Understanding churn rate

To truly understand a business’s health, company’s track certain numbers. One metric that we feel is vital to tracking and predicting a company’s success is customer churn rate. It can be hard to understand what is causing your churn rate to increase but with a little bit of work and change in focus, you can overcome what seems to be an impossible task of keeping customers happier for longer.

Churn rate is the rate at which your customers are leaving your book of business. If you want to find your company’s quarterly churn rate do the following arithmetic: the number of customers that you lost last quarter divided by the number of customers you started last quarter with. The percentage you end up with will be your churn rate for that quarter. So if you have 500 subscription based customers and 25 of them leave your book of business last month, then your churn rate for that month would be 5%.

jonatan-pie-234237This may sound like an extreme case, but believe it or not, the average churn rate for a SaaS company should be between 5-7% ANNUALLY! That means most companies in the SaaS industry should only have around 0.42 – 0.58% monthly churn.*

It can be easy to fall into the mindset that all you need is new customers but it is vital to avoid falling into this type of thinking. According to smartinsights.com, only 18% of companies put a strong emphasis on customer retention. This is insane given the fact that it costs nearly 5X as much to acquire a new customers than it does to upsell/keep an existing one**. Not to mention the fact that existing customers are much more likely to talk about contract renewal or upsell possibilities.

So how do you keep your customers from churning? There are a few different efforts that can help you get your company on the road to keeping more customers happy resulting in much more revenue.

First, make sure your business model is catering to the needs of existing customers. Don’t be like the 82% of businesses that don’t place existing customers needs first*. Placing new customers ahead of the existing one is a business practice that has to end now. Understand who your audience is and what they consider good service. This might include more check in calls or email follow-ups. It all depends on your business…but above all they need to know you care and that you are listening to them and handling their concerns.

carsten-stalljohann-197892Second, looks for the signs of a customer who is about to cancel your business services. Chances are your business has these numbers and all it takes is the right person with the right tool to see what leads to a customer leaving. Sometimes this is a lack of communication between a business and the paying customers and other times all it takes is a support phone call that lasts too long. No matter the reason, if it causes a customer to leave your business, you should care about it enough to track as a metric.

Third and lastly, be willing to change. Change is uncomfortable. And addressing churn rate can show a lot of weaknesses in current processes. Sometimes the changes needed are not addressed because caring about customers is not baked into the company culture and it might be up to you to change this! It can be a long road for your company to shift concern to a current-customer focus but in the end it is almost always worth the increase in revenue.

If you are a decision maker at your company and you want to make a real difference in the total revenue your company keeps, one of the most effective things you can address is customer churn. It will be a long road ahead to stop customers from leaving your business and it’s services. But don’t let your customers slip away unnoticed and start tracking (and eliminating) your churn.

 

sources: *source – http://sixteenventures.com/saas-churn-rate, **The Harvard Business Review


How to Choose the Right KPIs for your Sales Organization

Meet Veronica she’s got it all figured out.

The Problem: how to choose KPIs that will have the most immediate, direct effect on revenue.

To answer this problem let’s meet Veronica. She is one of those people that you always seem to hear about- rarely stressed, her managers and teams are consistently meeting or exceeding their sales quotas, the CEO and COO are kept in the loop and couldn’t be more impressed. She attracts top talent that always performs above expectations.

No, she isn’t made up. People like Veronica do exist. But if you could have seen her six months ago you wouldn’t have recognized her or her sales teams. When Veronica joined the company she was hired with the very specific goal of implementing best practices for her industry, ensuring that sales quotas were met- something they hadn’t done in a long while.

Analyze current top performers to discover the KPIs that are right for your business.

When Veronica first started things were a little bumpy, put simply she didn’t know where she should look to find the right best practices to implement. She knew of over a dozen places where she could get a list of KPIs that she should be tracking, but wasn’t sure if these were the exact KPIs that she should be focusing on for her industry. She needed individualized guidance and was coming up short.

So she did what many would do- she started analyzing the sales reports that her company was already generating. The company was still selling, and so she figured, wisely, that if she could identify who the top performing salespeople are then she could use that data to generate a list of best practices that were tried-and-true for her specific company. According to Bob Apollo “A minority of the sales organization – rarely more than 20% – are habitual over-performers. A larger number – often 30% or more – are habitual under-performers… the majority of sales people sit somewhere in the middle: there is some indication that they have the potential to do better, but they have so far failed to consistently and reliably over-perform against their targets.”

