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 .

Churn is literally killing your business. I know this because when I built my company, Flowtown, we had 10,000 customers and we were churning 12% a month. If you ve never looked at your MRR revenue graph, where it shows you net new monthly reoccurring revenue, and then on the bottom side, what you re losing, you probably won t even realize that you're losing more customers per month than you re adding. That is why you ve hit your growth ceiling.

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.