What is Real-Time Operational Intelligence?
What is Real-Time Operational Intelligence?
Real-time operational intelligence allows a business to transform a significant amount of data into information that is actionable and accessible at all times and across all devices within the organization.
With its capability for real-time operational intelligence, VisualCue can turn large amounts of data into easy to understand and actionable information. It is capable of integrating different parts of the existing infrastructure and pulling data from various sources. It can also help your employees to understand and share information more efficiently.
Business Intelligence vs. Operational Intelligence
Imagine you have left on a cross-country road trip and you are headed down the road as the driver. You can use your rear-view mirror to see where you have come from and refer to your map for the overall goal of the trip. Traveling like this will work but will not help make decisions about when to stop for gas, when to take a different route due to traffic or adjust your estimated time of arrival based on weather. This is kinda like using business intelligence which has to do with analyzing data that has been collected and looking at where you have been to decide where you are going based on historical data. It is beneficial for specific scenarios, but not all.
Using the tools on the dashboard of the car as well as the view out the front window, you can better understand how your car is performing like how much gas you have, which blinkers and lights are turned on, how heavy the traffic is, or the weather on the horizon. These are all things you need to know as they are happening in order to be safe as you travel. This is what is it like to use operational intelligence in your business. OI takes in data as it is being collected and combines trends with historical data to help with better decision making in-the-moment. Real-time operational intelligence offers the most benefit in scenarios where decisions and actions are needed quickly or in real-time.
Benefits of Real-Time Operational Intelligence in Contact Centers
- Real-time operational intelligence can help the contact center to know if they fall behind in performance according to specific key performance indicators
- It provides the necessary information in an organized fashion and conveniently, either on a monitor, tablet or phone
- It allows the managers to remotely monitor employees in real time without having to be there physically
- Managers and employees can set alarms for when specific thresholds in their key performance indicators have been passed to react in time
Here at VisualCue, we have applied this to numerous clients and seen the power of processing large data sets in real-time. Some of the most successful clients have been government contracts, contact centers with hundreds of agents, logistical planning and delivery, and groups within the hospitality industry. As mentioned earlier, the benefits of real-time operational intelligence shine in environments where decisions and adjustments need to be made at a quicker pace. This is why real-time operational intelligence is valuable to the contact center space.
The Role of Tech in Contact Centers
When there is so much information available for a manager to track they can easily find it impossible to deal with and lose track. That’s why a good manager should be able to choose the right metrics to track which will give insight to the experience of the customers and will help to put an equal emphasis on both quality and quantity.
As a manager set clear realistic benchmarks for certain critical areas of performance in order to maximize performance and efficiency. Some of the most vital areas that you could track are included below.
A Few KPIs to Consider
- Answering Speed
This is a key performance indicator that applies to inbound calls. It looks at the number of inbound calls that your employees do not answer within a certain time period. The industry average is 28 seconds so you can see how well your employees are doing against this figure. If they’re taking longer, it might be a good idea to hire more employees.
- The Level of Service
This is related to the answering speed and is a metric that looks at how many calls are answered within a certain period of time by your employees. According to the International Finance Corporation, the global benchmark is that 80% of a contact center’s calls should be answered within 20 seconds of being made.
- Forecasting
This is the number of calls you expect on a daily basis. The International Finance Corporation has some interesting numbers for us here as well. The global benchmark for this metric is a variance of 5% either way. If the actual number of calls you receive is more than 5% greater than your forecast, then you’re probably understaffed. You’ll need to get more employees or your current ones will be overwhelmed with the number of calls they are receiving and it will affect their service. If the number of calls your contact center is receiving is less than the number you have forecasted, then your staff is not being efficient. You should either find a way to get more calls or reduce your stuff as your costs will end up unnecessarily eating into your bottom line.
- The Rate of Abandonment
This is the number of calls that your customers abandon before your agents can answer them. It can be for a variety of reasons, such as customers having to wait too long to speak to an agent. The globally accepted average is somewhere between 5% and 8%.
- The Occupancy of your Agents
The occupancy is a very important metric as it tells you how much time your employees are spending on a phone call. The occupancy tells you how much time they spent in conversation with the client, how much time it took to wrap up the call, update the system, and complete the paperwork associated with that call. The global average is between 60% and 80%.
