How Customer Insights Can Strengthen Retention Strategies
Running a subscription-based business can be like managing a leaky bucket: some water will inevitably run out, but you must keep an eye on those leaks to ensure things don’t get out of hand. In the same way, while customer attrition is a fact of life, it’s essential to maintain an up-to-date understanding of what’s causing customers to reduce or cancel their subscriptions––and, thus, what you can do to keep those losses down. The most effective approach? Customer insights.
Many companies launch big internal projects or hire pricey research firms to understand customer churn. But there’s a smarter, more efficient way to gain these insights without breaking the bank: targeted customer research through interviews.
In this blog post, we’ll explore how setting up a focused customer insight program by chatting directly with customers who have recently canceled or reduced their subscriptions can provide valuable information to help plug those leaks (or at least slow the flow) and boost customer retention. This approach not only saves time and resources but also leads to better decision-making for long-term customer satisfaction and loyalty. After all, Gartner research has shown that retaining and selling to an existing customer is more cost-effective and profitable than acquiring a new one.
So grab your metaphorical bucket, and let’s dive into the power of customer research and its impact on understanding and helping combat those pesky holes, aka attrition.
The power of rapid customer insights
While many research projects require big budgets and timeframes for recruiting from target audiences or existing panels, a subscription-based business has the distinct advantage of already having complete customer information, making it simple and fast to reach out and gather insights.
Leveraging that information to implement quick and cost-effective research methods, such as one-on-one interviews, can provide quick-hit insights into several business problems, such as messaging changes, new offerings––and, in this case, the trends and rationale behind subscription holders reducing or canceling their subscriptions.
It’s essential not to rely solely on survey data or internal projects when trying to understand attrition or reduction rates. By conducting qualitative interviews, you can gather first-hand insights from customers who have left your service, providing a more accurate and nuanced understanding of their reasons for doing so.
Getting started with customer interviews
Define your targets––by buying program, geography, title, or whatever is most relevant. You’ll want to aim to conduct 20-30 interviews. Remember, this is quantitative research, so you don’t want to talk to two people and call it a day.
Studies have shown that 5–10 interviews will reveal solid, reliable results. However, many companies feel more comfortable having response bases of 20–30 separate interviews. (It is essential to gauge the tolerance of your internal audience when it comes to sample size, as you want to ensure the results are not dismissed out of hand.)
Writing your interview request
Once you have your list of contacts ready, craft a personal, catchy email using all our great insights into what makes a great marketing email––brief, bullets, great headline, etc.
To improve response rates, you’ll want to offer incentives. Often the easiest thing to offer is a Visa gift card or the like. Rates vary, but you’ll definitely get respondents’ attention when asking for their valuable time if you compensate them for it. (Make sure to check the compliance limits of your corporate policies to be sure you don’t run into internal hurdles.)
I’ve found the best results with a brief personal email describing the problem, what we are asking for, and what they will receive in return. Also, ensure you ask that the recipient point you to the right person in their company if they are not it.
Be prepared to adapt your email outreach techniques, as you might discover that sending at certain days or times yields better results. Depending on timing, your initial send can result in a 10-15% response rate, providing a decent sample size for your customer insights research.
Uncovering hidden issues
I recently helped one of our Aventi Group clients complete customer research similar to what I’ve outlined above. Doing customer interviews helped us identify issues with the client’s subscription-based software that were previously going unnoticed and causing subscribers to cancel or reduce their subscriptions.
The client company suspected that the subscription downturn was due to rising competition. However, we discovered many contributing factors, some new, some known, which allowed the client to rally internal resources and aim to remedy the costliest ones.
For example, there was a technical issue regarding account profiles that had not been flagged internally as significantly contributing to churn––even though it was a known issue. We found that many customers were so frustrated they simply canceled their subscriptions instead of calling support. Customer insights like these can help you implement better fixes for common problems, ultimately improving customer satisfaction and reducing attrition.
The benefits of a personal touch
Conducting customer interviews not only provides valuable customer insights but also demonstrates that your company genuinely cares about its customers’ experiences. That personal touch can lead to improved brand loyalty and even win back some customers who have canceled their subscriptions.
By taking the time to listen to customers’ concerns and gather their feedback, you can create a more customer-centric approach to your business, ultimately improving retention rates.
Fine-tune by GTM
Understanding the reasons for customer attrition may differ depending on the go-to-market (GTM) channel through which you acquired your recently canceled customers. When conducting customer interviews, you can segment your research based on different GTM channels to identify trends or issues unique to specific acquisition methods.
For example, customers acquired through enterprise sales teams may have different pain points than those who were cross-sells from other company solutions. By tailoring your research, you can create more targeted strategies to address the unique needs of customers acquired from different channels.
Sizing up (or down)
Changing your interview approach may also benefit your business model and customer volume. For example, a smaller company with fewer cancellations can contact customers directly to request feedback. By contrast, a larger organization might need to scale its approach by using automated tools to solicit interviews from larger target lists.
Regardless of your company’s size, it’s essential to adapt your research methods to ensure you’re gathering meaningful customer insights from a representative sample of your customer base.
Lessons learned and best practices from customer interviews
There are several lessons to be learned from conducting customer interviews:
- Dedicate resources: Assign a team member or external consultant to quickly structure the research program, conduct the interviews, and analyze the data. In many cases, by dedicating resources, you can see results in as little as 3 weeks.
- Scale your approach: If your business has a high volume of customers, consider scaling your research methods to meet your unique needs.
- Test different outreach techniques: Continuously test and optimize email outreach strategies to maximize response rates.
- AI-it (or record all interviews): Note-taking on demand is hard, so use AI or other call transcription as well as recordings to enhance the data analysis.
- Present results with video clips: Using today’s video editors, almost anyone can master creating a quick clip that lets the customer tell the story in their own words––and boy, does this help diverse or potentially disagreeable teams listen up.
- Follow up. And then follow up again: Every project is only as good as its impact. Make sure someone is tracking action items to plug those pesky leaks.
- What if…? Make the ask. In the cases where you have good interview rapport with the customer and they are still using your software to great effect, perhaps even make the ask for a testimonial. Weirder things have happened!
By implementing these best practices, you can ensure that your customer insights project is a success––and then some.
Unraveling the mystery of customer attrition
With tighter economic times and increased competition for subscription-based companies, it’s more important than ever to understand the factors contributing to customer attrition. Even if you haven’t seen a spike in cancellations, it’s crucial to ensure you are periodically re-identifying the significant contributors to customer churn or reduction in order to develop effective strategies to tackle these thorny issues.
By conducting customer interviews and addressing the concerns they uncover, you can improve customer satisfaction, reduce churn, and ultimately protect your revenue during challenging economic conditions.
Ready to take a practical, rapid step toward greater customer insights? Contact Aventi Group today to schedule a complimentary 30-minute call.