How to Manage Churn- with Irit Ezips!

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!

Irit Ezips is the Chief Customer Officer and CEO at CSM Practice. She has been consistently voted top Customer Success strategist since 2013 and is frequently featured as a speaker at conferences and Customer Success publications. Irit has played a pivotal role in shaping Customer Success best practices and methodologies.

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

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

Q: Please introduce yourself. 

A: My name is Irit Ezips and I’ve been doing customer success consulting Since 2014, helping companies either set up the customer success function and coming up with the right strategic approach of, you know, what kind of engagement model they’re going to have, what’s the organization structure is going to be like the customer journey map, you know, key indicators, things like that, or work with customer success organizations that are already set up that are looking to optimize something around their operations.

Either they’re not getting the right results, or they’re struggling with, you know, showing value internally struggling with earn struggling with upselling, actually, I would say that that’s my forte, like value management to customers and increasing upsell. Those are two areas that I really love working with customers, and of course, optimizing onboarding, coming up with churn, retention strategies and health scores, and everything else.

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

A: Well, it depends really on the type of company that you’re in, I think, early-stage startups when the poor or any company where the product is not stable 50% of the time is because we have outages, we have performance issues, and then we don’t have the right people in place, or the right processes in place to ensure a positive customer experience. When these types of things happen.

The second type of churn that we’re seeing is when you do have a good solution, it’s stable, but maybe it adds a lot of value at the beginning. And after year two, year three, the added value is diminished. So your product becomes commoditized. And it’s very easy for a competitor to come in, knock on the door and say, hey, yeah, we have the same features basically, and kind of scoop your business right underneath your feet, so to speak, without you knowing. Then the third type of solution and lose when you have a fair, you know, fairly mature product, you have a fairly mature customer service. However, your customer success function or your strategy around customer success is super reactive. And so you know, the customer experience is just not the best possible, or you’re not really focused on delivering value to customers beyond the solution itself.

So at some point, their business grows beyond what the initial requirements were because they don’t have a relationship with you. They don’t know what else you can add to the table. And so they’re just assuming that those additional use cases or functions or is something that they can only find outside, and they end up churning, leaving you for somebody like another solution that potentially is perceived more mature. And I mean, some people would say, well, the top reasons for churn are the customer executive has left. Yes, sure. But if your solution has been fully embedded in critical processes, and you had the relationship is deepened and the breadth of relationship that you needed, most likely you would have champions within your customer’s account already a champion for you. So this is the type of symptoms that we sometimes see as key churn reasons when your customer success function is not proactive enough to set up the right, you know, policies and processes with customers to ensure that these kinds of things are mitigated for the most part.

Churn Analysis Template

Q: What should be the KPIs for measuring churn?

I talked to a lot of executives about this question. And most of them you know, the number one answer that I get is the net retention rate. Because this encapsulates not just logo churn, meaning the number of customers that have actually left, but also the actual impact on the business, including down sells, and then offset by some of the upsell work that your team might have led. And so you want to do net retention rate, which is the revenues minus the down-sell minus the churn plus the upsells. You want to do customer logo churn rate and numbers. And then you definitely want to look at gross churn. So gross churn rates mean, okay, you had x number of revenues at the beginning of the year off of those particular customers, how many actually stayed? What’s the level of revenues that were actually renewed, based on the start of the period that you had? 

So those are the metrics that I would look into when I’m looking at churn. Now beyond that, he kind of wanted to look at leading indicators to churn because these are lagging indicators, this is what has already happened. We can also look at leading indicators to churn which will include, for example, customer satisfaction scores. It might include the engagement level or relationship score you have with customers, their adoption rates of your usage, frequency of usage, percentage of utilization of yours, system, and you know, like, their list goes down, they’re all encapsulated, usually into one metric, that’s called customer health score. I like to separate customer health scores. Also from a customer Risk Indicator, I think there’s like a completely different set of metrics that indicate churn risk versus full health, which is customers that achieve full value with us. But that’s, I feel like that might be like a different session altogether. But yeah, those are the things that I would track. 

Imagine you put a strategy in place to fight churn to reduce gross churn. How are you going to show that you made progress? It will take you let’s say for all new customers, it will take almost a year to show that by improving your onboarding process, you’re actually able to reduce churn a year out because most contracts are annual some companies are going to have multi-year contracts or are looking at how are you going to show that you’re actually making progress you have to focus on leading indicators. So I think step number one is just to do some due diligence and find out what are your key churn reasons and there’s like a whole framework on how to do that with your team with your customers. And then once you have the reasons find found out you need to come up with better strategies and based on the strategies that you’re going to put in place this would give you a sense of what the indicators should be. 