- Adherence to Schedule
This KPI looks at the availability of your agents when it comes to receiving phone calls. Your employees may all be present in the building, but that does not mean they’re all at their desks handling phone calls from clients. Staff members will regularly take breaks from taking and making phone calls for a variety of reasons. These include going to the bathroom, talking to each other, or grabbing a quick snack. It’s certainly understandable for agents to take breaks, however, they shouldn’t be taking all of their time on breaks or the costs start to pile up. They should restrict their breaks to certain times of the day and spend the rest fielding calls. The global metric, in this case, is 95%. So make sure your employees are on the clock at least 95% of the day.
- Customer Satisfaction
You can’t overstate this. Customer satisfaction is absolutely important to the success of your contact center. Numerous studies have shown that customer satisfaction directly affects a lot of things, including their loyalty to your contact centers and the morale of your employees.
The problem with customer satisfaction is that it is a very subjective thing. As a consequence, it is a little harder to measure it than other aspects of performance. In the past, contact centers did it by conducting a survey via mail or phone calls many days after the initial call.
Nowadays, feedback is solicited immediately after a call is over to determine how satisfied with the service. The voice response system will invite the customer to rate a few aspects of the service they just received on a scale of one to ten. They’ll include a variety of things, such as their conversation with the agent, whether or not their problem was solved, and so on.
- Attrition and Absenteeism
This is another important metric that will give you key insights into how well your contact center is doing and how you can improve it. This metric looks at how many of your employees leave your contact center on a yearly basis. It also looks at how many of them are missing work and what the frequency and reasons are. If your employees are regularly absent, it could mean that they are under a great deal of stress and they may lack the necessary motivation to work. These employees can have a negative influence on the rest of your workforce and spread that lack of morale.Also, if your employees are leaving your organization regularly, your costs will increase because hiring and training new employees costs money. You should be careful not to drive up your labor costs too high because it will bite a huge chunk out of your bottom line. The global average for attrition is 15% while the global average for absenteeism is 5%.
- The Resolution rate on First Calls
This is another extremely important metric that tells you how likely your customers are to be loyal to your contact center. The first call resolution rate tells you the proportion of calls received by the contact center that is resolved the very first time. For a call to be resolved the first time, it shouldn’t have been rerouted to a higher ranking official and the agent shouldn’t have to call the customer again. The global benchmark for this metric is 75%. However, you should strive to keep your first call resolution rate as high as you can. It is perhaps the most important factor in influencing customer satisfaction.
The Service Quality Measurement Group conducted a study that showed that for every 1% improvement in the first call resolution rate of a contact center, the customer satisfaction of that contact center improved by 1%. They arrived at this conclusion after conducting the study on a large pool of over 150 contact centers. They found that the best contact centers in the world have a first-time resolution rate of 87% while the least performing contact centers had a first call resolution rate of a mere 67%. Your first call resolution rate can do many wonders for your firm. Improving it will certainly improve customer satisfaction. But it can do even more than that. It will leave your employees more motivated. When they resolve issues the first time, they will have to deal with fewer callbacks from irritated customers. This will improve their mood, reduce their absenteeism, and also reduce attrition.
Improving your first call resolution rate can also have a positive effect on the profitability of your contact center. Your customers will likely stay with you and stop going to your competitor. Studies show that when customers have their issues resolved the first time, only 3% of them will leave and go to your competitor. That is a remarkably high customer retention rate. On the other hand, when calls aren’t resolved the first time, a whopping 38% of customers are likely to move to your competitor.
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Becoming a More Successful Contact Center Manager in 2018
One of the most influential factors that lead to the success of a contact center are the managers who run it. Contact center managers face many challenges including budgetary restrictions, high turnover rates, training costs, and workflow management. As we bring in the new year with goals of higher efficiency and ideas of how to better ourselves, we felt it would be fitting to review some ways that contact center managers could be more successful working with their teams.
As VisualCue has worked with successful contact centers across the nation, we have gathered some common tips managers found to be most helpful when working with their teams of agents as well as reporting to upper management. By using these practices, we feel contact center managers have a real chance to make 2018 their best year yet!
Communicate with your team
As in any situation, communication is critical. This is especially true when working with contact center agents. If you are working with a group of new agents who have never worked in a call center scenario or if you are working with a team if seasoned phone calling veterans the result is the same…communication is essential as a manager. Make sure your team knows and understands why you have the standard set where it is. With clear expectations set, the expectation is often reached. Help your agents by letting them know the signs of success by setting thresholds on performance numbers.
