{"id":9434,"date":"2017-08-09T10:51:31","date_gmt":"2017-08-09T08:51:31","guid":{"rendered":"https:\/\/chartmogul.com\/blog\/?p=9434"},"modified":"2023-08-10T17:10:55","modified_gmt":"2023-08-10T15:10:55","slug":"tips-tricks-sales-cycle-length-churn-rate","status":"publish","type":"post","link":"https:\/\/chartmogul.com\/blog\/tips-tricks-sales-cycle-length-churn-rate\/","title":{"rendered":"Tips &#038; Tricks: Analyzing sales cycle length impact on churn rate"},"content":{"rendered":"<p>Knowing which customers are at greater risk of cancelling\u00a0is key to reducing churn. Segmentation in ChartMogul lets you find and view\u00a0groups of\u00a0customers that are a greater risk of churning. One key indicator of high churn risk is the length of time it takes to convert a\u00a0customer to a paid plan (sales cycle length).<\/p>\n<p>&#8220;Time to convert to a paid account&#8221; is a proxy for\u00a0many issues related to on-boarding, including:<\/p>\n<ul>\n<li>Technical difficulty\u00a0setting up the account<\/li>\n<li>Low product engagement during the trial period<\/li>\n<li>Organizational issues with access to the account<\/li>\n<\/ul>\n<p>All of these issues (any many more) can contribute to a higher churn risk.<\/p>\n<p>In this article, we&#8217;ll use the\u00a0<strong>Trial-to-paid in days\u00a0<\/strong>filter in ChartMogul to answer\u00a0the question:<\/p>\n<blockquote><p><em>&#8220;Does sales cycle length impact churn rate?&#8221;<\/em><\/p><\/blockquote>\n<h1><span class=\"wysiwyg-font-size-large\">Setting up segments to compare<\/h1>\n<p>To achieve this analysis, we will need to\u00a0set up two custom segments in ChartMogul.<\/p>\n<ol>\n<li>Log in to your\u00a0<a href=\"https:\/\/app.chartmogul.com\/\">ChartMogul<\/a>\u00a0account\u00a0and go\u00a0to your\u00a0<a href=\"https:\/\/app.chartmogul.com\/#\/reports\/cohorts\/customer-churn\">Customer Churn Rate<\/a>\u00a0chart<\/li>\n<li>Click\u00a0<strong>Add filter<\/strong>\u00a0then select\u00a0<strong>Trial-to-paid in days\u00a0<\/strong>&#8211;\u00a0<strong>equal to or less than\u00a0<\/strong>&#8211;<strong>\u00a014<\/strong><\/li>\n<li>Save this as a segment\u00a0and name it something like &#8220;Converted within 2 weeks&#8221;<\/li>\n<li>Click\u00a0<strong>New Segment<\/strong>,<strong>\u00a0<\/strong>then\u00a0<strong>Add filter<\/strong>\u00a0and select\u00a0<strong>Trial-to-paid in days\u00a0<\/strong>&#8211;\u00a0<strong>greater\u00a0than\u00a0<\/strong>&#8211;<strong>\u00a014<\/strong><\/li>\n<li>Save this as a segment,\u00a0and name it something like &#8220;Converted after\u00a02 weeks&#8221;<\/li>\n<\/ol>\n<p>What we&#8217;re doing here is creating two segments:<\/p>\n<ul>\n<li>A &#8220;long sales cycle&#8221; segment (2 weeks or less)<\/li>\n<li>A&#8221;short sales cycle&#8221; segment (more than two weeks).<\/li>\n<\/ul>\n<p>Depending on your product characteristics and trial length, you might want to customize these to better represent your own sales cycle.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2021\/06\/he--l__hc__article_attachments__115004395985__Screen_Shot_2017-05-12_at_13.43.58.png\" alt=\"Screen_Shot_2017-05-12_at_13.43.58.png\" \/><\/p>\n<p>This custom segment will\u00a0highlight whether customers who converted to paid within two weeks of signing up are\u00a0more likely to churn than customers who took more than two weeks to convert.<\/p>\n<p><span class=\"wysiwyg-font-size-large\">Viewing the data<\/p>\n<p>In the\u00a0<strong>Customer churn rate<\/strong>\u00a0chart, we can see a correlation between sales cycle length and customer churn rate:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-large wp-image-9444\" src=\"https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle1-1024x621.png\" alt=\"\" width=\"1024\" height=\"621\" srcset=\"https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle1-1024x621.png 1024w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle1-300x182.png 300w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle1-720x437.png 720w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle1.png 