How to Manage Churn- with Anita Toth!

The capacity to forecast that a specific customer is at a high risk of churning while there is still time to do something about it is a major new possible revenue generator for any company. We, at CustomerSuccessBox, spoke to some of the Top Customer Success Influencers to know how they manage churn!

Check out Anita’s interview where she gives insights into how you can manage churn efficiently. 👇

Anita Toth is the Chief Churn crusher at Anita Toth Inc. Top 100 Customer Success Strategist 2021. Top Influencer 2021 by Engati. She helps her B2B customers exponentially increase their net profits by utilizing the missed revenue opportunities caused by churn. 

We asked Anita to share her opinion on customer churn and retention. The following is what she has to say.

Q: Please introduce yourself. 

A: Surprisingly, most people think that I’m a  consultant. I’m not. We’re actually a full-service agency that helps with the voice of the customer and customer feedback as a way to reduce churn. So we do this with a system that we have called customer insights 360. That allows companies to get insights into areas that they typically are struggling with. You know, getting a really good understanding of what’s going on with the customer. So some obvious places onboarding and then exit interviews or surveys, but then also different points along the customer journey where they’re, you know, looking to get a better understanding of what’s going on with the customer and hopefully getting some of those, you know, early churn reasons or those what puts customers at risk of turning, having a better understanding of those so that they can start reducing churn. Right?  When it, you know, those first seeds are planted before they, the customer actually leaves. 

Q: What do you think are the common reasons why a ‘churn’ occurs?

A: I think I think there are several, uh, most often we’ll hear the price. Um, when, even when, you know, we have clients that we take on and we ask one of the first things they’ll say is price. And I always say that price is the justification for other things that are going on. So suddenly, you know, they haven’t been receiving value. They just don’t feel, you know, maybe their expectations weren’t met between the sales process and then the reality of being a customer. And, you know, sometimes there are things there are internal changes perhaps. For example, the champion leaves or there are key stakeholder changes. But, but then again, those new people who are coming on board have to see that there’s value in the product they’re getting, otherwise they say that’s too expensive. And then the price is used as the final reason versus digging down and understanding that they just often didn’t see the value or expectations just didn’t meet with reality.

Q: What should be the KPIs for measuring churn?

A: I really don’t like to suggest KPIs because every company is different, but I will say this. You have your overall churn metric, which is several metrics rolled up into it. You should really be looking at segmenting your churn. So according to the customer, either account or product line, however, you want to do it, you should be segmenting them. Because you know, different customer segments are going to have different churn rates. And then also by time, so 30-day churn, 60-day churn wherever your onboarding is. As soon as onboarding is done, that’s definitely a place where you want to measure where your churn is. So all of those should roll up into an overall churn metric, but each company has to decide, you know, how they want to segment out. But that is really the key is segmenting out. Your churn, according to whatever makes the most sense for your company. 

Q: Who should be responsible for managing ‘churn’ in a firm?

A: Everybody. I think everyone should leave even, you know, happy customers from happy employees. I really believe that if employees are really miserable and you have high employee turnover is going to lead to unhappy customers. So we really think that it’s not just something that, you know, you hear, oh, everybody should be involved, in customer retention or reducing churn, but really they should from the top right down to the bottom, whether they’re customer-facing or not, because even somebody in HR who is hiring, if there are poor employees there, they’re not going to last. And then the customer experience isn’t going to be great and then they’ll leave too. So it really is, um, something that every person in the company should, should have a hand in versus just, you know, certain people owning that metric and being their responsibility to do something about it. 

Q: Do you have a framework/template/playbook in place for analyzing the churn?
A: We really don’t do that, because we’re trying to find the reasons why versus looking, like, after the fact why customers have turned and dig into data. There are other people that I partner with who are really good on the quantitative side. So that’s not something that not only we don’t get into, but also myself personally. So it still comes down to looking for those insights, and what are they? And how do you gather them? But the strategy is not to wait until something happens, or churns, and then try to find out why they left, the strategy is to throughout the customer journey, you were taking these little checks, Little pulses. And the second strategy, as I mentioned, is with new processes, or new initiatives. 