Focus on your team’s needs
One of the highest costs to a contact center is the cost of hiring and training new employees. According to InsideCRM, it can cost between $5,000 and $17,000 everytime a contact center agent leaves. This is a surprising number especially when you consider the higher rate of turnover that contact centers experience. So how do you keep people happy and working hard? Show you care about their success! Most people in the workforce find it motivating to know their work is being recognized. This can be done through both gamification of the workforce as well as with specialized training from management.
Offer training early and often
Most contact center managers work to make sure their agents are trained, but all too often the training happens only when problems have spread among multiple agents. If this is the case, then the manager has already missed out on precious opportunities leading to missed leads by the team. Monitor your agents to see what needs work and where in real-time. This is possible with a few digital tools including VisualCue for Contact Centers. Knowing what agents are struggling with in real-time allows for managers and team members to solve the issue before it becomes a more widespread problem. It is better to train with an agent as their performance is starting to dip rather than asking them why they had such a bad week last week.
Use downtime to your advantage
As a manager, there will always be a few minutes throughout the day where you have some downtime. What you do with this time could possibly make the difference in your team’s success. We find it most helpful for managers to use this downtime to check on the performance of their teams and individual agents. As a manager set yourself up for success by using tools that allow you to quickly and easily understand how teams and individuals are doing. With the right tools, it only takes a few seconds to check and is an excellent use of time when you just have a little of it.
Use new reporting trends
Gone are the days where all you need to report was a good old-fashioned spreadsheet. Many contact centers who we begin talks with still use columns and rows to track what agents are doing. Tools like ours offer a solution that enables managers to make decisions based on real-time operational intelligence. Track instantly and address issues as they happen. Compare agents and see who is needing assistance and who is doing great!
Much of the success of a contact center falls on the manager’s shoulders. In the simplest terms, it usually comes down to how managers communicate with their team and how managers track their team’s success. As with all things, there is always room for improvement and what better time to start fresh than the New Year!
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The ABCs of Customer Success
As far as SaaS companies are concerned in late 2017, one of the most important topics that we could cover is the idea of customer success. By improving customer success rates, businesses are far more likely to see financial success. I like to think of it like this – Customer success leads to retention. Retention leads to revenue.
So how is customer success achieved? First, let’s talk about something a little less fun…customer churn. Customer churn (when a customer cancels their service) occurs at every stage of business. When a company works to reduce their customer churn rates, they are also likely doing the very same steps to increase their customer’s success rate.
Many startups will focus on closing large enterprise clients. This is understandable. Enterprise clients offer more stable cash flows, glowing references, and more business opportunities for scaling and growing services. However, SMBs (small to midsized businesses) matter just as much. For starters, getting smaller clients is much more manageable with automated processes while enterprise clients are more expensive to onboard.
The essence of customer success is to work on customer retention to reduce customer churn, whether that customer is an enterprise client or a small SMB. In this article, we’ll take a look at some ways of achieving customer success over the lifetime of their subscription.
“H” is for Handoff
The smaller the company, the less hassle the first handoff is. If your company is relatively smaller, then it is likely that the person that recruits a customer is also their primary point of contact with the company over the lifetime of their subscription. If this is the case, there is no problem. However, it isn’t always so, especially for larger companies. Usually, the person who recruited the client hands them over to a customer success management agent, and they become the new client from then on. It is essential in such circumstances to inform the client of this change so that they do not experience any confusion.
There are a handful of important factors to consider when passing a client or lead over to another team member: who will be working with the lead, the size of the lead, the possibility of a larger team working with the particular client, and so on. Make communication a priority for your team to cover any gaps in the process.
“C” is for Champion
Have you ever worked with a customer who just gets what your company does? They might even love the service you offer and are happy to explain it to everyone they know. A customer champion is a person on the other end of a business deal that understands your products in and out and can easily vouch for it.
Customer champions understand the most fundamental aspects of your product as well as the benefits of the service you offer. Customer champions will also typically be excellent communicators. That is why they are so valuable to the work you are doing. Having a customer champion isn’t particularly difficult either. All it requires is communicating with someone who always has an ear on the ground and whose colleagues find easy going and approachable.
