Corey Talking to a Camera About Detecting And Solving Customer Churn
Featuring Corey Pierson, CEO and Cofounder of Custora
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The top 10% of your customers are driving 50% of your revenue. There's a next sentence: often, if we look year over year, the revenue of that group, that 50%, if we look at what they spent in 2017, what they spent in 2018, you lost 50% of that revenue.
Think of that: 25% of your revenue, you lost by customers cooling off, your great customers cooling off or churning out completely. 25% is a lot of revenue. It matters a lot to detect when people are downshifting or fading out.
First things first is just to put something in place — people are fading and how are we reaching them?
The second piece of that is: How are you determining someone is fading?
Unfortunately, what most retailers say is that we've got a rule: 90 days of inactive time, we send out we miss you, or 365 days.
But, again, going back to the customer economics here, we love those loyal customers. We love that 10% that drive 50% of the revenue.
Turns out, they purchased pretty frequently. For most brands we work with, if they got a rule that's like at 365 days, that sucks. They're now inactive. The reality is those customers were buying every month.
Why didn't you reach out after two and a half months?
You don't solve churn by having a Hail Mary pass — it may be a well-timed Hail Mary pass, but it's a Hail Mary pass at the end, after they're already showing that they're veering off.
You want early indication of maybe the new product line isn't clicking with this segment, and how do we adjust. You want early indication that maybe a certain demographic pocket of customers is not shopping as much this year.
Huh, is there a competitor, is it maybe something to do with the big ad campaign we're running? Some of these things are levers that you can pull immediately to course-correct, and some of them aren't, but you still want to know early so you don't make the same mistake as you're making your buys for next season already.
And so there's a huge part of the automatic churn program that's not just email — common theme here, if you want to be customer-centric, it's not just email, it's about knowing who the hell these customers are, everything about the ones that are fading, and flowing that across the organization as well.
But all of it starts with having a program. It's got to be automatic. It can't just be ad-hoc analytics that you ask for here and there; you need those reports flowing to the teams every single week or every single month. You need the emails going out every single week in a well-timed way, you need to be testing things all the time.
That's the organization that's actually mitigating and turning that 25% of loss into 20% or 15%. Again, these are giant points of revenue we're talking about, when you really align and get a program that's holistic in place.