1882w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle1-300x182@2x.png 600w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle1-720x437@2x.png 1440w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<p>We can also see the same correlation on the\u00a0<strong>Net MRR churn rate<\/strong>\u00a0chart, though the difference\u00a0between the segments is less pronounced:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-large wp-image-9445\" src=\"https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle2-1024x618.png\" alt=\"Segmentation sales cycle 2\" width=\"1024\" height=\"618\" srcset=\"https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle2-1024x618.png 1024w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle2-300x181.png 300w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle2-720x435.png 720w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle2.png 1868w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle2-300x181@2x.png 600w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle2-720x435@2x.png 1440w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<p>Looking at the\u00a0<a href=\"https:\/\/help.chartmogul.com\/hc\/en-us\/articles\/203359301\">Average Revenue Per Account (ARPA)<\/a>\u00a0for the two segments, we can see that the customers that take longer to convert are also more valuable customers (higher ARPA). It&#8217;s possible that the customers in this segment are larger deals.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-large wp-image-9446\" src=\"https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle3-1024x622.png\" alt=\"Segmentation sales cycle 3\" width=\"1024\" height=\"622\" srcset=\"https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle3-1024x622.png 1024w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle3-300x182.png 300w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle3-720x437.png 720w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle3.png 1890w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle3-300x182@2x.png 600w, https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/08\/sales-cycle3-720x437@2x.png 1440w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<h1><span class=\"wysiwyg-font-size-large\">What we learned<\/h1>\n<p>For most businesses, the characteristics shown above represent a\u00a0problem that should be addressed. We have learnt so far that customers who take longer to convert:<\/p>\n<ul>\n<li>Are at a greater risk of churning<\/li>\n<li>Have a higher ARPA than other customers<\/li>\n<\/ul>\n<p>To address this problem we could:<\/p>\n<ul>\n<li>Provide a higher level of support to customers currently who have\u00a0a higher risk of churning<\/li>\n<li>Address the on-boarding problems or other friction experienced by customers who don&#8217;t convert\u00a0within 14 days<\/li>\n<li>Investigate whether these actions succeed in driving down churn rates by looking at your\u00a0<a href=\"https:\/\/app.chartmogul.com\/#\/reports\/cohorts\/customer-churn\">customer churn cohort analyses<\/a><\/li>\n<\/ul>\n<p>These suggestions\u00a0for potential churn rate reduction are a good starting point for your own customer retention strategy.<\/p>\n<h1><span class=\"wysiwyg-font-size-large\">Next steps<\/h1>\n<p>For more accurate results, you\u00a0should consider\u00a0the\u00a0expected trial period for each plan, rather than on a global level. You can do this by filtering to a single plan and using the\u00a0<strong>Trial-to-paid in days<\/strong>\u00a0filter. This lets you see\u00a0the plans\u00a0with\u00a0more problematic\u00a0onboarding, and\u00a0those\u00a0with a higher churn rate. You can also see which plans receive the most trial extension requests before converting to a paid account.<\/p>\n<p>You can also use\u00a0<a href=\"https:\/\/help.chartmogul.com\/hc\/en-us\/articles\/206120219\">custom attributes<\/a>\u00a0in ChartMogul to track the impact of NPS and customer health scores on your churn rates. This gives a good indication of which customers are at a greater risk of churning.