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“T” is for Trial
This point is particularly important for large enterprise clients. Say you have a free trial for your product for 30 days. Your smaller clients will be fine with this trial period. Your enterprise clients, on the other hand, will typically see it as only the beginning.
By the time the trial period is over, larger companies will only be beginning to draw up a blueprint for how they will integrate your product into their systems. During the trial phase, your client will likely incorporate your product into a more massive project. Remember, most clients today are employing a whole host of different digital sales and marketing products, only one of which is your product. They might also be pursuing other strategies such as emails, new sales staff, etc. It’s crucial to keep your product at the top of their list of priorities while also keeping things simple.
The trial phase should be split into two phases. The first is to define everyone’s roles. Have a discussion with the client about what to expect. Also, you need to have clear rules for how to get the top brass at your client’s company informed of crucial role changes and technical tweaks whenever you plan to grow the account. The second phase is creating a blueprint for the customer. This plan will detail the workflow, making it easier for them to follow it.
“A” is for Adapt
There are many changes that could take place at your client’s company. These vary in size and impact. For example, your customer champion might switch from their current position to a different one. If such an instance arises, you should move quickly to recruit a new customer champion.
Another form of change is one that affects relevance. Your customer might discover a new product or change the way they do things, impacting the significance of your product to them. Do you still offer enough benefits to justify them paying you for your services? 
Remember, your product needs to give more value than it takes. There will typically be regular cost-benefit analyses conducted on your product to see if it’s worth keeping. In such cases, you should be prepared to defend your product and show why it is still a great proposition.
“G” is for Growth
When an enterprise client starts out with your product, they’ll usually apply it to a specific unit of their business. If they understand the benefit of your product and want more of it, scaling up becomes a point of discussion. This is the perfect opportunity for you to grow an enterprise account and bring in more revenue. Most of the hard work building a relationship and earning trust will have already been done. Make sure to plan and act as quickly as possible before the opportunity disappears.
“S” is for Success
There are so many factors to customer success we could probably have a paragraph for each letter of the alphabet. It’s important to learn from each experience you have with a client so that, as your company and processes grow, you learn what works and what to avoid along the way. Remember these primary factors to helping your customer be satisfied, and you will be well on your way to success too!
Using Red Flag Indicators to Fight Churn
The most important thing to a customer success program in any company is that it keeps the figure representing this rate as low as possible. Of course, the CSM team can do all it can to prevent churn. However, that’s not where the real challenge lies. Once the churn has already crept in, as it inevitably will, how do you fight it? The real problem with this is figuring out why your customers are forsaking your service.
Once you know clearly why users are leaving your subscription base, you have half of the problem already solved. Now it just becomes a matter of plugging a few holes and keeping customers happy.
One way to efficiently track the causes of churn in your product is by using red flag metrics. This is mainly the process of tracking user behavior in a bid to find out where their behavior starts to change and become indicative of abandonment.
The Writing’s on the Wall
Before a user ever leaves your product and decides they won’t be logging into their account again, they show signs of the same. Most users won’t wake up one morning and suddenly decides to abandon a product. It is usually a slow process of frustration or indifference that culminates in abandonment. Your job as a member of the CSM team is to find patterns in user behavior to see these red flags before the user capitulates.
The signs are usually easy to see. The first thing to go out the window, of course, is engagement. What was a casual login every day turns into a login every other day. It soon becomes once a week, then once a month and before you know it, the user is missing in action.
Such signals are what we call red flags, and they are essential as they enable us to see the smoke before the fire begins to burn. Once you start to recognize at the red flags waving, you can quickly remedy the situation using various tools, including automation on a large scale or contacting the customer directly. You would be surprised at the difference made by a popup tooltip, or an automated email can make.
There Are Many Different Types of Red Flags
There isn’t a one-size fits all list of red flags that you can look for. Everything depends on the specifics of the situation; your product, the type of customer, as well a lot of other small details that come into play along the way.
The best way to find red flags is to work backward. Look at clear-cut examples of customers leaving your book of business. These are customers who you are sure to have entirely given up on your product. Try to find the common thread running through all of their cases. You can also look at other issues, such as:
- Customers who haven’t opened your app in a long while
- Customers who have given your product scathingly negative reviews
- Customers who have recently uninstalled your app
- Customers who closed their free trials
The last one is particularly telling since a majority of customers don’t close their accounts, no matter the service. These are some of the things you can look at to give you a clear indication of who already left and who might only just now be toying with the idea of canceling your services.
