“If churn isn’t in single digits, it’s absolutely the only thing you should be focusing on” – Josh Pigford

According to KISSMetrics it can cost “7x more to acquire new customers”. Great marketing and sales efforts and monetary investments go in to acquire customers. This is an earned asset, yet it alarming to see that so many organizations fail to utilize this asset to fuel their growth.

Why are your customers breaking up with you? 

You are an innovation genius, with your product or service, you want to change the world for better. And kudos to you that you did your initial customers and it looked all sunshine and rainbows in the end. Well, probably it was just the beginning before the first storm would knock your doors. Things were going great, you were set to get more customers with your strategy. Meanwhile, when you looked at your initial customers, guess what! They are gone.  So you made impeccable product. Spent a considerable amount of money on branding. You also made a superhero appearance when your customers were in dark time while using services. 


And you are left thinking about what just happened with you. Well, there are majorly two reasons why this would have happened: Either they have gone to one of your competitors or they just don’t need that service, be it coming from you or one of your competitors. To understand this better, consider that one morning you get up and have a billion-dollar startup idea and you are excited to take over the world with it. And you start looking for a co-founder who would share similar values and passion and would fight the battles next to you. And you sold the idea of joining you to the most eligible co-founder. Congratulations!! 

You were happy, your partnership and startup were flourishing. But your co-founder has started cutting discussions short, started showing up to work late and started leaving early, missed appointments, bipolar arguments and list goes on. It looke normal to you until one fine day he/she decides to leave. Chances are high that he had issues with working in your venture, rather than exploring other options. Or maybe he just lost the drive and passion which ignited them earlier. 

Same is the scenario with your customers and your sales team is left to wonder what to do! Your customer THINK that they don’t need your product/ service anymore. Good news your sales team is proficient enough to reach out to them and build a sense of need in their minds to win them back. 

Why is it essential to plug the holes in the bucket: 

Precisely stated by the growth leader of the unicorn startup that tuned out to be a 97 billion dollar empire. If you look from a sales and marketing perspective, a prospect goes from an awareness stage to closer. In the awareness stage, there could be a possibility that your customers did not even know that there is a problem with their business and your solution could solve it. Now that they are well educated about how such solutions even work, the curious cats might start strolling the neighborhood to check their options.

It does not fair to you that you watered the tree, but cannot enjoy most of the fruits. If this was not enough to consider reducing your churn rates. Take a look at these Customer acquisition & retention marketing stats (Source: OutboundEngine

  1. Increasing customer retention by 5% can increase profits from 25-95%.
  2. The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%.

In the graph below it become self-explanatory that once an organisation becomes 5 years old and is out of the startup phase, it is a better payoff to focus on generating recurring revenues from existing customers (Green curve) rather than revenues from new customers(blue dashed line).

Let’s introduce a concept called “Negative Churn”. Negative Churn happens when the expansions/up-sells/cross-sells to your current customer base exceed the revenue that you are losing because of Churn. It’s an amazing result. The business is nearly 116% bigger with a negative churn rate of 2.5%. Clearly getting to a negative churn is one of the most powerful accelerators for growth. (Source: For Entrepreneur

How AI can help:

Let us get back to your unicorn startup which you were building. Have you figured out why your co-founder left? If you want him to stay that is the question you need to answer, to begin with, because bringing in a business partner with the same zeal and skills would be extremely difficult for you. And you wish if knew he/she was about to leave long back, you could have had that conversation and sold them the idea to stay.

Sales professionals are stuck with that question on a daily basis. There are multiple factors and myriads of data that would make a customer leave, which is very difficult to be analyzed with existing solutions. Does it look inevitable issue that will haunt the sales and marketing team till the internity? Well, AI-powered churn reduction solution which is built on the base of machine learning, is here to empower the sales and marketing team. 

While data coming in from multiple sources at a fast pace, it could be difficult for humans to process them considering the dynamic nature and data being in siloed structure. But with machine learning models running on Google Cloud, these data silos start behaving as a unified data source and empowers the sales team by flagging customers who might fall of the customer base, so that they can intervene and retain those customers. 

Here are two case studies where AI-powered churn reduction helped the organizations: 

1. Data Virtualization leader utilised ML to Improve Renewals. Subscription classification churn model showcased 75%-92% accuracy

Being the leader in virtualization products- specializing in corporate IT systems and cloud service providers, their products are used in many enterprises across industries and are recognized for driving innovation. This is echoed in the client’s own company culture, which is keenly focused on fostering innovation and change and prompted their Renewals and E-commerce Teams to look to Machine Learning and Artificial Intelligence in the cloud as a means of showcasing innovation to help drive business benefits.

The subscription renewal process was based on simple rules, and the process could not scale alongside the need to handle multiple low value renewals. The then-current methods could not adequately assign risk to renewals, resulting in loss of revenue. Also, they detected many now well-known companies (such as Uber and Airbnb) that had placed e-commerce orders. The rapid growth of these companies surprised this visualization leader, who had no way to proactively detect these companies until they were household names.

With the AI powered churn reduction solution built by Pluto7, they were able to drive innovative process improvement and saw tangible business benefits like identifying customer churn rate up to an accuracy of 92% and 2-3 potential high value customers through the Diamonds in the Rough model. 

2. The worldwide leader in IT and networking used to reduce time to generate sales quotes from weeks to minutes:

World’s largest networking company. The global corporation, based in San Jose, California, develops, manufactures, and sells networking, telecommunications, and other equipment as well as security and other services. They are growing their datasets by about 5TB a week. That dataset growth without a doubt comes from a growing customer base. 

Increasing the customer base increased the burden on the sales team to retain these customers. Manual processes for analyzing data collected from the Large Install Bases slowed validation results to 3-4 weeks. Slow turnaround limited the sales team’s ability to deliver a renewal quote for customers. On top of that manual processes introduced a lot of errors in analysis, causing further issues with customers. Consequently, their churn rates increased.

Pluto7 helped this world IT leader by complementing their existing on-premises infrastructure with the cloud-based data platform. Using Google BigQuery to quickly analyze large datasets about customers Install Bases, a platform was developed that could scale quickly for analysis and also set the stage for future use of advanced analytics. As a result time 

we developed a platform that can scale quickly for analysis and also set the stage for future use of Advanced Analytics (such as machine learning). As a result, for each large install base, the time to get the results was reduced from 3-4 weeks to 50 minutes.  Elimination of errors also improved the overall customer experience. Overall business transformation in this scenario gave an edge to sales team to get a deeper connection with the customers and reduce churn rates

Does your business need this pill?

Whether you take the red pill or the blue pill, it is completely your choice. But before you make the choice, ask yourself two questions:

  1. Is my business existing to generate profits or is it a non-profit organization?
  2. Does it matter for my organization if my customers/subscribers start falling out?

Whether your organisation is for profit or for non profit, you have customers or followers. One aspect that everyone is sure about it is that you are on the ship to reach the destination and not to kiss the ocean floor. Growth is what you will want to compromise on. Although the discussion was around subscription based IT and software companies, but who knows that AI based churn reduction could help you in keeping your Youtube subscribers stay loyal. What this entire discussion means to you is one thing : SUSTAINABLE GROWTH. If this rings a bell for you wish to discover how AI based machine learning models can help your business then follow us on linkedin or feel free to reach out to us at contact@pluto7.com and we will never let you leave empty handed. 


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