Churn Fighting Focus: When customer relationships start right, they stay right
Today we are putting on our psychology hats to take an closer look at an important fact we often forget during the daily grind: human nature affects the nature of business.
But before you think about skipping over this part of the post – “this is psycho-babble that doesn’t impact me!” – let’s immediately apply this idea to a daily reality we experience as Customer Success professionals: the importance of a positive start to a customer relationship.
Intuitively, CSMs recognize that each new customer relationship should start on a positive note; indeed, many of our teams put a great deal of time and energy into thoroughly and thoughtfully onboarding our customers. And these instincts are well-founded, as research shows that creating a beneficial customer experience, especially at the very beginning, pays dividends in the long-term quality and tenure of the relationship. This was illustrated particularly well in a study of customer satisfaction and churn in the cell phone industry from a few years ago. The study revealed three compelling points: 1) that negative experience at the outset are a major factor in short-term customer exits, 2) the longer people have satisfactory interactions, the less likely they are to churn and 3) customers who enjoy many months of positive experiences weigh cumulative satisfaction more heavily than any occasional, negative events that occur later. This all probably rings true for many of us.
But why is starting right so important? What about human nature makes this so critical? As this interesting post by Amity explores, it’s because humans naturally make snap decisions and tend to stick with them. In other words, for Customer Sucess, it is true that how the relationship starts tends to set the tone for the entire relationship.
Additionally, it turns out that this is especially true when it comes to perceiving another’s intentions, as seen in an experiment called The Trust Game:
“Players were given funds and instructed to invest cooperatively with other players. Researchers then rigged the game so certain players acted in a more trustworthy manner than others. As expected, over multiple trials, test subjects learned to adjust their investment strategies according to partner. But scientists discovered something very interesting. When they subtly suggested certain players were more honorable than others at the start, test subjects readily accepted and acted on the information. When false notions were planted, subjects continued trusting bad actors and distrusting good actors despite evidence to the contrary. This was further proof of a phenomenon called confirmation bias: humans tend to stick with their initial beliefs, regardless of the facts.”
In short, trust is a significant driver in customer loyalty, particularly when customers perceive a buying risk. And when trust is high, so is loyalty; this is especially true when renewal decisions involve risk. So how customers come to trust a technology, a brand and the people behind it matters – and first impressions linger.
So what does this all have to do with Customer Success? As Amity points out, “By nature of its role, Customer Success has a profound influence on customer loyalty from the outset. Customers are in their most vulnerable state after they ink the deal. Anxious to learn if their decision was the right one, customers yearn for a deep sense of certainty and security. When CSMs provide early assurances and demonstrate the company can be trusted, greater loyalty comes as the result.”
Amity also offer some sage advice: the key to achieving world-class performance is overcoming natural silo-ism, or the tendency for functional groups to look inward to please the boss instead of outward to please customers. They suggest forming cross-functional teams of marketing, sales, support, customer success, UX and even accounting that collaborate to define and implement a superior customer experience; this helps ensure promises made are systematically kept along the way.
If you are interested in more on how to successfully start customer relationships and consistently onboard your users, we recommend this read, this read and this read. And if the psychology behind customer loyalty has peaked your interest, we also recommend checking out this read.
Customer Success Around the Web
- How Customer Success Meaningfully Reduces Cost of Customer Acquisition: When discussing customer success for SaaS startups, the conversation focuses mostly on retaining customers and reducing churn. These are two fantastic benefits with meaningful return-on-investment. But great customer success organizations can meaningfully impact another critical part of the customer lifecycle, customer acquisition, by catalyzing evangelists to refer new customers. This insightful read dives into the (very important) math behind the growth that can occur when your CS team is able to reliably find and cultivate evangelists. It is an interesting read for all CS pros, but particularly for anyone who is working to demonstrate the wide-reaching potential of CS at their company.
- 5 Best Practices to Reduce Customer Churn: We love a good listicle, we can’t help ourselves. This particular list is thoughtful and thorough, highlighting some focuses that we agree are central to reducing churn. Our personal favorite from this list is “Build relationships high and wide.” Too often, relationships with customers are too shallow and narrow. Contracts are signed, users are trained, software is used, but few relationships are developed outside of the day-to-day contacts. Sometimes that works, but most of the time it’s a risky proposition. What happens if your only contact leaves the company? You’re likely left with no advocate and no additional relationships within the account. Plain and simple: you’re at risk of losing them as a customer.
- Why CSMs should be Product Managers’ new BFFs: In most companies, each department is like its own, relatively isolated shogunate. Each manager has his or her patch of office space to rule and each kingdom is somewhat suspicious of its neighbors. Take Sales and Marketing for example – a Corporate Executive Board Survey cited in Hubspot’s “The Power of Smarketing” revealed that 87% of the terms Sales and Marketing use to describe each other are negative. This read ventures to say that the feelings of Product Managers towards Customer Success Managers are neither warmer or fuzzier. But Customer Success Managers are uniquely well-positioned to help Product Managers develop, improve, and update products, which benefits every part of the company. This insightful read explores the ways that a CSM-PM friendship can benefit each team member, the company as a whole and ultimately, the customer.
Word to the Wise
This week’s wisdom comes from a recent blog post by Groove, makers of simple help desk software, about how they are using their own customer success stories to overcome one of the biggest challenges in marketing and grow their business. The post explores why customer stories are so valuable – credibility, visualization and goodwill, to name a few reasons – but we found it particularly interesting when they pointed out that the best stories are not just blind praise of your company:
“What’s a good story? Hint: it’s not a fluffy, gushing “Groove is amazing and changed my life” statement. It’s much more nuanced than that. I encourage everyone to read Sean D’Souza’s two-part Copyblogger series on The Secret Life of Testimonials (Part One and Part Two), but what we’ve found is that the best-testing testimonials are specific about who the testimonial writer is, and what problem Groove solved for them. The first part helps the reader put themselves in the shoes of the testimonial writer. As a SaaS founder, I’m a lot more likely to relate, for example, to Allan Branch, another SaaS founder, than the anonymous “John S., Boston, MA” that I see offering up testimonials all over the web. The second part, specificity about a problem, demonstrates to the reader not just that your product is generally good (that’s not enough), but that you can solve their problem.“
This great post also gives helpful pointers on how to identify the customers who are most likely to share their story with you and examples of different ways to share the stories you collect. We highly recommend checking out the full read.