To understand why customers are canceling your business, gather the data on a group of customers who have canceled and start to look for trends in their experiences. It’s important to look for any patterns as they will help you quickly identify potential future churners and rush to fill the leaks before they become impossible to manage. Try to compare their activity, or lack of it, before they left, with the activity of your most devoted customers. This is when the data you collect as a business becomes vitally important. Refer to their history and compare it to other users, with tools like VisualCue, to understand the trends in unhappy customers.
Activation is a Critical Stage
As mentioned earlier, there aren’t any universal red flags to look out for. However, some common signs will easily apply to many SaaS products and organizations.
One of the factors that matter most is how many users manage to achieve activation. The activation point is the point where the user completes the setup process for their account. The truth is, most users do not reach full activation of SaaS products. The actual percentage is close to 60% of users on free trials. These users never log in to their products beyond that first login.
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Users can fail to reach the activation point for a plethora of reasons. They might just have decided that they don’t like your product, or you might have targeted the wrong type of user with your marketing strategy. There will be some factors you can’t control, but it is essential to mitigate any factor that leads to churn as much as possible.
When the User Doesn’t Login Again
If your product has an established user base, then there is a clear pattern for most users for how frequently they log in, and it is up to you to understand that trend. The typical user might be daily, weekly, and so on. When you notice a user breaking from this pattern, then that’s a red flag of potential churn. The failure of a customer to log in is an indicator that the customer simply doesn’t see as much value in your product as they did before.
Here the solution is to remind them of how valuable your product can be for them. Send them an email containing reminders for them to check their accounts. You can also send them some educational materials or little tips on how to navigate particularly different areas that they might be having trouble navigating. It’s as simple as getting the customer excited about your product again.
The Follow-up Always Matters
Remember, the point of this whole process is to recognize churn before it materializes and nip it in the bud to reduce your overall churn rate. The easiest method to reduce churn before it starts is to observe patterns as they emerge and employ large-scale automated solutions. Tracking these signs of churn is made simpler with the use of the VisualCue data visualization tools. It can help you see patterns in your customer base at a glance and in real-time, allowing you to be able to understand better where your customers find value.
By looking for the red flags you and acting quickly on them, you can reduce your churn rate and turn business around altogether.
- Sources
- https://blog.intercom.com/designing-first-run-experiences-to-delight-users/
- https://glideconsultingllc.com/makes-great-onboarding-process/
- https://glideconsultingllc.com/10-reasons-saas-business-creating-poor-customer-experience/
Understanding Why Some Customers Leave
Understanding why some customers leave is something that many businesses struggle with. Companies small and large have been looking for answers on what they can do to reduce their churn quickly to unlock significant revenue potential. As Benjamin Franklin once noted, “An ounce of prevention is worth a pound of cure.” This idea is the foundation of what reducing churn is all about— preventing small issues from turning into reasons for cancellation.
For the sake of this article when we refer to churn, we will be referencing customer churn rate or the pace in which customers are leaving your book of business. This likely effects your company but if you are a SaaS provider, then this should hit especially close to home. So how can you reduce your customer churn rate now? For starters, you must understand the customer experience from start to finish.
It’s time to get tuned into your customer lifecycle. If your lucky enough to have customer success managers within your organization, speak with them about the signs of a customer who is about to cancel your service. These are the people you should be learning from to better your chances of keeping customers paying for longer. Signs of churn can range from being late on payments, browsing the terms of service page on the application, calling a help number, or even the age of the account. Learn which signs of churn are most important in your business and address them as soon as possible. If a CSM is not readily available for you, use your data to determine common traits of customers who have canceled your service. By monitoring the symptoms of churn, you can better address customer needs before it’s too late.
Consider this, according to SuperOffice.com 68% of customers leave a service because they feel as if the company does not care about them or their needs. One thing you can be doing right now is reaching out to your customers to understand what they expect from your service. By doing this, they will know that you care about their needs being met and will likely stick around.
