ChurnZero Aims to Play a Vital Role in Keeping Subscription-Based Businesses Healthy

Editor’s Note: Sponsored by Monday Properties and written by ARLnow.com, Startup Monday is a weekly column that profiles Arlington-based startups and their founders, plus other local technology happenings. The Ground Floor, Monday’s office space for young companies in Rosslyn, is now open. The Metro-accessible space features a 5,000-square-foot common area that includes a kitchen, lounge area, collaborative meeting spaces, and a stage for formal presentations.

Companies offering music, software, movies and even food increasingly are moving toward subscription models. And many of those businesses harbor one lofty goal: zero churn.

Churn happens when a customer decides to no longer subscribe to a product or service. The customer must then be replaced with a new one. Due to the costs of customer acquisition, high churn can kill an otherwise promising young business.

“Fighting churn is especially important for subscription businesses because they have to continuously keep the customer happy or else they will simply cancel and move on,” said You Mon Tsang, co-founder of Arlington-based ChurnZero.

As an entrepreneur and early pioneer in software-as-a-service (SaaS), Tsang has first-hand experience with the financial impact of churn on a subscription-based business.

“In the past, software would be bought all for one price, paid at once, and owned forever,” he said, adding, “Moving to the subscription meant less money upfront and more consistent revenue over time, but only if the customer is happy and stays with you.

“Churn was a critical business imperative in every business I’ve been a part of, but — surprisingly — there was little technology to help companies understand the health of their customer base.”

That’s where ChurnZero comes in.

Tsang and co-founder Mark Heys built a software prototype and got feedback from more than a dozen companies that were potential customers.

“We got great feedback on the prototype. But, more importantly, they all said this was a real and unsolved problem,” Tsang said. “That gave us the confidence to risk our time, energy and money on creating a business.”

Unlike other companies in this new field, Tsang said ChurnZero does more than just collecting data and creating reports on customers.

“At ChurnZero, we feel that data is important but not enough. Our solution combines data, task automation and communication and is one of the most comprehensive platforms in the industry,” Tsang said.

ChurnZero’s software enables businesses to understand how customers use a product, assess customers’ likelihood to renew, and personalize the customer experience.

Using ChurnZero’s services, businesses can better engage with their customers, sell more subscriptions and fight churn. The company offers analytics, personalized and automated customer interfaces, and timely alerts about customers–including those who are “power users” and those who are disengaged.

In addition to ChurnZero’s main services, the company’s blog, “Fighting Churn,” cranks out advice and resources to help account managers and executives retain customers. The site recently was named one of the Top 50 Customer Churn Resources by NGData.

Tsang and Heys chose Arlington as ChurnZero’s headquarters because of its attractive location to the nation’s top talent.

“It’s proximity to [Washington, D.C.] and public transportation, as well as the reasonable commute from the towns outside the beltway, means we have access to people fresh-out-of-college or with decades of experience,” Tsang said.