So Veronica needed to identify the 20% of her sales organization were her habitual overperformers and establish best practices based on what they were doing, thereby turning that middle ground into a high productivity zone. According to Apollo this is a smart approach, as “The middle ground represents a huge opportunity for performance improvement.”

But herein lies another, more meaningful problem-she needed to find the top 20% but didn’t understand the reports she was getting- they weren’t giving her a clear picture of the overall performance of each sales team. This made it difficult for her to identify who her top performers were and why. Without this information she couldn’t identify what the organization’s best practices were so that she could implement them throughout her sales organization. She was stumbling around in the dark and was under tremendous pressure to perform at a high level and deliver the results she was hired to bring.

Data visualization makes who the top performers are and why easy to see

Veronica discovered that the company was already gathering all of the data she need to improve, she just had no way to see exactly which metrics the top performers were excelling at in order to put them on top. That’s exactly where data visualization enters the picture- with the right way to look at the data the company was already gathering Veronica could identify the top 20%’s best practices and implement them company-wide, and she could do it without wasting a lot of time looking over endless reports, afraid she would miss a crucial KPI.

According to Brian Gentile “Data visualization’s greatest strength comes, arguably, from the way it can bring actionable insights to the surface. Unlike with charts and tables, visualization tools allow the user to interact with and directly manipulate the data sets. This level of interaction allows executives to ask further questions about the data, not just the what, but also the why, how, and where.” And that is precisely what Veronica needed- most CRM data analysis tools, rudimentary though they are, still give the user who the top performers are. They are even gathering data about the KPIs and metrics that the 20% are hitting, they just don’t visualize that information in a way that makes the intelligence actionable.

With the right data visualization Veronica could not only see who her top performers are but, as Gentile points out, was able to see “the why, how, and where.” These deeper questions are the intelligence she needed to identify why her top performers were the best, how they got there and where the rest of her sales organization should be focusing in order to see the biggest gains in performance improvement, fast.

Veronica’s success happened because she was able to use data effectively, seeing how performance metrics impacted revenue and using that information to establish a set of key performance indicators which became the best practices for her sales organization. The process was fast, effective, and enjoyable because she worked smarter. And it started with finding the right tool for the job.


Summer Sun

As we look outside of the windows right now in our Orlando offices the weather is sunny and clear.

But remember folks- this is Florida. That nice weather outside could turn into a massive downpour in a matter of minutes.

With weather changes that fast we (of course, seeing as it’s us) figured out that the only thing that could really help us understand the weather was a real-time data visualization.

Luckily the Internet is just teeming with them! We’ve scoured the web and found some absolutely amazing real-time weather visualizations so you can make the most out of our your summer weekend!

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What Makes A Data Visualization Memorable?

At VisualCue we like being at the forefront of data visualization thinking and research. This corporate culture we’ve created makes sense when you consider that VisualCue is, at it’s heart, a data visualization platform built almost entirely on new ways to look at data. It makes sense, then, that such a company would be keenly interested in any new research on what kinds of data visualizations are the most effective.

Imagine our delight, then, when new research presented just last year at the Eurographics Conference on Visualization published a paper from research at the University of Arizona and Indiana University on what kinds of data visualization led to an increase in recall accuracy.

The findings of that research, which we summarize here, should be interesting to anybody who wants to make sure that they are using the right data visualization techniques to make the most out of their data.

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Language Data Visualization

Languages- we all speak them. A lot of us speak more than one. We read it, write it, speak it. Many of the planet’s smartest people are convinced that the languages we speak inherently alter our perception of the world around us.

Given how important languages are it’s little surprise, then, that we have been studying them for a long time. We’ve classified, codified and put them in dictionaries and with all of that work, of course, comes a lot of data.

Using data to study language, whether it’s spoken or written, has picked up speed in recent years and we’ve gathered some of the best ways we’ve found to gain insight into the languages we speak.

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Humanity's Digital Heartbeat

Humanity's Digital Heartbeat

Think about what a heartbeat is for a second. It never stops (until the day it does, but for more data on that check out last week’s post), it’s the constant background hum to everything we do.

Social media can be a lot like a heartbeat for the entire planet. It’s always on and if for some reason it ever did stop you’d feel very real fear that the world had ended. It’s the constant background noise we’ve all become so accustomed to: every second we send out 6,000 Tweets. Every minute, we upload 300 hours of video to Youtube. Every day over 58,000,000 photos are uploaded to Instagram. That’s a lot of data.

And of course wherever there’s data there are amazing ways to look at it.

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