We live in a data-driven world, and responsible decision makers understand the power of decisions backed by data. By following and tracking your customer experience from start to finish, you better understand common trends and better address concerns. Here at VisualCue, we offer the tools to see in real-time which customers need attention. With limited training, you and your team can find the patterns in the data necessary to meet your customers’ expectations. Happier customers lead to less churn which leads to more monthly recurring revenue in the case of a SaaS company.
No matter the industry you are in if you are running a business than it is safe to say that you are concerned with keeping customers happier for longer. Reduce your churn rate by understanding the customer experience and look for patterns in the data. As you analyze the data, you will begin to recognize commonalities between the unhappy customers. Find these trends and address them because in the end, if you don’t take care of your customers, then I am sure someone else will.
What can you do about customer churn?
Although 96 percent of businesses fail within ten years, some companies manage to become successful enterprises. Companies like Apple, Berkshire Hathaway, and General Electric manage to thrive even though they face considerable trials—but how? What are these companies getting right that so many others are getting wrong? They keep clients onboard.
These companies get a few other things right, too, but when it comes to customer retention, they refuse to leave a single box unchecked.
With a five percent reduction in churn leading to a 25 to 125 percent increase in profits, it should come as no surprise that your company can benefit significantly from reducing its churn rate. And with new information and customer retention software that can help decrease your churn rate today, there’s no excuse for not improving this aspect of your business.
Below, you’ll find more information on customer churn, its importance and how you can retain more customers.
What is Customer Churn?
The software as a service (SaaS) industry is primarily responsible for making churn a noteworthy metric. Churn is equal to the number of customers you lose every month divided by your total overall customers. For example, if you have 100 customers and you lose three, your churn rate for the month will be three percent.
Acceptable customer churn rates often fall somewhere between 10 to 20 percent churn per year. Churn standards often vary by industry. For example, SaaS rates are considered good if they’re below seven percent.
One other thing that’s important to note about churn is that the percentages as mentioned above aren’t universally accepted. Although a five percent churn rate might be acceptable to you as a business, venture capitalists and other funding parties prefer churn rates of around two percent a month.
Finding Your Customer Churn Rate
As mentioned above, the most basic way to calculate customer churn is to take the number of subscribers or customers you lose every month and divide that number by your total customer base. Some companies will claim that they have a negative churn rate because they add more customers than they lose every month, but industry experts suggest that businesses avoid this method because it often provides a less comprehensive picture of their consumer retention success.
Churn can also be calculated with revenue as the baseline. With this approach, companies first derive their monthly recurring revenue (MRR). Then, they take the amount of their canceled MRR and divide it by an interval of time multiplied by total MMR at the beginning of the period.
How to Reduce Customer Churn
There’s no hard-and-fast rule when it comes to what you should and shouldn’t do to reduce churn. Contemporarily, large businesses primarily use the following techniques: they give their customers fewer chances to terminate their relationship, they conduct a survey, or they invest in a customer retention software.
Whether you know it or not, you’ve probably been subjected to the first retention strategy. Companies that enlist this technique start by offering a free trial of their product or service. Once the trial is up, they just bill the free trial user annually. This approach seems to improve customer churn efficiently, but at the end of the day, it might only delay the inevitable. After all, if you’re unhappy with a company, you’re going to stop doing business with them eventually.
Surveying customers is another way to try and prevent churn. Call your customers or send them an email and ask them what they like—and don’t like—about your product. This technique will give you a greater understanding of what causes people to become valuable customers so you can try and replicate their experience. As you get to understand your customer base better, you will begin to learn what is essential to the people or companies you serve and what needs attention.
Last but not least, you can reduce customer churn with the help of a software platform. This is often the preferred approach because it provides companies with more valuable customer churn information than the two other strategies combined. Customer retention software offers real-time data that are key to reducing current churn and preventing it in the future. If this is the route, you take to make sure to study the options you have before you. So tools deliver insights on data while others, like VisualCue, offer actions to consider as you monitor your client base. No matter how you plan to take on your churn rate, remember that, it is best not to wait!
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%.
This 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 customer 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.
Second, 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 its services. But don’t let your customers slip away unnoticed and start tracking (and eliminating) your churn.
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sources: *source – http://sixteenventures.com/saas-churn-rate, **The Harvard Business Review
Interpreting Your Data to Reduce Customer Churn
Customer churn is costing you money. Most times it’s costing you a lot of money! Fortunately, increasing your customer retention by only five percent can increase your profits by 25 to 95 percent. So, you might be wondering how you can convince a customer to stick around. Well, it all starts with analyzing your customer relationship management (CRM) data.