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

A: I think that’s a great question for that’s very insightful. In general, I think it’s the CEO. That should the churn. I think there should be some accountable ability across multiple functions. I think that’s what’s emerging over the past few years, what’s what we’re seeing. We’re seeing issues with, you know, companies not that our product lead and not having the product team own the churn rate, we’re seeing sales teams, bringing in customers that are completely not aligned with the main business use case that are not a good fit for the company and they churn.

And so I think that the sales team should be held accountable when we’re seeing this kind of issue. And absolutely, the customer success team should be held accountable, anybody that’s responsible for post-sales. So if you have an onboarding team, they should be accountable for your one churn. Absolutely. If we have a professional services team, or, for example, we know that we have a complex product. And we have a lot of bugs and outages, which we should tie back. You know how many customers that have experience outages or are disgruntled about performance issues, have actually churned so that we can tie that back to the way support is being managed. So I think that putting the customer success managers solely responsible for net retention rate or even gross retention rate is problematic. I think almost every department could be held accountable to some degree. And it should probably be a number that’s tied to, you know, how is the company overall performance and kind of tied to the annual bonus of nearly every employee in the company?

The days where you set up the customer success team to fight churn are long over, we already know that customer success teams are either there to ensure customers maximize value, or that they are adopting the solution at a higher rate, the consumption of the functions and transactions of the features that they’re performing is higher. Some customer success teams are actually really focused on expansions. So it depends on your business model. But the days where you set up customer success to fight churn, you know, that’s just so 2013. I think that we have evolved since then. And we actually do understand that it’s a cross-functional effort.

Q: Do you have a framework/template/playbook in place for analyzing the churn?

A: I think it’s, that’s one way. Sometimes they really know why they have churn and we can tackle it right away. A lot of times I do an assessment. Sometimes it’s a very tactical assessment. And sometimes it’s a company-wide assessment. So it just depends on you know, what’s their gut feeling around why churn exists. Oftentimes, you can do customer interviews, and kind of understand why churn is happening from the customer’s perspective. And so I would say there are three ways you can tackle it. You can ask the CSM, and then kind of gauge which customers have experienced churn for those key reasons and what was the impact in previous years. So you can see how you progress over time, you can ask customers, and then you can do a company-wide assessment as well.

First of all, you know, there’s an onboarding issue, and the team already knows that customers don’t finish successfully 30% of their onboarding, meaning onboarding is complete. And there are crickets after, in terms of adoption, we already know there’s an issue I need to ask customers about it. To know that it’s a churn issue? No. It’s pretty clear. I could though ask customers, what is the issue with onboarding, what is their perspective around why onboarding is not successful with high touch customer success, and engagement models, the team, for the most part, knows as well, they kind of really know what is going on, because customers tell them, they have the level of relationship with the customer.

So when a customer leaves, a lot of times, the customer success manager actually has a very healthy relationship with the customer. They just, you know, something happened with the processes with the way that the onboarding was handled, that sort of failed the customer, they didn’t prepare them the right way, they didn’t dedicate the right resources, they didn’t rely on expectations properly. And many times we can kind of figure out based on what is happening later, as to what needs to be improved during the onboarding phase. 

So yeah, sometimes it’s absolutely advisable to talk to customers, I have a customer. Now, customers, don’t really have a customer success team. But they have a lot of customer-facing teams. It’s a very big company. And they have you know, the number of customers that they have is like a handful of customers that they actually work with. But each one is like a multimillion-dollar deal. Do they have like, at least five people dedicated to each account? Do you think that they don’t know what they know what the issues are?

So in those kinds of instances, you could talk to customers, but most likely, everybody already knows what the issues are. When you have vice versa. When you have 10,000 customers, they’re all very small, you probably should talk to a few of them to really understand what is the customer’s experience? What do customers want? How do they work with other vendors that they really like and are missing with this company? And so I think they’re where the relationship is a bit weaker, the customer interviews come in really handy. And in fact, I think customer interviews are really great anyways, but is it necessary to actually create an impact and improve things? Not always is my point.

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

A: So what we’re seeing in the market is when you have, what we call the long tail customer cohort, imagine that you have a company, you have 10 20% of the customers bringing 80% of the revenue, and then the remaining 80% is just 20% of the revenue, we call that the long tail, very small customers, maybe they’re not even profitable. And so you will have a different strategy for churn for those at a very high level, at least for those types of customers. You know, there’s, there’s some that you’re going to have a personal led touch, and there’s some that you’re going to have a very light touch or not at all.

