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The metric most marketers overlook, but shouldn't



MQL

SQL

CAC

CLV

MRR

ARR


Virtually every marketing dashboard includes some mix of the metrics above. Rightly so, given marketing is measured on its ability to fill, influence and move prospects through the sales funnel.


But, there’s one marketing metric most teams overlook when they’re pulling together their dashboard. Something that they can directly influence and when they do can significantly influence revenue. Customer churn rate.


Customer churn rate is the total percentage of customers who stop using your product over a period of time. Viewing churn alongside all of your traditional acquisition metrics can help you take a pulse on the customers your marketing efforts are actually acquiring. It won’t matter how many MQLs or SQLs you’re adding to the funnel if they're bad-fit prospects you'll likely lose.

Why should marketers care about churn?


I know you’re probably thinking, wait isn’t churn a customer success problem? No, not exclusively. Customer churn can be influenced by every single person in your organization. Sure, your customer success team may monitor, report on and build initiatives to reduce customer churn. But, that doesn't mean they are solely responsible for improving it.


When customers leave, they’ll have their reasons. It might be because of price, a less than stellar customer experience or low engagement with your product. But, sometimes it’s because of misaligned expectations of what your product will help them do, a bad customer fit or they forgot why they purchased your product in the first place. All problems marketing is uniquely positioned to help solve, and when they do will boost the lifetime value of your customers.


Here’s how chatting with customers who have churned can help lend a qualitative lens to all of the quantitative marketing metrics you’ve got your eye on.


Spot the gaps between value promised and perceived value delivered


There’s nothing more frustrating than being promised one thing and delivered another. Making lofty promises about what your product can help a customer achieve is a surefire way to temporarily boost your acquisition numbers. But, when you fail to deliver on what you promise, they'll leave as quickly as they purchased. Setting the right expectations around who should use your product and why they should use it can help you avoid attract customers that are more likely to stick around long term.


If you and your customers do not share the same expectations around who should use your product and why they should use it, you’ll waste valuable resources acquiring the wrong customers.

Let’s say your product is a rewards program platform. Your marketing and sales materials talk about how you will help new businesses acquire more customers quickly. But, your product is actually better suited to helping established businesses drive repeat purchases. Two very different outcomes for two very different customers. What do you think will happen when a new business purchases your product and sees little growth in the number of new customers they’ve acquired? They’ll churn.


Gathering insights from churned customers can help you identify just how big the gap between what's promised and what's delivered is. You might learn that your marketing team, success team and sales team are not rallied around the same story. Or, you might notice your value propositions are not aligned with realistic product outcomes. These conversations can shed light on valuable information that you can use to fine tune your marketing messages to attract customers that will have higher lifetime values.

Paint a clear picture of which customers are a bad fit for your product


Every company discovers that there are some customers that just aren’t a great fit for their product. It could be because their path to purchase is too resource intensive for your team, they want features that aren’t going to be on your roadmap or they prefer a dedicated account manager that you can’t offer.


The truth is, sometimes churn is okay. There are some customers your team should be willing to lose. The trick is knowing who they are.

There are some customers that your team should be willing to lose, customers that are a bad fit. These customers will be more likely to churn, while adding stress to your success, support and product teams along the way. Churned customers can help you build a definition of who is not suited to use your product, often referred to as an exclusionary or negative persona.


Let’s say you offer a SaaS solution that is really well suited to smaller businesses with less than 5 employees. You know this because these customers have high lifetime values, are engaged users, like to make changes to product configuration on their own and rarely reach out to your support team.


When chatting with your churned customers you discover that some of them are leaving because your team can’t offer them dedicated account management, specialized reports or one-on-one support. You should let them churn, but learn as much as you can about them after they leave. You'll likely notice that churned customers share similar characteristics, attributes, attitudes and behaviors that can be captured in your negative persona.


When your sales, marketing and success teams have a shared understanding of who your ideal customers are not, you'll be able to build more successful strategies to acquire, engage and retain customers that are less likely to churn.

Find opportunities to engage with the customers you already have


As marketers we’ve all been there. You bought a SaaS tool you thought would revolutionize your tech stack, then three months later found another one that promised the same. At the end of the year you’ve racked up ten subscriptions. Finance asks you why you need all ten of these and the truth is, you totally forgot why you subscribed to half of them.


You're not alone. It’s estimated that nearly 31% of all customers who purchase a SaaS subscription never use it, making ongoing engagement with your customers critical to keeping them around. Marketing's job doesn't stop once a customer is acquired, even if that's what your marketing dashboard would lead you to believe. A lack of engagement can be an indicator that a customer is likely to churn, which means you'll have to work harder to add even more prospects to the funnel.

That's what makes customer marketing so vital to preventing churn and improving customer lifetime value. Unlike its acquisition focused counterpart, customer marketing focuses on what your customer experience looks like post-purchase. Delivering an incredible post-purchase experience with tailored content can actually help you decrease your acquisition costs, while boosting revenue.


Customer marketing can help marketing teams decrease their acquisition costs while increasing customer loyalty and improving customer lifetime value.

In fact, it's estimated that improving your customer churn rate by as little as 5% can help you increase revenue by up to 95%. If you notice that a high number of customers are leaving because they can't remember why they purchased your product in the first place, it's time to revisit your post-purchase experience. You might consider adding in targeted email communications, new feature webinars, customer stories, market insights, new ebooks or whitepapers. Whatever you choose, it should should add value to your customer's experience, giving them every reason to engage with your product.


Pulling it all together


Although it's incredibly important to measure how marketing is influencing your customer acquisition efforts, it's equally as important to measure how it's influencing your existing customers.


Tapping into churned customer insights will make you a better marketer. It allows you to take a step back and evaluate the quality of the leads and customers your efforts are acquiring.


It's this quality check that will help you fine tune your value propositions, define your bad fit customers and identify gaps in your post-purchase experience which will all in turn help you increase your customer lifetime values and decrease your acquisition costs.


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