CRM systems have transformative potential when it comes to reducing churn. However, very few businesses understand how to maximize their systems to improve customer success. If this sounds like your organization, you should focus on three areas when you track and analyze churn. After you’ve finished reading this article, you will understand how to identify problem areas and monitor change as you implement strategic solutions.
Analyzing Customer Behavior
Have you ever noticed that some of your customers behave the same way—especially if they have similar characteristics? Particular groups of your customers do in fact exhibit common behaviors.
If you can learn the common behaviors associated with particular groups, you can predict how similar customers will behave under similar circumstances. For example, you can estimate what a customer’s reaction will be to a future marketing action or an outreach moment from a team member.
Luckily, building customer behavior models is fairly simple with the help of a CRM tool. The confusing part is often translating the data into all-in-one visualizations. Many companies work with a data visualization, like we do Visual Cue, to better understand their reports.
Another aspect of customer behavior analysis that can challenge companies is deciding how specific the models should be. Businesses that already use software designed to track user behavior can generally make their reports very granular. After all, one of the advantages of a CRM software is that it collects and organizes a plethora of specific user data.
Businesses that don’t have a user behavior software in place may need to work with their engineering team to see if they can provide the data or create a tool that will collect it moving forward. Overall, the more specific you can get with customer behavior data, the better. An in-depth report will take time to produce, but it’ll provide you with the best picture of what behaviors lead to customer success.
Considering Customer Age
Another effective way to analyze customer churn is to look at churn by age. Here, age is calculated by how long customers have been with your company. In other words, one age group could be “first month,” and another could be “twelfth month.” After all of your users are sorted by the amount of time they’ve been customers, you can start to analyze customer abandonment rates.
Viewing data in this way will help you grasp customer information in a simple way. It will also allow you to know your customers’ behaviors as they age. Chances are you will notice some similarities that you can try and address.
Companies that have high churn rates within the first few months can and should be working on improving their onboarding process. On the other hand, businesses that notice increases in churn several months in might find that their rates increase when customers need to renew their contracts. If spikes occur during specific time frames for various reasons, and addressing these reasons can make all the difference.
Once you implement solutions to problem areas, take the lessons learned there and apply it to another problem area in your business. Step by step you will be able to conquer all the issues your company faces.
Churn By Time Frame
In some ways, analyzing churn rates by time frame is similar to analyzing churn rates by age. The main difference is that time frame data can be harder to track and analyze—especially if you’ve been in business a few years. Again, this is why many companies work with a data visualization tool or software. It’s all too easy to become confused by a chart that has hundreds of lines.
To group customers by time frame, you must first define your parameters. There are several common ways to do this, but one of the most popular is to group customers together my month. Under this parameter, all customers who purchased in January of 2017 would be grouped, all customer who purchased in February of 2017 would form another group, so on and so forth.
When you analyze data based on time frame, you’ll notice two benefits right off the bat. First, you’ll find that your numbers aren’t influenced by customer acquisition. You’ll have clean, clear data that speak only to your customer abandonment rates. The second benefit is that you’ll see clear patterns for various groups.
After you create this report, analyze patterns and look for causes of customer churn. If you find that a lot of customers joined your company in November but abandoned shortly after that, seasonality might be to blame. With this speculation in mind, you can begin to look into what happened in the month November to learn why that time frame group had a high churn rate. As soon as you figure out what led to the increase in abandonment, you can create a plan to improve your retention for the future.
This type of report may also provide you with insights on actions that improved customer retention. For example, if individuals that joined in April have lower attrition rates, chances are you did something right to influence them to stay with your organization.
Once you dig into the month, you can begin to determine the elements that incentivized customers to stay active. Then, you can work on reducing churn by creating similar conditions for your entire customer base.
The Impact of Reducing Customer Churn
There are many ways to make reports, but every single one you create should inform strategic action. Overall, the easiest way to interpret data is a clear and accurate visualization that will help you gain insight into your customer base.
Equipped with strategies to collect and represent your data, you’ll be able create plans designed to influence churn. You might instruct your marketing team to run campaigns that share similarities with past successful campaigns. Maybe you take the time to work with your call center employees and teach them about certain behaviors they can perform to reduce churn.