Companies should be doing this with regularity, not just in NPS once a year, or, you know, putting NPS on everything. Um, and that’s the only survey that goes out or maybe, you know, customer satisfaction. It has to be more than that because reasons change and you always want to have an understanding of how your customers are changing, how their needs are changing, and then how you, how the company can grow along with that change. So I don’t have anything specific because it doesn’t quite fit with what I do, but there are certainly some fantastic people out there that, that do have this information and do crunch the hard numbers. I just bring them in when I need them. 

Yeah. Because it’s great to go through. And I think there’s there, it’s necessary to look at the data, but, um, the data then is just observational versus actually having a conversation like you and I are doing. You’re able to make a comment. Then I’m able to respond further when you’re just looking at data, you don’t get any of that. You’re just seeing patterns and then trying to match some story in your head to those patterns versus speaking with the customers and finding out exactly why those patterns are happening. 

Q: What strategies according to you should be used for analyzing churn?

A: That’s, that’s actually a really big question coming from a qualitative perspective and seeking customer insights directly from the customer. The strategy is that it’s more having a comprehensive voice of the customer program. It doesn’t even have to be formal, but it is seeking places within. So we talked about this at the beginning with, you know, onboarding, post onboarding, and then, you know, when customers exit, those are two very obvious places to get deep information that you can then, uh, make changes on. The other thing of course is throughout the journey. So if there are things perhaps that are changing in your processes that might affect customers, instead of rolling out that process, um, you can have a strategy in place where you AB test and then talk to customers first to find out what their experience was like before implementing those changes.

So the strategy is to, is two‑fold. One is when changes are being made to talk to customers before the change is made, to get their input on how that change will affect them. And then the second is in those critical parts, uh, during onboarding, especially if you’re onboarding as long, you don’t want to wait until the onboarding process has finished and then ask them. So for the last eight weeks, what was your experience like? Well, you know, so many ups and downs, but if the onboarding is super fast, like a matter of hours, okay, you don’t need something halfway in halfway through, but you, you definitely want to have a strategy of those key places during onboarding or post onboarding, for sure, for everyone. And then, uh, as customers are exiting to get an understanding of not only why they’re leaving, but what is starting to change that, as I said, life changes constantly customer needs are changing so that you can then start picking up those threads and then going back and making changes to try to save more customers.

The strategy is not to wait until something happens, the customer churns, and then try to find out why they left. The strategy is to throughout the customer journey, you were taking these little checks, little pulses, that’s one strategy. And the second strategy, like I mentioned is with new processes or new, um, initiatives that are being rolled out that might affect the customer, even on the customer success side, to talk with customers before it’s rolled out to everyone to make sure that, um, you know, the impact is minimized on the customer and then to also get a, really a, a good understanding of how it might affect them in positive ways as well. So those are the two strategies I would recommend.

Churn Analysis Template

Q: Do you believe these strategies change according to the different segments of customers?

A: Nope. So the strategy is overarching, right? But how you execute might be different. So for certain segments you might send a longer survey versus interviews for other segments. You might want to do more interviews and just maybe a couple of smaller surveys, not just NPS, but going beyond that too, you know, maybe it’s four or five questions, um, or perhaps sending out even an annual longer survey that might be as long as 20 questions, um, that, that the strategy is just, this is where we want to use it. And then each customer segment should have how are we going to make this strategy happen? Because with some customer groups you don’t want to send surveys, you actually want to talk to them, especially if they’re your top, you know, your top tier customers. Yeah. You don’t want to just send surveys to them all the time. You actually want to engage them in different ways. 

Q: How soon should you start the renewal process?

A: So this is not my quote, but I’ve heard from someone else, renewals should happen every day. In other words, the relationship needs to be built throughout the entire process. So that when it comes time for renewal, the renewal is again, not my quote, but a non-event.

In other words, you’ve been, it’s, it’s the same as showing up to your anniversary when you’re married once a year with flowers and chocolates and go out for dinner and expect that to be, you know, the goodwill that lasts all year. So it should be done always with the intention of, having, you know, the renewal happen. Just like, if you want a good married life, you can’t just show up once a year and expect that to last that, you know, good gesture to last all year. 

Q: How do you know that when you’re off-track?

