Companies lose customers. And this is not the worst thing. The most terrible thing is that they do not know why this happens.
Pragmaticmarketing.com defined 3 types of customer churn and tried to figure out what drives the high rate of churn. All these kinds of churn we encounter in the SaaS world.
3 kinds of customer churn
In general, customers churn can be broken into three categories:
Failure to thrive
The “failure to thrive” goes like this:
From the moment customers buy the product they seem to regret the decision. Their onboarding gets slower or their usage rates remain terminally flat. It’s about the customers who never stop reporting problems: something is breaking, something never worked from the first attempt, and so on.
The customer has failed to thrive with your product. When they finally drop you, you’re disappointed but hardly surprised.
Churn reasons are not always clear.
On the face of things, everything seems great. Health scores are green, onboarding went well and usage rates seem ok. It seems that the future is clear and bright, however, for some reason you’ve started to see some worrying indications.
Before you know it, the client is gone.
What you need to do is to take another look at that green health score: If it reflected reality, your customer wouldn’t have left. You weren’t measuring the right things. Whatever informed your green health score was not enough.
Green churn happens when you keep your focus too narrow and don’t consider the full picture of your client’s engagement with your product.
This type of churn can blindside you suddenly.
As with green churn, your client’s health scores are good, but rather than a puzzling decline of the relationship, the end comes almost overnight and you don’t have time to react.
Something happened, and it happened on their end. It’s rather unexpected and unforeseen. You can’t counter it.
These 3 types of churn and their description should be helpful if you try to find the ways for the customer success. Anyway, do not panic and begin to recognize the signs of churn and act to address issues to keep your customers happy.