Anyone who has owned a churn number will recognise the end-of-quarter moment. The renewal is in the forecast, usage looks fine, nobody has raised a flag, and then the cancellation arrives. Cue a week of hurried calls and a review that concludes, more or less, that nobody saw it coming.
I’ve sat in that review more often than I’d like, and from both sides of the table. By a strange quirk of professional fate, I spent fifteen years in account management and new business, then moved into product marketing, where I was responsible for how the product was sold, where it was sold and who it was sold to. Product management followed not long after. Poacher turned gamekeeper, more or less (I’d like to think I was a fairly decent poacher).
The move taught me something I hadn’t fully appreciated as a seller. Anything mis-sold, mispositioned or sold to the wrong person doesn’t go away when the deal closes. It lands on product and customer success, usually around renewal time. As part of the leadership team I shared the churn number, and the same kind of cancellation happened on a number of occasions, nearly always for the same reason.
A customer can use your product every day and still leave
What the customer bought
Customer success could usually tell you how much the product was being used. What they often couldn’t tell you was why it had been bought.
Somewhere in the sales cycle, a buyer had built an investment case. They had stood in front of their boss and promised something: more revenue from a channel, a process that needed fewer people, a number on a dashboard by a certain date. Our product was how they were going to keep that promise.
Twelve months later, the programme they were running had wandered away from that case, and nobody on our side had checked in often enough to notice. The buyer couldn’t show the return they’d promised. From their side of the table, cancelling was the sensible thing to do.
Where the clock starts
What I’ve noticed is that most vendors treat the signature as the finish line. Sales gets paid, the account is handed over and onboarding begins. For the customer it works the other way round. The day they sign is the day they take on the accountability. They’ve spent budget, usually some political capital too, and now they have to prove it was worth it.
That’s what I mean when I say churn starts the moment a contract is signed. The renewal decision starts then, and it gets measured against what the buyer promised internally, not against how often they log in. A customer can use your product every day and still leave, because heavy use of the wrong thing doesn’t get anyone a good review at year end.
It’s also why the promise made in the sales cycle matters so much. It’s the one the customer will be held to.
Two kinds of checking in
There are two conversations a vendor needs to keep having after the sale.
The first is about the product: how they use it, what they want from it and what annoys them. Most companies do some version of this, even if it’s a survey nobody reads.
The second is about the programme: what the buyer committed to, what their objectives are, who they answer to, and whether they’re on course. Far fewer companies have this conversation. It’s the one that predicts the renewal.
This week
Take your ten biggest renewals over the next two quarters. For each one, write a sentence on what the buyer told their boss your product would achieve, then ask whether they’re on track to show it. If you can’t write the sentence, treat that account as at risk, whatever the usage says.
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