As you roll out your solutions, make sure you understand how you will measure their impact. A sound monitoring system should be in place you so you can promote the aspects of your customer churn reduction plan that are working.
Making BETTER-Informed Business Decisions
As a business leader, you’ve probably heard hundreds of iterations of the phrase “Challenge the status quo.” Management experts and industry leaders have been told to tackle conventional thoughts and systems head-on for as long as they’ve been around. The only issue with this phrase, though? It’s become so common that it’s become the status quo!
It’s all too easy to settle for a technique that works, even if there are better options out there. Companies often rely on antiquated processes because they’re familiar with them. They fail to explore new ways to make better-informed business decisions in the name of comfort. If you’re ready to break away from this norm and make a change, this article is for you.
Reducing Churn With Real-Time Data
Although it’s been a trending topic for some time, there is still a lot of confusion about what big data collection can be used for. Simply put, a collection of extremely large data sets can be analyzed to reveal correlations, trends, and patterns. These trends often hold powerful insights, that if acted on quickly, can provide awesome results by way of reducing customer churn, increasing customer satisfaction, and will usually result in an increase in company revenue.
Getting data in real-time has many advantages and possibilities, but it’s gaining traction in the business sector because it allows companies to make better-informed business decisions. Historically, organizations had to look at the past to create business insights. For example, they would gather information from the prior day, month, quarter or year and then create reports, projections and working plans from said information. Today, businesses that want to make strategic moves can rely on real-time analytics to inform action. Instead of looking back, decision-makers can visualize current data to make time-relevant decisions when they matter most…now!
In the past, a simple question like “How many customers are about to leave our service?” could take hours or days for teams to understand. More complicated questions often took weeks or months to be analyzed. With real-time data being used, answering complex questions is no longer a burden that takes time. In seconds, you can receive a robust answer to your most complex business queries.
The opportunities of real-time data are endless—as long as you know how to access them. For most companies, this technology seems foreign, complicated and time-consuming. Luckily, this couldn’t be further from the case. With a small amount of know-how, every business— regardless of size—can start to use data to make better business decisions.
Knowing The Customer
Experts suggest that companies first use data to better understand their customers. It seems today, people only stay with a company if they have a very good reason to do so. There’s plenty of competition and similar offerings in almost every market, which makes it very hard to gain loyal customers.
As a result, businesses must work harder than ever before to avoid churn and increase customer success. Real-time data can help you understand exactly why and when your customers jump ship. With this information in mind, you can create a plan that keeps customers coming back time and time again.
Long gone is the need to select and study small samples of customers to try to guess who will be leaving your business portfolio next month. With real-time data, you can understand virtually every one of your customers at any given time. Can you imagine sending fresh customer feedback to your employees instantaneously so they can improve a customer’s experience in real-time? More importantly, can you picture using this technology to turn a bad customer experience into a positive one?
The Goal? Understanding the Customer
With a clear goal in mind, real-time data improves venerable business models. Without a clear goal in mind, this information can do more harm than good. Companies that fail to define what they want will waste their time and money trying to analyze countless sheets of information. Time and money are two of your most valuable resources, so don’t waste either of them for a second. You must create a goal early on and visit it often if you want to use your data effectively. 
One major roadblock for decision makers is understanding the picture that real-time data paints. Typically, businesses organize their findings in various charts and graphs—which can tell different stories depending on how the information is interpreted. Fortunately, there’s a new workaround for this issue. Instead of creating pages of visualizations that showcase findings from Big Data, organizations can use a data visualization tool that does it all for them.
This tool creates easy-to-understand visual representations of data. They are designed in an intuitive way, so everyone in an organization can understand them with little to no training. With the help of these visualizations, companies are able to scale up their entire organization’s ability at once.
Industry experts know it’s important to challenge the status quo. However, many of them fail to use this knowledge to drive action. If you’re ready to take your business to the next level, you need to move away from outdated processes. It’s time to stop relying on antiquated business intelligence procedures and transition from capturing data to making it useful.
Departing from the tools and practices that your business knows might feel uncomfortable at first, but it will be well worth it. By 2020, your customer experience will be more important than any brand differentiator. If you learn how to reduce churn rates and improve your customer experience now, imagine the success you’ll have in the future.
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