<\/p>\n<p>Using Segmentation,\u00a0<a href=\"https:\/\/twitter.com\/davidcapple\">David Apple<\/a>\u00a0from\u00a0<a href=\"http:\/\/www.typeform.com\/\">Typeform<\/a>\u00a0found that \u201csomeone who gives us a low score on the NPS is still less likely to churn than someone who didn\u2019t respond at all\u201d.\u00a0<a href=\"https:\/\/chartmogul.com\/blog\/typeform-nps-with-chartmogul\/\">Read more in this article<\/a>.<\/p>\n<p>There are many\u00a0attributes that you could add to customers\u00a0that\u00a0indicate an increased churn risk. Other examples include tags such as:<\/p>\n<ul>\n<li>&#8216;price sensitive&#8217;<\/li>\n<li>&#8216;low usage in trial&#8217;<\/li>\n<li>&#8216;has open support tickets&#8217;<\/li>\n<li>&#8216;support provided in\u00a0non-native language&#8217;<\/li>\n<\/ul>\n<p>You can add attributes and tags to your customers in ChartMogul, using\u00a0an\u00a0<a href=\"https:\/\/app.chartmogul.com\/#admin\/data-enrichment\">Enrichment integration<\/a>, or by using the\u00a0<a href=\"https:\/\/dev.chartmogul.com\/v1.0\/reference#introduction-enrichment-api\">Enrichment API<\/a>.<\/p>\n<h1><span class=\"wysiwyg-font-size-large\">Share your analysis\u00a0<\/h1>\n<p>Do you have a particular analysis in ChartMogul that has helped gain unique insights? Do you think it could help other users? Please send it to us at\u00a0<a href=\"mailto:support@chartmogul.com\">support@chartmogul.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This week in our Tips and Tricks series, we take a look at how time to convert to a paid account can have an impact on the eventual churn rate among paying customers.<\/p>\n","protected":false},"author":20,"featured_media":9174,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,1998],"tags":[25,47,115,260],"class_list":["post-9434","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gtm","category-retention","tag-chartmogul","tag-product","tag-segmentation","tag-tips-tricks"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tips &amp; Tricks: Analyzing sales cycle length impact on churn rate | ChartMogul<\/title>\n<meta name=\"description\" content=\"This week in our Tips and Tricks series, we take a look at how time to convert to a paid account can have an impact on the eventual churn rate among paying customers.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chartmogul.com\/blog\/tips-tricks-sales-cycle-length-churn-rate\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tips &amp; Tricks: Analyzing sales cycle length impact on churn rate | ChartMogul\" \/>\n<meta property=\"og:description\" content=\"This week in our Tips and Tricks series, we take a look at how time to convert to a paid account can have an impact on the eventual churn rate among paying customers.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/chartmogul.com\/blog\/tips-tricks-sales-cycle-length-churn-rate\/\" \/>\n<meta property=\"og:site_name\" content=\"ChartMogul\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/chartmogul\" \/>\n<meta property=\"article:published_time\" content=\"2017-08-09T08:51:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-08-10T15:10:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/chartmogul.com\/blog\/wp-content\/uploads\/2017\/06\/tips.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"3000\" \/>\n\t<meta property=\"og:image:height\" content=\"1250\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Ingmar Zahorsky\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@chartmogul\" \/>\n<meta name=\"twitter:site\" content=\"@chartmogul\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Ingmar Zahorsky\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/chartmogul.com\/blog\/tips-tricks-sales-cycle-length-churn-rate\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/chartmogul.com\/blog\/tips-tricks-sales-cycle-length-churn-rate\/\"},\"author\":{\"name\":\"Ingmar Zahorsky\",\"@id\":\"https:\/\/chartmogul.com\/blog\/#\/schema\/person\/58f65a634d6409df11b691b1d05810d9\"},\"headline\":\"Tips &#038; 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