experience, these are the 5 reasons why our customers churned. Some are out of my control. For others, it’s completely preventable. And there are customers where you know churn is coming, but to maximize profit, I could have taken these actions.

Top 5 reasons for Product-Led Growth customer churn

1️⃣ Price

2️⃣ Out of Business

3️⃣ Integrations

4️⃣ Not Feeling Heard

5️⃣ No need anymore / No more champions



1️⃣ Price: SaaS Race to the Bottom 💰 🛑

It’s competitive out there, folks! 😨 There's always going to be a cheaper option lurking around the corner. In this competitive landscape, you need to use pricing both defensively and offensively. Our team has faced countless renewal conversations about pricing, and we've also gone after competitors' customers using our freemium tier.

Pricing will forever be a contentious issue as customers constantly look to cut costs. What's really going on in their minds? Customers are constantly thinking: 🤔

  • "Am I getting a good deal?"

  • "Do I feel reassured it's a good deal?"

  • "Can someone else give me a better deal?"

So, how do we overcome this challenge? It's all about helping customers gain confidence by providing guidance. We need to show them that we know exactly what they need, both today and tomorrow, while staying compliant. They hiring us as thought leaders and a guide. Your renewal should be a reassurance that "things will be taken care of."

Sometimes, we make our case by throwing in an advanced feature, providing more professional services, or cutting costs just a little bit. But when you can't reassure your customers, that's when churn due to pricing happens. Remember, the underlying reason is always about feeling assured and not being played for a fool. 🙂‍↕️

2️⃣ Out of Business: The Unavoidable Reality for Startups 😵 🛑

Expect churn from startups. It's out of our control. What we can do is detect the timeline leading up to it. We often notice this because customers become less active on the platform, they're not using our solutions, and they have other fires to put out internally. 🧯

The key question here is: Are our solutions unlocking revenue and savings for them? Is your software helping them with sales? We need to remind our customers of this value, so they're less likely to cut back on our solutions as they approach potential business closure. 🤔 

This is where Executive Business Reviews come in handy. They allow us to check in and remind customers of our value. What we didn't do well in the past was have better internal communication about upcoming churn and give executives a heads-up about forecasting. Forecasting helps leadership understand what needs to be done to recover revenue goals. 📊

Out of Business is a churn factor you need to account for in your reporting. While it's beyond our control, don't be surprised when it happens. Set expectations with your executive team about signs of customers' potential business closure.

3️⃣ Integrations: Missing Product Feature ⁉️ 🛑

In today's SaaS landscape, customers have established workflows that are like a spider web – you can't easily untangle them. 🕸️ Previously, SaaS software would simply say, "We sync with Zapier, you can sync everything from there." But in 2024, customers expect more. They want a deeper, seamless, and automated integration experience.

We've lost customers because we didn't have certain integrations, and you might too. But here's how we circumvent this issue: We reassure our customers by asking the real question – does their outcome NEED our software to integrate with those tools? 🤨 

Most of the time, they don't actually need those integrations. While our competitors tout how many integrations they have, it's not about the size of the integration library. It's about how many integrations the customer actually needs.

If our software doesn't have a particular integration, we inform our customers about manual ways to accomplish their goals and reassure them that it's a low-effort process. Remember, it's not really about integration – it's about "How much time do I have to spend on this?" Provide your customers with a playbook so they can execute with confidence.

4️⃣ Not Feeling Heard: The Art of Customer Success 🎨 🛑

Customers have requests and feedback, and when we put on our customer success hats, we need to reassure them. This means developing success plans, consulting them on alternative solutions, and setting clear expectations.

Initially, we made the mistake of simply pushing back on our customers, telling them we didn't have what they were looking for. This led to poor customer success, and you could feel the frustration in their emails. 🤬

We transitioned to a better approach: acknowledging our customers, providing them with workarounds, and reassuring them that other customers can proceed without certain features. We say things like,

  • "Sounds like it's a difficult experience for you"

  • "You can try another way... like edit and then upload"

  • "Typically, other customers can move forward without this. I'm happy to connect you with some of them to share their experience"

It's an art to achieve great customer success. It requires being an expert in your product and knowing your customer segment inside and out. This way, you can reassure them with acknowledgment and guidance.

5️⃣ New Stakeholder Alignement: The Vanishing Champion💨 🛑

We've seen it happen numerous times – champions leave. When this happens, expect churn. The champion knows how to use your product, but other folks on their team? Not so much. 😫

We've had customers' champions leave, forcing us to restart the onboarding process, activate new users, and educate them on the process. Often, it's too late – customers tell us the champion is already laid off or didn't leave any instructions. 😡

Reflecting on this, what can we do better? Prepare a contingency plan. Reassure the "Buyer" that we have a hand-off plan. 🫱🏽‍🫲🏼 Even without the champion, we can guide their team through the process. It's crucial to develop relationships with the whole buying committee, not just an individual.

This type of churn is controllable if you get ahead of it. Prepare those contingency plans for when champions leave – it'll save you a lot of headaches down the road.

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In conclusion, anticipate that churn will happen in Product-Led Growth. It's important to hone in on the revenue, NRR, and ARR forecast. Partner with your teams (Product, Engineering, Sales) on churn prevention. Develop plans to reassure your customers, stay on top of churn reasons so you can mitigate them, and communicate with your leadership team.

With these strategies, you'll be well-prepared to recover revenue and drive business growth. Remember, in the world of PLG, it's all about reassuring your customers and providing value at every step of their journey. Now go out there and conquer that churn! 🚀

<Shoutout to @Abheer Bipin for inspiring me for this post>

Read more about Post-Sales and Product Led Growth

Read more about Product Led Growth and Churn

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I am Gary Yau Chan. 3x Head of Growth. Product Growth specialist. 26x hackathon winner. I write about #PLG and #BuildInPublic. Please follow me on LinkedIn, or read about what you can hire me for on my Notion page.