Manage Churn to Manage Your Valuation

Janet Schijns

As promised, we’re continuing to dig into our discussion concerning churn management, which is a critical element to increasing your business value and ensuring sufficient revenue streams to continue funding your business growth.

Today’s topic is how to design a churn cohort program to better defend your business from competitive and economic pressures and inertia that leads to loss of customers and revenue.

What’s a Churn Cohort?

Let’s start by defining a churn cohort. And why is this a secret ingredient to reduce churn? A churn cohort refers to a group of customers who share similar qualities who started using a product or service and subsequently stopped using it during a specific period. A churn cohort analysis is a method used by businesses to track the behavior of these customers who stopped using their product or service and understand why they left.

By analyzing the patterns and characteristics of churn cohorts, businesses can gain insights into why customers are leaving and take steps to prevent future churn through product improvement, customer experience and marketing programs aimed at similar churn.

For example, a collaboration-as-a-service subscription-based partner might track the churn cohort of customers who signed up in January, never fully used the solution, and canceled their subscription at the next contract renewal period one year later. By analyzing this cohort, the partner might discover that this group of customers left because they were never fully trained to use the product, which resulted in low use and thus lower value, leading to the turnover.

With this knowledge, the business can make changes to improve their onboarding, training, usage tracking, or other elements and reduce churn for future cohorts with similar characteristics. The key to most churn cohorts is a strong marketing plan that helps you to engage the customers earlier and more often to help prevent churn. Ready to get started?

Identify, Analyze Churn Cohort Behavior

To get started using churn cohorts as a silver bullet to reduce churn, partners should design churn cohorts by identifying groups of customers who exhibit similar patterns of churn behavior, and then analyzing these groups to understand what factors may be causing customers to churn.

Here’s a step-by-step process for designing churn cohorts for a future marketing treatment:

Bottom Line Payoff

By following these steps, the average partner will reduce churn by more than 200 basis points, which is a large improvement to your bottom line. Remember, while this might seem like hard work, every dollar you keep a competitor from stealing is a dollar that you can put toward reinvesting in and growing your business! Happy Churn Reduction.

Janet Schijns is CEO and co-founder of JS Group, a go-to-market acceleration firm. She is a Top 50 Channel Influencer (Channel Futures) and was named Channel Influencer of the year in 2019. Schijns was formerly EVP and CMSO at Office Depot, was Verizon’s chief channel executive and chief marketing technologist and ran the channel organization for Motorola Enterprise and government. She co-founded the nonprofit Tech World’s Half in 2017 to address the issue of women dropping out of technology, and WomWon in 2021 to help women establish financial independence. Schijns also speaks about empowering and advancing women in the technology industry. You may follow her on LinkedIn or @channelsmart on Twitter.