There is no single path for growing a software business. What works for one SaaS likely will not work for another as every product and market is unique. Finding product-market fit and acquiring the first customer is only the beginning. Creating a sustainable sales and marketing engine, hiring the right team members, handling operational and administrative tasks...the list of "must-do" activities stacks up in a hurry. Within the neverending list of critical things to do: serving customers and keeping them happy. What if there were a way to turn the customer experience into a driver of growth?
Thankfully, there is and it comes in the form of Internal Champions.
In this post we will dive into churn reduction and how putting your best customers to work for your business can be the bridge to accelerated growth. Understanding the value of not just new but also existing customers is of paramount importance. By understanding churn and leveraging Internal Champions, you can make the customer experience a growth driver for your software business.
Churn, also referred to as customer turnover, is the rate at which products or services are abandoned by consumers. It is considered a negative event for a business because churn can lead to reduced revenue and customers leaving the service for good.
For software businesses, churn most often occurs when someone purchases the product or service but does not use it enough, does not recognize enough value, or they feel that there are cheaper alternatives available with equal or better quality. This behavior often shows that the product was not valuable enough to keep on paying for it. Another key driver of churn in technology businesses is a poor customer support experience. Churn means lost revenue and other potential benefits happy customers bring. The potential for upselling and cross-selling goes out the window. Positive referrals and word of mouth do not happen. Further problems may occur if this customer reaches out to friends about the service to share a poor experience and encourage them to cancel or leave as well.
Negative net churn means expansion revenue from cross-selling and upselling existing customers outpaces the revenue lost from canceled customers. In order for a software company to maintain healthy growth, it is important to have a net churn rate that is in the negative. In short, a negative net churn rate means that even with a few canceling customers, active users find increasing amounts of value in the service or product.
The term "net" is important here because it means that you will be subtracting those who switched away from those who came onto your platform. Negative means that there are more of these people coming and adding increased amounts of revenue than customers leaving. This can provide a great deal of stability for the business and its assets like employees and resources. Negatives rates also allow companies to grow at an increased rate.
Negative net churn allows businesses to grow while keeping their customer base stable. This happens because the customers who stay with the company generate enough revenue to more than offset those who leave. Maintaining a healthy growth rate is important not just for top-line revenue growth but also for attracting investors and new employees.
The best way to avoid churn is to have internal champions at a customer account. Just as the customer success or support team is advocating for the customer at the vendor company, an internal champion is an advocate inside the client company. This advocate is the inside voice that helps promote the product or service to colleagues and coworkers.
As the name implies, an Internal Champion is an individual who is passionate about a product or service and has a considerable amount of knowledge about it. They are usually employees of the company. In many cases, their credibility and authority come from being experienced and tenured in the space and at the company itself.
Internal Champions can be found by looking for individuals who are vocal about their love for the product, share knowledge with others, and are always asking how they can help improve the product.
Internal Champions often share many of the same professional traits. While this list is far from comprehensive, it is useful to recognize the behaviors and motivations of Internal Champions. Doing so makes it easier to identify these individuals and forge meaningful relationships. Here are a few characteristics commonly found in the best Internal Champions:
Goal-oriented - Internal Champions often see the big picture and understand the desired outcome for a team or organization.
Expert in the product they love - Internal Champions endeavor to find even more utility and value in the tools they use. In many cases, not only are they champions but in many cases are also power users.
Enjoys problem-solving and growing the business - As with being goal-oriented, Internal Champions enjoy the breakthrough moment of solving a challenge and pushing the business or team forward.
Good communicator - Almost by definition, Internal Champions are good communicators. This goes beyond simply teaching or telling people about a product or application. Good communication is also about listening and understanding. Internal Champions listen as well as inform.
The first step in reducing churn is locating your internal champions. These are the employees who are already passionate about your product and have a desire to see it succeed. They often have a good understanding of how the product works and are vocal about their support for it within the company.
Internal Champions can be identified through various methods like surveys or interviews. It is important to communicate with them and find out what their thoughts are on the product. This includes understanding what they like about it, what needs improvement, and how they think the product can be marketed better. Some companies go as far as creating a “Product Advisory Counsel” where the input of Internal Champions can be formalized and integrated into the product development process.
Once you have located your Internal Champions, it is important to keep them engaged and informed about changes that are being made to the product. This will ensure that they continue to be vocal advocates for your company and product.
Internal Champions can play a critical role in reducing churn by helping to build a positive image of the product within the company. They can also provide feedback on ways to improve the product and market it more effectively. Keeping them informed and engaged is essential in making sure they remain loyal advocates for your company.
If these Internal Champions are not informed about changes being made to the product, then they may become disinterested and stop using it themselves. This can lead to them encouraging others within the company to do the same which would have negative consequences for the business.
The best way to keep these advocates is by communicating with them often. It is also important that their feedback is taken seriously because this will help provide a better experience for everyone within the company.
By keeping Internal Champions loyal, we can reduce or altogether eliminate churn in our business. This means that there will be more people using the product who are dedicated to continuously improving it for everyone else. It also means that there will be fewer people leaving the product because they are satisfied with its current state and enjoy using it.
If you want to grow your business while keeping churn low, then keeping Internal Champions around is essential. Ensuring that they remain happy and willing to work towards improving the product will go a long way in helping reduce churn within your business.
Putting customers to work for you is a great way to foster growth and reduce churn. Not in the traditional sense, of course, but customers do indeed go to work for your business every day with the way they use your application, who they share it with, and how they help other users. Locating Internal Champions and developing relationships with them is important to gathering information and sharing it as well. Internal Champions will promote your new features in the best of times and help quell talk of cancellation (churn) in the worst of times.
Lantern analyzes how customers utilize your software and makes identifying and connecting with Internal Champions, Advocates, and Power Users easier than ever. To learn more about how our platform identifies Internal Champions at your key accounts, contact us here.