Dan Martell - November 28, 2022


What Is Churn？ (How to Fix It)


Episode Stats

Length

6 minutes

Words per Minute

210.94444

Word Count

1,425

Sentence Count

74


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Transcript

Transcript generated with Whisper (turbo).
00:00:00.240 Churn is literally killing your business.
00:00:02.880 I know this because when I built my company Flowtown,
00:00:04.800 we had 10,000 customers and we're churning 12% a month,
00:00:09.080 which meant after 8.3 months,
00:00:11.540 we lost 100% of all of our customers.
00:00:15.000 If you've never looked at your MRR revenue graph
00:00:17.640 where it shows you net new monthly reoccurring revenue
00:00:20.040 and then on the bottom side, what you're losing,
00:00:22.620 you probably won't even realize
00:00:24.200 that you're losing more customers per month
00:00:26.760 than you're adding and that is why
00:00:28.200 you've hit your growth ceiling.
00:00:29.680 want to share with you how to look at your MRR and fix your churn problems. Let's get into it.
00:00:37.820 Number one is you need a cancellation capture process. I remember when I was building my
00:00:41.860 company Flowtown, we were literally losing all these customers every month and we had no clue
00:00:46.460 why. And then we introduced this cancellation capture process. This is a screen that gets
00:00:51.420 prompted to your customer when they go to cancel that asks them a few different questions. It's
00:00:56.660 like, you know, tell us the reason you're canceling.
00:00:59.180 Is it because of this?
00:01:00.280 Is it because of that?
00:01:01.160 And the information we're getting was clear as day.
00:01:04.400 It was very evident to us that our customers
00:01:07.340 were coming in using the product
00:01:09.420 and then working with other tools for workflows.
00:01:12.360 And then we were like, oh, well,
00:01:13.200 if we added that to our product,
00:01:14.740 then they wouldn't have to leave
00:01:15.820 and they would stick around.
00:01:17.040 And that was the beginning of a product
00:01:19.280 that we went from 12% churn down to three to 4% churn
00:01:23.160 because we built a complete solution.
00:01:26.160 Number two is you need to do a click stream analysis.
00:01:28.720 You know, think about it this way.
00:01:29.720 Is every customer that comes through your product
00:01:31.640 that's successful leaves some success clues.
00:01:34.980 The way they use your product,
00:01:36.480 if you actually look at the logs,
00:01:37.880 you can see where they went initially
00:01:40.100 and then their second visit and their third visit
00:01:41.900 and figure out how they use your product.
00:01:44.080 Because if somebody's sticking around,
00:01:45.960 if they're not churning,
00:01:47.100 it means that they've understood
00:01:48.840 or figured something out about your product
00:01:50.420 that everybody else hasn't figured out yet.
00:01:53.420 So you analyze the click stream
00:01:55.340 and you find out what is the commonality
00:01:58.540 of all these people so you can put your product
00:02:01.060 in the order that everybody that's successful wins.
00:02:04.120 Here's what I mean by that.
00:02:05.080 When I was building this product called Timely,
00:02:07.160 it was this really simple idea for people
00:02:09.400 to queue up their tweets
00:02:11.080 and then we would automatically post them on Twitter
00:02:14.100 whenever we felt based on the algorithm
00:02:16.120 and the engagement graph of their historical tweets,
00:02:19.380 we would choose when they go out.
00:02:20.960 So they just had to queue them up
00:02:22.140 and then we would push them out.
00:02:23.520 And what we noticed is when we launched this thing,
00:02:26.420 a lot of people were excited about it.
00:02:28.180 They told their friends about it,
00:02:29.300 but we noticed that people weren't using it.
00:02:31.420 And what I did is I literally got on the phone
00:02:33.360 with all these customers that signed up, but didn't use it.
00:02:36.040 And it was really fun for me because, you know,
00:02:37.480 I was like, Hey, you know, I'm the founder of Timely.
00:02:40.400 You know, I noticed you signed up for the product.
00:02:41.940 Oh, this is so such amazing idea. I love it.
00:02:44.240 Hey man, can I ask you a question?
00:02:45.920 Yeah. What's up?
00:02:46.760 Why aren't you using it?
00:02:48.000 Well, you know, like, I don't know.
00:02:49.920 I didn't have anything to share.
00:02:51.140 I didn't have anything to tweet. Interesting.
00:02:52.960 The reason why you didn't share anything when you signed up
00:02:55.660 is because you didn't know what to share.
00:02:57.920 Yeah, so I sat down with the team and I said,
00:02:59.880 hey, there's all these people that are signing up
00:03:02.480 for the product, but they're not getting to the place
00:03:04.700 where they receive the value to understand
00:03:06.760 why they should keep using it.
00:03:08.260 How do we fix this problem?
