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Marketers Can Manage Churn to Show Growth

This article is a continuation of the one I wrote on how CMOs and their marketing team can drive organizational growth.

As Marketing takes charge of growth, an important aspect of the business to understand and manage is your client churn.

A common question here is: why should marketers care about churn, isn’t it customer service or leadership’s responsibility? – Wrong!

Don’t Keep Filling a Leaky Bucket

Lost customers impact business sustainability, and result in multifold cost incurred to get new ones. While this increases marketing budget, just covering the gap is not growth.

Thus, it is only fair that when Marketing is tasked with bringing in new customers, they should have a say in retention too. At the very least, Marketing should influence retention along with other groups such as customer-facing teams and Sales.

Types of Churn

Generally, churn can be of two types- customer churn and revenue churn.

Assume you have two customers: Customer A generates $1,000/mo. revenue and Customer B produces $5,000/mo. Your total revenue is $6,000/mo. Assume you lose Customer A. Your customer churn is high at 50%. But if you look at the dollar/revenue churn, you are at 17%, a fairly small number. You still have $5k MRR (monthly recurring revenue) from Customer B. Congratulations!

Now, if you lose Customer B, your customer churn is still 50%, but the dollar churn is 83%. This number is big enough to give you sleepless nights.

Imagine if you did lose Customer A (at $1k/mo. revenue), but you grew Customer B by $2,000/mo. – the total revenue now is $7k/mo. In this scenario, the revenue churn is actually negative. This is good news.

Negative Churn Formula

Negative churn is a powerful metric to measure your success despite the loss. A negative churn is a positive thing, and for this to happen, your additional revenue from any existing customer should be greater than the revenue lost from churn.

Expansion

Marketing can Control Churn

Marketing has a lot of control over churn reduction and on expanding revenue from current customers. In fact, Marketing can help the customer-facing team and the leadership reduces churn. What is required is a deliberate strategy.

Appropriate short and long-term nurture strategies such as content marketing and ABM (Account-Based Marketing) can help reduce churn. Marketing teams can plan and implement custom programs to the key accounts and promote the benefits of the products/services they signed up for – in a way influence why they should stay with you. Marketing can promote product features and how the product is different from competition to attract new customers. Assets such as case studies, white papers, product videos, testimonials from current customers, and other thought leadership content can help build a positive image with your current and future customers. Who does not want to be associated with a company that is making other firms in their industry successful, right?

Other strategic initiatives could include webinars, social media, Q&As, blogs, meet-the-expert events, etc. In the post-pandemic business world, all these can be executed virtually with lower costs than large scale off-line events. You can now spending your marketing budget on customer retention and revenue growth effectively.

Conclusion

Your customers want to know that they have made the right decision in hiring you to help them grow. Marketing as the growth driver and one with customer insights have all the ammunition to manage churn. Thus, marketing should contribute towards and run churn management programs in conjunction with other teams such as Customer Care, Sales, and Account Management. The collective customer insights from all these teams are priceless and can help build a robust churn management strategy.

Sajjan Kanukolanu

January 21, 2022

By Sajjan Kanukolanu