Growth HackHow Groove decreased Churn by 71%
Groove make Customer Support software. You might have seen their support widget on the bottom right of some websites that you have visited.
Groove feature a few times in Growth Hacks. They have a really cool blog where they share their journey with numbers.
Measure
Groove were having a problem with churn. Their churn rate was 4%, which was reducing their MRR quite a bit.
4% sounds quite low, but Customer Support software is sticky. This means that it’s difficult for users to leave one Customer Support provider and go to another. It makes getting new customers difficult (expensive) but means that it should be easier to have a low churn rate.
Groove had been measuring customer churn and what those users were doing in the application for a while.
Find the bottleneck
Groove looked at a few metrics for customers that churned vs customers that stayed.
They found a few numbers that were very different between the churners and non-churners:
- Length of first session. Churners had shorter first sessions. Possibly because they were getting stuck at an early onboarding step
- How long it took to complete certain tasks
They put cut-off times for each of the measures above and called these Red flag Metrics. Any customer who had a short first session length or took too long to complete a task triggered a red flag metric.
Task duration length is an interesting measure. Groove noted that the White House Office of Consumer Affairs said that 96% of customers that have a bad experience with a company will not tell the company.
Bad experiences can be a leading indicator of customer churn. So the “how long it took to complete certain tasks” indicator was used to identify users that had a bad experience so that Groove could intervene.
Intervening with customers who triggered Red Flag Metrics would hopefully reduce churn. Reducing the number of customers who triggered a red flag metric should also reduce churn.
Experiment
Groove ran an experiment where they started intervening with customers who triggered red flag metrics.
Anyone who spent less than 2 minutes on site in their first session got a targeted email offering a one-on-one strategy session.
Anyone who triggered a red flag metric because they took a long time to setup an integration got an email asking if they wanted one-on-one help setting up that feature.
Users who setup a feature but started to show lowering engagement got an email with case studies for similar businesses. The purpose of this would be to reinforce benefits of the product and motivate the user to continue using Groove.
Users who received interventions had a 71% lower churn rate. That’s pretty impressive.
My favourite part about this experiment is that the interventions genuinely help the customers to achieve success in their business and in the product.
Next Steps
Groove actually had some really cool next steps.
They got their red flag metrics and looked at customers who had been performing the best. That is “who completed these tasks the fastest” and who was the most engaged”. These are possibly Groove’s happiest customers.
They emailed these customers and asked for referrals. Pretty cool, huh. They got their churn prevention system, flipped it upside down and used it as a customer expansion system. Super cool.
“How to repurpose a churn prevention systems as customer expansion systems” is something I will be keeping an eye out for.
The cool part is, if you can use a churn prevention system for customer expansion then you can justify investing a lot more into it.