LSA16: What Google Data Says About Small Business Advertiser Churn
March 8, 2016 | Contributed by: Wesley Young
So much of our attention, even at our conference is on client acquisition. But Kristin Coit of Google said that it costs 5-10 times more to get a new client than to retain one.
During Kristin’s session at LSA16, we learned that Google is trying to help marketers tackle the problem of churn and has made it one of their “20% projects”, indicative of the importance it views the issue. Adsense, Gmail and Adwords were all products that were started with the 20% project tag.
Marketers can accelerate growth by looking beyond just client acquisition. Upsell and retention play equally important roles in growth. Marketer revenue can be simply calculated as Revenue = Acquisition + Upsell – Churn.
Upselling and churn go hand in hand. Kristin cited stats from Marketing Metrics as follows:
- The probability of selling to an existing customer is 60-70%
- The probability of selling to a new prospect is 5-20%
Reducing churn will boost return sales or the sales of other products/services.
Google defines churn as an Adwords account that has been inactive for 6 consecutive months. But not all churn is controllable. Google found that 52% of churn as they define it can be addressed as caused by dissatisfied clients, price factors, and loss to competition.
The biggest driver of controllable churn is a function of (1) customer expectations, and (2) perceived value. Here’s some data-driven tips from Google on how to reduce churn:
- Communicate ROI: Google found a direct relationship between reporting quality and churn rate. The more frequent the reporting, the lower the churn. Related, more frequent reporting correlated to higher ratings and higher satisfaction of those reports. 54% of customers rated reporting as excellent or very good when they received weekly reports. 48% did so for monthly reporting and only 14% did so when reporting was less often.
- Don’t let customers drop for inaction: Google found that 26% of customers were not asked to renew or extend their campaign. It’s important to track contracts and proactively contact customers in advance of expiration/renewal time. Also, Google sees a trend of greater success with longer contracts that have a chance to prove their effectiveness. Month-to-month contracts may not give a campaign the chance to succeed when compared to 6 or 12 month contracts.
What can you do to win clients back? Google found that 58% of customers indicated they would return if they:
- Saw results or a better explanation of results
- Received additional/different pricing options
- Received more or better customer support
So consider offering incentives to return such as a free month or free add on service. Have a process and/or a retention team to handle cancellations. Survey your customers and offer rewards to your long-standing customers.
Google also has some programs that help partners support retention and reduce churn:
- Predictive churn program – receive a report on monthly at risk accounts or churn symptoms.
- Tenure analysis – Reports on advertiser tenure and status of historical performance.
- Churn History Analysis – historical view of partner churn against peers for benchmarking.
- Customer Satisfaction survey – facilitate CSAT surveys to capture feedback from advertisers and identify areas of improvement