00:03:09.660 Somebody on my team said, quotes are pretty famous.
00:03:12.820 People love sharing great quotes.
00:03:14.380 Why don't we go grab the top 25 quotes in all of history?
00:03:17.920 And we cue them up so that when somebody's signing up
00:03:20.620 for Timely the first time, we just prompt them
00:03:22.880 and say, hey, share something to see how this works
00:03:24.880 and just give them a list of 25 different quotes.
00:03:27.020 And they just had to load, add to queue, add to queue,
00:03:28.940 add to queue.
00:03:30.840 And that process allowed us to get people activated,
00:03:35.400 to get them engaged in their first time user experience.
00:03:38.420 What's called the Fatui, first time user experience.
00:03:41.580 Get them to a place of core value
00:03:44.120 so that then they got the tweets going out.
00:03:46.320 They got a report from us to show them the engagement.
00:03:48.500 They saw the difference between our sharing the time
00:03:51.780 of the tweet versus them doing it
00:03:53.400 and the lifted engagement.
00:03:54.900 And that created the mental place in their mind
00:03:57.500 for timely to become a tool they would use every day.
00:04:00.980 Number three is time to first value or TTFV.
00:04:04.780 It's literally the time it takes somebody
00:04:06.940 from signing up for your product
00:04:08.680 to getting to that place of value
00:04:10.620 where they understand the problem you solve for them,
00:04:13.180 how you solve it, and they receive that impact.
00:04:16.280 I always joke with entrepreneurs
00:04:17.860 that SaaS, software as a service,
00:04:19.500 really should stand for success as a service.
00:04:22.380 It's not enough to just say, I've got this tool,
00:04:24.680 this workflow that solves your problem and go use it.
00:04:27.240 And it's gonna be like this Nirvana.
00:04:29.400 It's really about asking yourself like,
00:04:30.900 what does success look like for our clients?
00:04:33.260 What is the area of impact they wanna have in their business?
00:04:36.280 They've signed up for your workflow software.
00:04:38.200 What workflow are they trying to automate?
00:04:40.580 And too often we drop users on blank slates.
00:04:44.560 We say, here's the dashboard, figure it out.
00:04:46.540 But the way I look at it is your signup process.
00:04:49.660 When somebody first comes to your product,
00:04:51.860 it's really like the level one of a video game.
00:04:54.500 You know, in level one of a video game,
00:04:56.040 you think you're playing the game,
00:04:57.300 but really what it's doing is it's teaching you
00:04:59.220 how to play the game.
00:05:00.960 It's walking you through different scenarios,
00:05:03.120 different actions that you're gonna take in the game.
00:05:05.180 So when somebody signs up from your product,
00:05:07.360 I want you to consider removing all distractions,
00:05:11.460 getting rid of anything that might stop them
00:05:13.860 from doing the steps that you've learned,
00:05:16.240 especially using the clickstream analysis,
00:05:18.140 that if they do those steps in that order,
00:05:21.440 that they will be successful
00:05:22.660 because the time it takes from sign up to first value,
00:05:26.480 if you can get that into days,
00:05:28.800 if you can get that into hours,
00:05:30.140 if you can get that into the first experience
00:05:32.960 of the client with your product,
00:05:35.180 you will grow even faster
00:05:37.020 because the viral word of mouth will just take off.
00:05:39.960 If you get a person to sign up for your product
00:05:42.160 and then boom, they get it.
00:05:44.060 Their brains explode.
00:05:44.900 like the best thing ever, then they will tell everybody about it. And that's how you build
00:05:48.720 growth. So to reduce your churn, three things you need to make sure you got to do. First,
00:05:52.740 you got to install a cancellation capture process. So when somebody goes to leave, you go, whoa,
00:05:57.120 hey, tell me about your experience. Why are you leaving? Maybe I can help you now. That'll give
00:06:02.000 you the information. Number two is you want to analyze the click stream so that you know what
00:06:05.880 the best people that are winning are doing. And number three is you take that stream and you put
00:06:10.440 it front and center in the sign up flow in their initial experience so everybody gets time to first
00:06:15.640 value as fast as humanly possible if you want to check out how i've designed my capture cancellation
00:06:21.020 process then you can click the link below to download the cancellation capture blueprint
00:06:26.080 where i'm going to literally give you the wireframes the copy the different tabs that you
00:06:30.440 should be prompting on cancellation for your customers use that information to drive product
00:06:36.280 innovation, to drive activation, to reduce the time to first value. And as per usual,
00:06:41.400 I want to challenge you to live a bigger life and a bigger business. And I'll see you next Monday.