Komiko can help your account management renewal. Working with our customers, we analyzed 7,432 renewal opportunities across a variety of different businesses and the results are remarkably consistent. Ninety days prior to renewal, customers can be divided into five categories based on their likelihood to renew: likely to renew, above average, average, below average, and churn risk. The graph below shows a typical distribution of these groups and their renewal rate. In most cases, the bottom two groups represent 20-25% of the customer base and about half of the overall churn.
This distribution exists in your customer base before the push to renewal even starts. Being able to identify these groups has the immediate benefit of allowing you to pay special attention to the bottom two groups. These are high risk customers that you need to rescue. For them you should have a different plan and proactively inject new voices and new ideas into the relationship with the customer.
How can these account management renewal groups be identified?
Using machine learning to analyze customer engagement in the 180 days leading into the renewal period, we were able to create these groupings for each our customers in each customer segment they serve. The model analyzes hundreds of combinations of time periods and engagement metrics create a unique predictive model for each segment.
Four of the easiest metrics to understand are number of contacts engaged, number of meetings, and inbound and outbound email communications. If we just look at those metrics, we find that there is clear differentiation between the level of engagement for customers that renew versus those that churn. Engagement levels are consistently lower for the bottom two groups. The graph below represents this difference as percentage of the level of engagement found in deals that are ultimately won.
Losses have lower engagement in all categories. Wins have roughly twice as many contacts engaged. They also exchange email with you roughly twice as much and meet with you almost three times as often as those that churn. These metrics are true before the push to renewal even starts. The number of meetings, emails, and contacts will vary based on the size of the account, but the ratio of these numbers in an unhealthy deal to a healthy deal is clear.
Fundamentally, maintaining a positive level of engagement with the customer is the reason customer success teams exist. A great customer success organization engages proactively and consistently with all their customers. Your customer success tools should tell you which engagement factors (meetings, emails, active contacts, …) matter most in each segment, set targets for most important ones, and insure those targets are met. That’s what being proactive means and proactive is the defining attribute of a great customer success manager.
In future installments of this blog series, I will dig deeper into the actual metrics that come up most often, CSM to account ratios, and other things that you should think about when designing your team and your engagement plan.