How to connect the dots between revenue churn and customer feedback

Churn is bad news. and I'm sure any of my fellow customer success managers (CSMs) will relate. By definition we want to fight it at all costs, right?

But I’m sick of the conversation around churn. What I dislike is a pattern I see emerging: talking about customer success interchangeably with “preventing” churn.

The more we talk about “stopping” churn or “stamping it out,” the more we reduce the customer success function to a reactive, digitized, firefighting service – and it’s not that. You know that, I know that.

Instead, of talking about “preventing churn,” I prefer to think about creating and shaping customer experiences that deliver value, helping my customers progress and reach their goals.

That’s what I want to discuss in this article: How we, as CSMs, can get ahead of churn by focusing on customer feedback.

Why your approach to customer feedback will determine churn rate

Despite the pervasive focus on churn reduction, customer success is ultimately about driving sustained customer engagement, helping customers to achieve their goals and overcome challenges over time, as their needs evolve.

When you shift the emphasis from a defensive reaction to a positive, proactive ambition, customer success teams can unlock a more strategic and impactful approach.

And this is where the uniqueness of customer success lies: in its ability to understand the customer mindset by analyzing product usage data and directly incorporating customer feedback to inform strategies.

The customer-centric mindset

Creating robust feedback loops and bringing the authentic customer voice into product improvements is critical, rather than simply "dealing with negative customers."

Even when it gets to a critical stage, effective customer success teams don't view customer feedback as a burden to be managed. Instead, they see it as an invaluable source of insight that can drive meaningful product enhancements and strengthen the partnership.

Similarly, the most strategic CSMs shift their focus from narrow upselling tactics to identifying holistic opportunities to add value and help customers reach new goals.

Rather than simply pushing additional purchases, any good CSM should take a consultative approach to deeply understand the customer's evolving needs and collaborate on solutions that create long-term business impact.

This mindset transformation – from short-term revenue generation to sustaining mutual growth – is a hallmark of customer success teams operating at the highest level.

The key here is proactively incorporating the customer's perspective and priorities, whether through feedback channels or joint goal-setting. By making the customer an active partner in the process, rather than a passive recipient of products and services, customer success can drive innovations that truly meet their needs.

This customer-centric approach fosters loyalty, and advocacy, and opens up avenues for expansion that go beyond simplistic upselling.

The strategic importance of customer feedback

Retaining and growing your existing customer base is always going to be paramount under any recurring revenue model, but customer success becomes a non-negotiable in a tough economy.

When new business leads dry up and your sales team struggles to close deals, customer success teams have a unique opportunity to explain and account for lost revenue.

As CSMs, we have a crucial responsibility to share valuable insights across the company. This information can help improve the product, bring in the right customers, and explain lost revenue.

Let me break it down for you:

For product teams: We can provide invaluable feedback to help improve the product based on real customer experiences.
For marketing teams: Our insights can help target the right customers, reducing churn from poor fit.
For the CEO: We can attach customer feedback to revenue loss, providing a clear picture of where adjustments need to be made.

This strategic impact not only benefits the company but also shields the CS team from potential scrutiny.

Protecting and empowering customer success teams

Now, let's talk about something that's close to my heart as Head of Customer Success: protecting and empowering our CS teams.

It's easy for CS teams to come under fire when churn rates rise. But here's the thing – not all churn is created equal, and not all of it is the CS team's fault.

Let me paint a picture for you:

Imagine your CS team is under fire because of rising churn rates. The pressure is on, and people are starting to question the value of CS itself. “Are they doing their job?” or, “Our customers clearly aren’t successful, are they?” are unspoken accusations thrown about. It’s not right, but then again the blame game is never a legitimate avenue to pursue.

This is where the power of customer feedback really shines. If your customer success team has been diligent about collecting and analyzing feedback, you might find that much of the churn is due to product issues or misaligned customer expectations.

This insight can become your shield. It doesn't make the problem go away, but it shifts the focus from "What's wrong with our CS team?" to "What systemic issues are we facing as a company?"

Think about it – if we can show that customers are leaving because the product doesn't meet their needs or because we're bringing in customers who aren't a good fit, it changes the conversation entirely.

We're no longer on the defensive, trying to justify why we couldn't retain a customer. Instead, we have the ammunition we’ve longed for to push for necessary changes.

