21 Fundamental CSM Rules - Part III

Hi, Markus here. Welcome to a new episode of the Customer-Value-Led-Growth Newsletter.

I share strategies and guides to help you become a proactive CSM, deliver more value for your customers, and turn it into revenue for your company every week.

Need additional help? Check out these resources 👇️ 

• Training Platform

• Coaching Services

• Notion Guides

• CSM Operating System

• Free Templates

Let’s skip the intro again and jump straight to the last (for the time being) 7 CSM rules to double your impact as a CSM 👇️ 

1. Holistic Risk Management

It sucks to lose your customers. What sucks more is never to see it coming. Most CSM teams are following a vanilla approach to risk management. They are stopping at obvious churn risks like

• no/low product adoption and usage

• low NPS, CSAT, and health scores

• no engagement and responsiveness

Life would be easy if all churn was visible from a mile away, but unfortunately, it’s not the reality.

• churn comes from “power users” who don’t get enough value

• customers give high scores and ratings to avoid triggering your risk mitigating playbook (while looking for alternatives)

• sponsors and executive buyers don’t care about how their teams rate your product if the ROI is not there

The most effective way to detect hidden churn risks is to track customer progress and outcomes and answer those 2 questions:

• Are customers completing the tasks and solving the problems required to accomplish their goals?

• Do their results match expectations, or have they been falling behind and are unlikely to accomplish their goals?

Tip: Use your QBRs to investigate those risks and identify their root causes.

2. Churn Intelligence

Churn is a data problem. If you understand why your customers are leaving and you can detect recurring patterns, you can apply strategic solutions. Solutions that eliminate the root causes so that you can preemptively eliminate the risks.

But that’s exactly the problem. Most companies don’t have meaningful data about why their customers are leaving (root cause analysis). They stop their analysis after hearing things from their customers, like

• “The product was too expensive.”

• “Features X and Y are missing.”

• “Competitor Z has a better offer.”

that are merely proxy reasons. This is what’s really going on 👇️ 

• If the product were too expensive, they would not have purchased it in the first place. What they are saying is that they did not get enough value for what they are paying

• Buying a product despite missing features can only happen if they did not do their due diligence. More likely, these customers don’t understand how to use the existing features properly and don’t get the expected results

• If that were true, customers would not have selected your product. They would have gone with the competitor right from the beginning. Again, what they are saying is that they did not get enough value and tried an alternative.

The difference between the proxy reasons and the truth is like night and day. Requiring entirely different countermeasures. Imagine building the supposedly missing features only to find out that it does not change a thing. Worse, it makes your product increasingly clunky, decreasing the overall user experience.

From a bird’s-eye view, there are only 2 reasons why customers leave. For external ones not under your control, and because they did not get enough value. A proper churn analysis reveals where and why things are going south.

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