A: I wish there was like a checklist. Because there are things like customer health scores that can be used, so actual, you know, a set of data that come in and gives you know, a score, based on the on what you put into that as well as the weightings of it. That’s one way. Another way is you know, use the see things other at this point. It’s all observational, obvious signs. But it’s also sometimes in just the listening even in a conversation, you’re noticing certain things that are no longer being said, there isn’t a checklist to say, well if this, this, this and this, because even customers with great health scores turn suddenly and unexpectedly. Something probably needs to be discussed and maybe some difficult conversations need to be had to understand what those changes are. So you see behavior really, its behavior, its changing emotional state, and participation. And then of course, not hearing certain things anymore or hearing new things that indicate, oh, there might be an issue here. So it’s all three.

Q: Automation vs In-person vs remote retention. Which one do you prefer and why?

A: As far as I understand it, ’cause it’s not really what I get into. It’s really, the business model has to do on this, the size of the accounts. So if a customer is spending, you know, 20 million a year, you’re going to want to do in-person versus, you know, with some companies, even B2B, it might be, you know, $12 a month. And so for $12 a month, you’re not going to dedicate somebody, you know, a person to that. So that’s, those are the things, as I understand it, the biggest reasons why you have more automated retention like I use Calendly, I think I pay whatever, $120 a year for it. That’s all automated. 

So they keep up with me regularly telling me about changes, and how they can be positive for me and my business. And that keeps the relationship going. Plus I see value in the product, but, um, if I had like a huge company where I wanted everybody to use Calendly, uh, that would be vastly different than they would assign somebody, uh, that wouldn’t be automated. So really it’s on those two things, the amount of the product, and then the size of the user base or, or for the account. 

Q: What are some of the common mistakes that you’ve made or seen someone else make while handling churn?

A: We’ve all made mistakes. The biggest I will tell you right now is, um, especially with companies that do exit interviews they will try to use that exit interview as a way to win back the customer. And to me, that’s a bait and switch it feels horrible. Like if they’re thinking they’re coming into this interview to talk to you about the reasons why they’re leaving and then suddenly now you’re trying to sell them back in. It’s a horrible feeling. And in fact, can permanently damage the relationship, you know, in my previous, you know, before I started doing this, I made that mistake too. And, you know, attempting to win back the, you know, oh, we’ll change, we’ll do this, you know, kinda going back to the marriage analogy, oh, we’ll go to counseling. Well, you know, that kind of desperate, um, I think has probably one of the most injurious things that you can do as I see it as much as you can.

If a customer’s exiting, try to leave the relationship on a high point, and then you can always reach out, you know, three months later and see how things are going. That’s probably the best way that you can handle the situation. So it’s in a desperate attempt trying to win customers back by, you know, trying to sell them, making promises, bending yourself like a pretzel to say, we’ll do anything to keep you. It doesn’t put the company in a good light. It doesn’t put that if there was a personal relationship, let’s say between a CSM and the customer, it doesn’t put that in a good light or, or a CS leader even. And then it just leaves the customer sort of feeling, you know, just like when you break up with a relationship, it doesn’t, um, leave them feeling in the best position either. So I think that’s, that’s probably like the biggest leave the relationship on a good note, do not try to sell them as they leave, do not try to, you know, twist yourself into something that you think they want to just to have them stay. 

Because even if you do twist yourself, the company and make all these promises if you can’t keep them, then they’re leaving anyway. And it really puts the company sort of in a very vulnerable position and so better to leave the relationship with respect. And say, you know, wish the customer well, and then reach out in three months and see how things are going. 

Q: Any tips for CS leaders who want to manage churn/retention?

A: I have something called the 25 churn factors. So this is my recommendation there are some things that are really out of your hands like market conditions and what’s happening internally with the customer. Out of those 25, there are about five or six that truly, there’s not much you can do about. There’s a good chunk of that or product right related. So CSM, CS leaders might have a tiny bit of influence, but on the whole, that’s not going to be there either. But there are a good 12 to 15 which are definitely related to the CS leader or Chief Customer Officer or CSM. Absolutely. My recommendation is again the strategy is if we want to reduce churn, how do we do it? Pick one of those every quarter and focus on improving it. Just pick one that is what I’d recommend.

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Swagata is Head of Marketing at CustomerSuccessBox. Advocate for great customer experience. She is an avid traveler and when she is not working always on the lookout for new places to explore.