As Head of Customer Success, this kind of insight is gold. It allows me to ask the right questions:

Is our onboarding process falling short?
Are there issues with our CS processes?
Are we failing to build strong relationships with our customers?
Are we not helping customers find value in our product?
Is the main issue that our product isn't meeting customer needs?
Are we targeting and bringing in the wrong types of customers?

In the best-case scenario, we find that the CS team is doing everything right, but other factors are driving churn. This doesn't mean we celebrate – after all, we're still losing customers. But it does mean we can build a strong case for change:

Maybe we need to revamp our product to better meet customer needs. Perhaps we need to reassess our sales and marketing strategies to ensure we're targeting the right customers. It could be that we need to align our messaging to set more accurate expectations.

This approach turns customer feedback into a powerful tool for cross-functional collaboration. Instead of playing the blame game, we're using data to drive meaningful improvements across the organization.

Understanding why customers churn

So, how do we get to the root of customer churn and explain that lost revenue? The golden rule here is timing. Once customers have churned and left your product, the chances of them telling you why are very low. They've checked out, and their obligation to you has ended in their minds.

Instead, we need to focus on two key moments:

Pre-churn: Identify customers at risk of churn or displaying early symptoms like decreased product usage, downgrading, or ignoring CSM calls. These are prime opportunities to dig in and understand why they're unhappy.
Point of cancellation: Implement a robust cancellation flow. Whether this is within the product or through a high-touch model, make sure you're asking the right questions at this critical moment.

The art of asking the right questions

Now, here's where it gets interesting. It's not just about asking questions; it's about asking the right questions in the right way. Customers often give easy answers that don't provide the insights we need. They might not want to take the time to give a thorough answer, or they might be hesitant to provide negative feedback.

In my experience, there are two main reasons why customers churn:

Product ineffectiveness: Your product isn't effective enough in addressing the customer's challenges. Maybe it doesn't go far enough, or it only solves half the problem.
Problem significance: Your product might be solving the problem well, but the problem itself isn't significant enough for the customer to justify continued use and payment.

To get to the heart of these issues, we need to ask questions that go beyond surface-level responses. For example, if a customer says they're canceling because they "didn't use it," that's not helpful on its own. We need to dig deeper:

"Why didn't they use it?"
"What expectations did they have when they signed up?"
"What problems do they actually have that we could potentially solve?"

Similarly, if a customer says the product is "too expensive," we need to understand why they now feel it's not worth the price when they initially thought it was.

Designing an effective cancellation flow

When it comes to understanding why customers leave, the way we ask for feedback is crucial. It's not enough to simply ask, "Why are you canceling?" We need a more nuanced approach that gets to the heart of the issue.

I recommend designing a cancellation flow that asks multiple questions to uncover the root cause of churn. Here are some examples of questions you might include:

What was the primary reason you decided to cancel your subscription?
Did our product meet your initial expectations? If not, how did it fall short?
Were there any specific features you were hoping for that we didn't offer?
How often did you use our product in the last month?
Did you encounter any difficulties while using our product?
Was there a particular event or experience that led to your decision to cancel?
How does our product compare to alternatives you've tried or considered?
If we could change one thing about our product or service to make you reconsider your decision, what would it be?

The key here is consistency. We need to ask these questions every time a customer cancels. It sounds straightforward, but in my experience, many companies fail to implement this systematically.

Turning insights into action

Once we have this valuable feedback, what do we do with it? Well, that depends on which of the two main churn reasons we've identified:

If the product isn't effective enough: This is where we need to work closely with our product and development teams. We need to fix glitches, improve features, and address the gaps between customer expectations and product reality.
If the customer's need isn't significant enough: This is more of a marketing and sales issue. We need to gather as much data as possible about this customer segment and work with our marketing and sales teams to refine our ideal customer profile. Maybe we need to avoid targeting these types of customers because they're more likely to churn.

Bringing it all together

As CSMs, we have a unique opportunity to bridge the gap between customer feedback and churn reduction. When we ask the right questions at the right time, we can gain invaluable insights that drive product improvements, refine our target audience, and ultimately reduce churn.

Remember, every piece of feedback is an opportunity to improve. Every cancellation is a chance to learn. When you embrace this mindset and implement systematic feedback collection, you can turn the daunting task of “reducing churn” into a strategic advantage for your company.

So, the next time you're faced with a cancellation, don't just accept it at face value. Dig deeper, ask those probing questions, and use the insights to drive meaningful change. That's how we, as customer success managers, can truly make a difference – not just in reducing churn as troubleshooters, but in creating lasting value for our customers and our companies.