The causes of churn are varied and the indicators are subtle

There are many causes of churn, and identifying which is most important for your business can be challenging. Example drivers of churn can include:

• GTM: Go-to-market churn can be caused by selling to the wrong customers, overselling the product, or having pricing and packaging that creates a poor value/price tradeoff.
• Product and Service: Product and Service (Solution) churn occurs when customers don’t successfully onboard or develop product habits. This can stem from poor messaging, lack of product features, or too much friction in the onboarding process.
• Expansion Churn: Expansion churn happens when a company fails to grow revenue from existing accounts—whether through upgrading clients to new features, increasing users within organizations, or effectively managing renewals and price increases.

The indicators of what causes churn in your business can be subtle. This is especially true when you’re selling to the “wrong” ICP or when the market has moved away from your positioning and value proposition.

While quantitative analysis is essential for understanding churn, most people’s first instinct is to analyze data—which only reveals broad areas of opportunity

Most investors and CEOs I talk to see churn as primarily a data problem. Many of us (myself included) naturally gravitate toward solving problems through numbers.

Their first instinct is to have their team analyze:

1. Which firmographic factors correlate with churn?
2. At what stage of the customer journey do customers get stuck?
3. Which customer behaviors and attributes (product usage, service engagement, subscription types and lengths, acquisition channels) correlate with churn rates?
4. How effectively are we driving expansion?

Let’s examine some typical analytical findings:

• Firmographic: Plumbers, HVAC, and roofing businesses with more than 20 employees and active Google profiles churn at a lower rate.
• Customer Journey Stage: Only 38% of customers reach “first value” within the 15-day onboarding window.
• Customer Behavior: Customers who get more than 20 reviews through our service (with negative review rates below 15%) churn at a lower rate.
• Customer Characteristics (non-Firmographic): Customers on quarterly contracts churn at a lower rate.
• Expansion: Among customers who’ve been with us for over 12 months without previous upgrades, we achieve a 12% annual upgrade rate.

These findings point to opportunities, but they don’t reveal clear solutions. How exactly should we adjust our approach to acquiring larger plumbers or increasing the number of positive reviews? The metrics simply highlight areas that could improve retention, revenue, and margin.

One significant drawback of quantitative analysis is the time and effort required to do it properly. Data often has quality issues—duplicates, changing field definitions, and other problems. Considerable work goes into establishing definitions (such as determining how long a subscription gap indicates churn) and integrating data across systems when your data warehouse is incomplete.

Talking to customers is a faster way to identify issues and leads to more concrete solutions

While building your analytic understanding of churn, you can develop a more qualitative understanding by simply interviewing customers.

• New (recently sold and onboarded) customers: Talk to recently sold customers to understand their buyer’s journey and how they chose your solution. What was their onboarding experience like? What areas for improvement do you hear repeatedly? Is there a gap between what was sold and the clients’ experiences? Is there a trend in client happiness by company type?
• ‘Mid Career’ customers (customers that are near the ‘breakeven’ point for acquisition expense and were successfully onboarded): Talk to mid-career customers about their product experiences and what prevents them from trying additional features. What elements of messaging, product, pricing, or other levers seem promising? Have they considered upgrading? What was that conversation like and what prevented them from upgrading?
• Churned Customers: Who made the churn decision? What was the conversation around termination like? What was their experience with your company during that conversation? What is their current solution? What were their buying and onboarding experiences like?

As you conduct more interviews, you’ll start to identify what’s causing churn. Equally important, you’ll develop strong hypotheses about potential solutions.

Start an automated recruiting and scheduling process and start talking to customers today

Automating interview recruitment increases efficiency by freeing up your team to focus on higher-value tasks and improves the consistency and scalability of your program. Automation also enables better targeting of specific customer segments to gain more relevant insights and allows for seamless integration with existing processes, creating natural opportunities to solicit feedback.

There are several ways to recruit customers for these interviews. These methods include:

• Automated emails and SMS messaging: Leverage automation to send messages to clients at key thresholds, such as after a sale, post-onboarding, at mid-life milestones (like their breakeven month), and when a cancellation is requested.
• In-app messaging: Similar to automated emails and SMS messages, in-app messaging can be used to solicit interviews at these same key thresholds.
• Support team recruiting: Train your support team to invite customers to participate in an interview after an interaction.
• CSM team recruiting: Encourage your customer success managers to request customer participation during milestone meetings such as post-onboarding check-ins and quarterly business reviews.
• Save desk recruiting: Train your save desk team to recruit both lost and retained customers.
• Use a third party: Consider using a third-party vendor that specializes in churn interviews, especially for interviewing churned customers.

Note that automating scheduling makes the process more efficient. Using a service that allows customers to self-schedule and alternating interviewers using round-robin scheduling will streamline the interview process.

Have your executive team participate in interviews and share findings weekly to develop a customer-centric organization

A somewhat hidden benefit of creating a continuous interviewing process is that it presents an opportunity to make your business more customer-centric. Over time, as a company grows, it’s common to lose sight of who the customer is and what their experience is. If you construct your interviewing program correctly, you can expose more of your company to the customer experience. To do this, construct your interviewing program so that: a) senior leaders take part in interviews regularly, including some groups that don’t always have regular contact with customers, such as engineering; b) share your interview findings in a weekly digest to the entire organization.