ArticleBest PracticesSeptember 2, 2015
Churn is Psychological; Here is how to Defeat it. Image

Churn is Psychological; Here is how to Defeat it.

By Gainsight Team
Recent studies have shown that failed onboarding and implementation are the biggest reasons for churn in the software business. It’s no surprise though; the time between the purchase of the solution and seeing first value is generally a period where the buyer is experiencing buyer's remorse. This bout of remorse is not because your product or service is bad (it might be), but it has more to do with a normal psychological trick we play on ourselves.

Abstract thinking sets buyers up for failure

When people are making a purchase, they tend to think very abstractly about the transaction. This might be best explained by thinking of a quick vacation out of town for the weekend. It sounds amazing to unplug for some much needed rest so you book the hotel and the buy the plane tickets, but then, as the trip nears, you don’t have any clean laundry, the car broke down so money is tight, the trip is right before a big board meeting the next week, and who is going to watch the dog while you are gone?  You see, the gritty details of a purchase have the biggest capability to make us the most happy or unhappy with our decision in the first place. We know this because research finds that our happiness is predicted better by the details of our everyday lives than it is by our overall life circumstances (see Kahneman et al. 2004 and Kanner et al., 1981). The same way that the little details in life have the ability to make us the most happy, the little hassles have the ability to make it the most burdensome as well. 

So, buyers are predisposed to be disappointed? 

Well, yes. This is why selling and onboarding a new customer is so tricky. If you have done a great job selling the product, identifying your prospect's pain point, and mapping your technology to their vision, the prospect will be living in the abstract, they will be thinking about all of the opportunities ahead. They are not thinking about data quality and integration challenges, a 90 day plan to train 30 staff members, and setting up and following a detailed project plan. At this phase is where the euphoria of the purchase can quickly turn to remorse. When presented with the gritty details of making their shiny new technology solution successful, the prospect immediately starts to panic and the remorse sets in. Here are 3 ways your onboarding and implementations team can battle remorse, set the customer up for success, and keep the euphoria train rolling.

Onboarding and Sales Alignment

Much has been written about Marketing and Sales Alignment as key to a scalable customer acquisition strategy. I would argue that Sales and Onboarding/CSM alignment is key to a scalable customer success strategy. The bottom line here is that your sales team cannot tell a prospect that they can be up and running in 5 days when it takes 60 days to onboard new customers. They cannot tell them that your solution is ‘plug and play’ when it actually takes significant lift from their team. The more the sales process diverges from reality, the more likely it is for the customer to feel duped and regret their decision. This sounds common sense, but it’s followed a lot less often than you may think. Another important part of Onboarding and Sales Alignment is nailing the handoff. Messy handoffs can leave customer feeling confused and can cause their confidence to wane, quickly. We can spend a whole post talking about this process (well would you look at that), but analyzing your handoff process is critical to new customer happiness.

Details and Context

You should expect that your brand new customer is afraid of the details that go along with implementing, and that’s ok. If your onboarding team has all of the details accounted for and mapped to a timed project timeline, you can easily calm your customer’s fears. You see, the part of the decision making process that gets called into question by details isn’t the fact that they exist, it’s the fact that they are difficult. In the initial onboarding call, you should make sure they have a very clear expectation of how the process will go, a detailed list of tasks that need to be completed on the way, and (most importantly) an understanding and reassurance that you and your amazing team of onboarding and implementation specialists are there to make this process work. The more precise you can be in explaining who is responsible for what in the process plan, the smaller you can make the process seem to the prospect. The point is that having all of your details in order is critical, but so is the context of how those details are going to get accomplished. The additional context will put the customer at ease and make them feel like they are still in control of the project and that vision they saw in the sales process isn’t compromised.

Celebrate the milestones

As you hit milestones on your path to 100% implementation, make sure to celebrate with your customer. I don’t mean throwing a pizza party every time a list item gets crossed, I simply mean recapping your position in the plan and letting them know they are making great progress. In the times where the onboarding team and the new customer team are off and executing the plan, people naturally start to wonder “am I doing well or not?” or “is this process going smoothly or not?” Take every opportunity to let them know when you have crossed an important milestone, congratulate them, and reassure them that they are on a clear path to success with momentum gaining. They will appreciate you showing them the light at the end of the tunnel.  Bonus: Humans are wired to reciprocate givings of thanks and success. Celebrating and thanking your customer and their team will likely result in them thanking and acknowledging you as well which will only build goodwill between to two groups. The best case scenario in Onboarding is a feeling that you and your customer accomplished something big by working together well. The more they feel that along the way, the more likely that will set the tone for the relationship to come. Gainsight’s own Lincoln Murphy famously said “The Seeds of Churn are Planted Early”. What we mean by that is in very beginning stages of your relationship with your new customers there are unique conditions that put the relationship at high risk, no matter how great the product is. As the relationship gets older, the trust begins to harden, there is a track record there that instills long term confidence in your solution. But churn lurks around every corner, and each step in the customer journey is a chance for the hassles of the details to have customers question their decision making and your solution. It’s your team’s job to allow the prospect to focus on the vision and goals, nail the details, and win with your product. In thinking about the psychology of the buyer, your onboarding team actually might be the biggest predictor of success of your customers.
GT
Gainsight Team

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