So what I’ve seen in the market is that for the long tail, you would probably set up a retention team. And you’ll have three basic things why customers call you to cancel the contract. And depending on the situation, you will have a different playbook on how to win their business back. So let’s say they lack adoption, that most likely means that either onboarding failed, there wasn’t any training, you can offer training, you can offer to extend the subscription so that you can re onboard them, you could, you know, offer, like a bunch of different things to do. 

For example, even I had that once, you know, a few years ago, I was using this solution is like $15 a month. Not a big deal, right? So I wrote, hey, I want to cancel. By the way, most companies when you write them that they say yes, sure. Here’s your reimbursement. Some companies actually get on the phone with you to say, Hey, can you show me what you’re trying to do? Maybe like I didn’t do it properly. But it would be it’s a very minimal amount like $15 a month, they would actually say at one one of them say what were you trying to achieve?

They gave me like five different typical use cases. And I picked one of them and then they said can you shed some more light on what you know, give us some examples. And I sent them another email with some more examples and by All this time I’m not churning yet, right? Because they’re engaging me with value discussions over email. Then they sent me a PDF file with step-by-step instructions on how to set up things in their application to get that specific outcome. That’s why I didn’t churn it for another year, at least a year or two, just using this solution until the use case was relevant anymore. 

But I thought that was admirable because you could retain customers even have a very low touch or sort of like almost no human touch, a very scalable way. And then for high-touch, of course, you know, you’re going to have a specific playbook for mergers and acquisitions, for losing your key stakeholders, your admin, your executive, you’re going to have some when a competitor name is being dropped in a conversation, etc.

You’re going to have playbooks to fight churn for these high touch models that are pretty typical of the team and should have a specific process in place. And then you should definitely have a process for escalations, what happens within emergencies. Right. Like sometimes we do have an emergency case with a customer, the way we react to that emergency really helps us shine through. And instead of having a churn crisis on our hands, we can actually create an advocate. And so depending on where the customer is, the customer is in the like, at a very high level at least Is it a long tail or you know, high-end strategic customers, you should have a very specific strategy in place on how are you going to retain them.

Q: How soon should you start the renewal process?

A: Well, the renewal process is really about having an internal conversation first to discuss, you know, what is our projections or forecast of renewal. And so when should you start internally start talking about it? I think the concept of when do you start is off from the get‑go, um, I think the 

highest mature customers that, uh, I’ve worked with actually had a place where the team can constantly update their forecast for renewal anytime during the year, meaning they opened the renewal opportunity as soon as the previous contract was closed. So the first-year contract was renewed. Then the second year we rule opportunity was already opened in the CRM solution. And there was a field that says, okay, this is the renewed amount, the amount that is due for renewal. And this is my forecast. And so I can project, are there going to be some down Salesforce, specific items, upsell on specific items? 

Renewal Template

What am I expecting? And so when you do that, and you commit the team to update this on a regular basis. You hold them accountable for updating it, and you’re reviewing it with them on a regular basis. Your projections are probably going to be off by one or 2% versus 10, 20%. 

And you’re constantly going to have a pulse around what’s going on, where your opportunities for upsells are. Where are your risks for churn? If you do that on a consistent basis, you probably have a little bit better probability to detect when churn is even partial churned, by the way, risks are, and then you can handle a mitigation strategy or a lot sooner. So if I start the renewal process six months ahead of time, by just having an internal discussion, it might be too late because the actual customer has decided that they wanted to churn nine months prior to the renewal that you just don’t know, maybe you miss that opportunity to really effectively and time in a timely manner, uh, address the issue. 

Uh, so, but there are some things that you can do to optimize the renewal process in general. You know, when do you notify the customer? When should you have a QBR? Probably you should have a business review or an executive business review with the customer a few months before the renewal, or once a year if they have a multi-contract or annual so that you can always talk about long‑term vision. I find that the companies that put in place a success plan, that’s not three months out, but actually, a year or two out, have a better probability of renewing.

Even if the actualized ROI is lower than the renewal rate, meaning they’re the customer is going to pay you for what they think they’re going to get in a year or two from now versus, you know, are you beating the ROI to justify the renewal for next year and given nothing is going to happen? You know, that’s a much harder sell on renewals. So there are a few tricks that you can do to secure the renewal. It’s not necessarily around timing, but are we having the right discussions, and are they done by the, with the right people and not a week before, kind of want to do it a few months before. And then am I gauging that throughout the life cycle of the customer? 

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

A: Well, your numbers are going to go off. I guess your numbers are going to either remain the same or get worse. And I’m talking about both leading indicators and lagging indicators if you track them. I think one of the main issues is that we don’t track. 

