Reducing churn (the rate at which customers stop doing business with a company) is crucial for businesses to ensure their strength and performance. According to Forbes, the cost of acquiring new customers and maintaining current ones is five times higher than the cost of keeping existing customers.
Increasing retention rates by even a small amount can have a significant impact on profits, according to Reuters. They report that retention can increase profits by 20 to 95%, while reducing costs and increasing sales by 10%.
Therefore, when looking for new leads and clients, businesses should also make sure to put extra effort into retaining their existing clients.
The most important thing for a successful business is happy customers.
The article discusses various ways to reduce customer churn and why reducing churn is valuable.
Churn rate is the percentage of customers who have stopped using your products or services divided by the number of customers you started with.
Customer churn or attrition is the number of customers who have stopped using or acquiring your offerings.
If you started the quarter with 500 clients, the churn rate would be 5%.
1. Lean Into Your Best Customers
For many businesses, solving the problem of customers leaving (churn) means identifying those most likely to cancel and putting more effort into keeping them.
Sunil Gupta, the Edward W. Carter Professor of Business Administration at Harvard Business School, suggests that this strategy is not effective.
Rather than redirecting time and resources to retaining customers who are about to leave, Gupta recommends businesses focus their attention on the most profitable customers who are about to leave.
According to Gupta, in order to successfully re-engage customers, you should refocus your efforts on those customers who are most profitable, and also take into account how likely they are to respond to your outreach initiatives, whether they be phone calls, emails, or larger promotional packages.
2. Be Proactive With Communication
If you contact your customers before they need your help, it shows that you care about them and want them to get the most out of your product or service.
The message you send to them should be related to their product or service usage.
If a customer signs up for your product or service but doesn’t use all the features, you might send them a reminder.
SEMrush did a good job of pointing out its features early on, which kept me from getting bored and using the tool less.
3. Define a Roadmap For Your New Customers
Beginning to use a new product or service can be daunting. If customers can’t work out how to use it straight away, they will probably lose interest very quickly.
A helpful way to make the transition smoother for new customers is to create a customer onboarding process or roadmap that guides them through your product’s or service’s features, functionality, and process.
This approach makes it easier to manage customer expectations by giving you complete control over the pace at which you’re surfacing more information.
Customers who feel that your business can help them achieve success are less likely to leave, so it is important to constantly monitor and improve your onboarding process, looking for any issues that could cause problems.
Hi there, We hope you’re enjoying Grammarly! We’ve been hard at work making improvements and wanted to give you a quick update on what’s new. … Thanks for being a part of Grammarly! Hi there, We hope you’re enjoying Grammarly! We’ve been hard at work making improvements and wanted to give you a quick update on what’s new.
We’ve made a number of improvements to our algorithms, resulting in better corrections and more accurate suggestions. We’ve also added a few new features, like the ability to ignore certain types of errors. Thanks for being a part of Grammarly!
Grammarly sends this message to new users to show its commitment to improving its services and introducing new ways for users to take advantage of them.
4. Offer Incentives
In order to keep customers, give them something special like a promo, discount, or loyalty program. This will show them that you value their business.
The first is whether or not the incentive is temporary or permanent. When considering when to offer incentives, think about whether the incentive is temporary or permanent.
You’ll want to think about the customer’s timeline and what they might need to renew their contract. Discounting the renewal rate could be the incentive they need to stay.
You should also think about what the customer needs. If you think a customer is going to cancel because they realize your product or service isn’t what they wanted, try to keep them by offering something that will help them achieve their goals.
After the Baremetrics team received feedback from customers who were ready to cancel due to a lack of features, they employed a strategy of providing more features.
This small effort helped them to retain 15% of the accounts that were ready to cancel.
5. Ask For Feedback Often
Customers become frustrated when they are confused about a product or service, or when they do not receive effective support for a problem. This can eventually lead to them leaving the company.
The concepts are vague but collecting feedback can help to identify the specific issues.
You can create a feedback loop for your business by setting up a survey or feedback form and sending an email.
Asking customers for surveys and ratings lets them know that you are dedicated to making improvements and becoming better.
Another way to source feedback and insights surrounding your customers’ experience with your product or service is live chat.
You can find out what is preventing your customers from getting the full value of your product by monitoring the conversations on your live chat feature.
6. Analyze Churn When it Happens
You should take proactive steps to prevent customers from leaving your business, rather than waiting until they have already left. Data can help you to identify strategies for preventing customers from leaving.
Though you may do everything right, some customers will still leave. Churn is an inevitability of doing business.
Use your churned and happy customers to predict when other customers will be happy or dissatisfied so you can take action to keep them from churning.
The first step is to analyze when customers are most likely to churn. Is it 30, 60, or 90 days after they start using your product or service? Does churn happen if customers go a specific number of days without using the product or service? Figure out the patterns of how and when churn occurs for your typical customer.
Then, get feedback as outlined in Step Five above to figure out why churn usually occurs.
By looking at past customer behavior, you can anticipate which customers are likely to churn in the future and reach out to them with personalized offers to keep them engaged.
It seems that SoulCycle has come to the conclusion that if someone doesn’t attend workout classes for three months, they are likely to stop attending altogether. So, in order to prevent this from happening, they offered the person a free class. This plan seemed to work, as the person ended up attending a few more classes.
7. Stay Competitive
The needs and demands of your customers will shift as new software and technologies enter the space.
Businesses that focus on upcoming trends, technology, and product advancements are more likely to avoid being disrupted by “the next big thing.”
It’s important to have a product or service that is on the cutting edge and to have customer success and support efforts that remain relevant. To make sure you are not lapped by your competitors, take note of their customer success initiatives.
Do they answer questions quickly on social media? Do they have a chat feature on their website that allows you to talk to a customer service representative in real time? Do they have a lot of articles and other resources on their website that can help you figure things out on your own?
You can improve your business by following the same strategy as your competitors. This will help you serve customers better and keep them coming back.
8. Provide Excellent Customer Service
A way to reduce customer churn is to provide excellent customer service. Your customer service reps should be empowered to solve customer issues or answer customer questions.
This could imply that they would need to expend funds to reconcile with a client.
Amazon and Zappos are big companies because they had a focus on customer service from the start.
Providing excellent customer service is a great way to differentiate yourself from your competitors and retain your customer base.
9. Handle Objections During the Cancellation Process
Even though you’re working hard, you may find that customers are leaving for multiple reasons. However, this doesn’t mean it’s impossible to get them back before they leave.
Why are the users unhappy? Can the company do anything to improve the situation? Is the company not paying its users?
After speaking with your User Success Director, research products that will help you to find a suitable place.
10. Send NPS Surveys
By monitoring your Net Promoter Score, you can get a better idea of how much your customers like or don’t like your business. Assign monetary scores to customers and divide them into three groups: passive and promoter.
An online form where customers can provide feedback about their experience would be beneficial in order to improve the quality of the product or service.
Customers should be encouraged to provide both positive and negative feedback in order to give an accurate representation of their experience. Feedback should be monitored regularly and responded to as soon as possible.
11. Prioritize Proactive Customer Service
If you provide poor service, customers will never come back and will tell their friends about their bad experience.
A bad customer will always have negative experiences, no matter how good the service is. You should be a very memorable client, so that you can help identify issues that you had never encountered before. If this happens, take action immediately.
12. Avoid Feature Blindness
Even though the software may have a lot of features, users are commonly only able to access one or two of them. There’s no need to be difficult about it.
The tool can help show how useful it is to build around other tools that may be beneficial to the customer. This will make clients feel like they are getting more value for their money by giving them the chance to improve their services.
13. Create a User Engagement Plan
What are some ways a customer can buy an online service? How can a customer ensure they will meet their goals? By creating an engagement plan that helps them set and achieve targets.
Before making any decisions, it’s important to talk to customers and find out what they want. Additionally, it’s a good idea to occasionally review and update your onboarding process. Doing so can help users learn more about how to use your product effectively.
14. Re-engage Inactive Customers With in-App Messaging
How often do you get frustrated when using an app or website? Write to the company if you have a problem. The issue might be that you’re not paying attention or you missed something.
You can help your employees orient themselves to the company’s intranet by sending them a message or reminder email that highlights the most useful features they have not used yet.
15. Create a Community Around Your Project
Getting everyone involved in your company can help to increase brand awareness and prevent customers from going to your competition. Nobody wants to feel like their company is not valued.
A successful business should aim to involve its customers as much as possible. This can be done by sending out surveys, inviting customers to contribute to blogs, or hosting webinars.
16. Provide Live Chat Support
If customers need support, they will receive it immediately through chat.
Make a note of what the conversation is about so that you can identify problem situations and improve the overall user experience, marketing material, etc.
17. Build a Knowledge Base
If people are constantly asking the same question or challenge, create a Knowledgebase with the necessary tools to solve the problem and let customers know where to find it.
By studying the conversations people have in the live chats, you can create content suggestions that are relevant to what people are talking about. This will help you better engage with your audience and create content that is more likely to be of interest to them.
18. Offer Discounted Long-Term Contracts
Your customers are essential for your job. Some people who switch suppliers may have difficulty if they are unhappy with their current provider or feel they are not being paid enough.
In order to keep customers for the long term, it is beneficial to offer them discounts on their contracts. This shows that you respect their commitments.
The Value in Reducing Customer Churn
Also, happy customers that feel appreciated tend to spend more. It is more efficient for businesses to keep their current customers happy, rather than to focus on acquiring new ones.
This is because maintaining current customers requires less time and effort than starting from scratch with new clients. Additionally, satisfied customers who feel appreciated are more likely to make additional purchases.
If you want your business to grow, it’s important to keep your customers loyal. Losing just one customer can cost you 40,000 dollars a month.
It takes time and money to market the products to a new customer and onboard them if there is no income to compensate for the loss.
Reduce Customer Churn in The First Week
Improve User Onboarding Experience
If you want to reduce the likelihood of people leaving a project early, you need to make sure they see the value in it quickly, and that as many people as possible experience the project’s main value early on.
The following tips will help improve your user experience:
1. SaaS solutions are constantly improving, so make sure to keep up with the latest changes.
2. Reading user reviews and feedback can give you insights into how to improve your own usage of the software.
3. Some solutions offer training materials or user forums that can help you learn more about how to get the most out of the system.
If users don’t understand and appreciate your product, they might turn it off and go to a different product.
Send a personalized welcome email
An email that is personalized with a greeting will be more trusted by the customer and will encourage them to use your product.
After launching the app, you should see a screen that explains how the app can help you. The next steps are to select the type of event you want to track and to start adding events.
Reducing Churn is The Key to Growth
To reduce your churn rate, focus on small improvements over time rather than expecting a large, overnight decrease. Even a small reduction in churn can have a significant impact on your overall growth.