We just have a gut feeling around what happens with customers. We hear customers being disgruntled, or we know that there’s like a conversion rate from trial to paid customer is low. But I think that you know, we know that we’re not doing great, but I find that most, most companies that are non‑food grades are not really good at measuring most of the stuff, the important stuff, they don’t have, their leading indicators well‑defined, they might have some lagging indicators like customer health score and gross churn, maybe net retention rate.

And that’s it maybe NPS that’s, I think that’s too light. Um, I think if that’s all you’re doing, you better have a killer product and an easy use case and super sticky solution. So you don’t have to, but if that’s not the case and you are experiencing customers leading you and it does hurt your business, then you know, the first thing you need to do is ask yourself, am I tracking the right things? 

The right metrics, the right processes, and also asking questions is crucial. Am I driving accountability by monitoring what the team is doing? Like, there are a lot of things that you can track, but you’re not probably not having good visibility to what’s going on. And then you can really share the value you’re adding to other teams. You probably don’t have great cross‑functional collaboration. You probably have murky, unclear roles and responsibilities. It was like a lot of stuff.

So you can’t really measure, you don’t have specific KPIs for each team. Like there’s a lot of like symptoms when there’s churn. And most of it I find has to do with, are we tracking anything or are we tracking enough? Are we tracking the right things? Um, and so I find that a lot of times management is lacking data data‑driven decisions, and capabilities. And so I would just double click on that. Is this the case? And if not, then maybe, maybe we do have some processes that we basically just need to roll our sleeves and, and fix, and maybe add some tools in place 

Customer Onboarding Template

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

A: I think it’s down to communication skills, uh, you know, when a customer expresses that they want to cancel some people don’t handle it very well. They are, they’re not equipped to handle that conversation. They might feel like they themselves, as a CSM failed the customer. And so it becomes a personal instead of, you know, approaching the conversation with a professional manner to understand the reasons to come in with a sense of, can we fix this?

What can we do, or at least collect the feedback so that you can bring it back to the team? So from a strategic standpoint, we can fix things in the customer journey. And so those are like probably the biggest mistake is that probably the biggest mistake is when customer success leaders are not coaching their customer success managers or don’t provide training on how to handle difficult customer conversations. 

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

A: If I have any tips for them on how to handle churn? Yeah, well, I would say, first of all, try to analyze why churn happens. What are the top 10 reasons for churn quantify the churn? How many customers have you had for each reason in the past two years, and what were their total annual revenues? And so how much churn was really impacted in terms of revenues lost for each churn reason? Can you quantify each churn reason and then see, how they, are how they sort like close the, and what is the key reason for churn? And, I think when you do that, you can actually show management. Why is it important to handle that situation?

So again, if you can quantify that a churn reason was that a feature was missing in the product. That caused a $10 million churn overall last year, then you’re more likely to get that feature fixed or added to the product roadmap. Or if it’s because the onboarding team lacks bandwidth or resources, then you can pinpoint and pitch why you need additional ones because it’s not just about being profitable with your customers. It’s about saving $10 million next year. So it would help to just align investments from the executive team to help you diffuse churn better. Um, so that’s, that’s number one. 

Second of all, look at your strategy. Do you have policies and processes in place to address issues that cause churn? So for example, if your number one issue is that customers churn due to merger and acquisition, which is completely out of your control, really take stock. Do you have the right, what we call a playbook in place how to handle things when a merger and acquisition happens? Because a lot of times actually other companies convert this situation into an upsell and expand into the parent company. Do you have the right processes, templates, and resources trained to handle the situation appropriately, or are you lifting them right? Losing customers whenever this happens. 

So these are the two things that I would look at.

  • Do we have the right playbook?
  • Do we have the right investments from the management team?
  • And can I prove why I need it?
  • Do you need a retention team? Do you have a specific place or just save customers that are, you know, a little smaller, deals?

And just some quick things that we can introduce, even within the product, you have options for, you know, extending the offer, discounting the offer or whatever, whatever it is to just add value and also figure out why customers are leaving when it’s a self‑serve strategy. 

Most companies and most leaders track the thing. They track churn by tracking gross retention rate, but they don’t drill down. Leaders don’t track reasons. They don’t quantify the impact of each reason so that they can justify the investment. Those are the kinds they don’t track leading indicators so that they can show that they’re improving toward reduction in churn. Even though we can see those numbers change yet because it takes six to nine months to actually start seeing the habits. That’s why they’re called lagging indicators. So those are the things that we need to fix immediately as customer success leaders and CEOs, by the way, this should be top of mind for any company that has some churn that they want to diminish.

P.S. – The main image has been taken from

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.