If you want your customers to stick around, it’s important you understand how to reduce customer churn rate.
Of course, some level of churn is inevitable — no matter how much effort you put into satisfying your customers. There are reasons customers stop doing business with you that are simply beyond your control.
But, if you can identify and address those areas that you do have control over, that can go a long way to minimizing the negative impact on your business.
That’s why we’ve put this list of proven strategies together for you.
Before we dive in though, let’s take a look at exactly what customer churn is and how to calculate it.
Customer churn rate shows the rate at which customers stop doing business with you over a given time period. You may also have heard it referred to as customer attrition.
The higher your churn rate, the more customers you lose. The lower your churn rate, on the other hand, the more customers you keep on your books.
Your churn rate is also diametrically opposed to your customer retention rate. So, if you have a retention rate of 75 percent, you’ll have a churn rate of 25 percent. Typically, you’ll want to aim for a lower churn rate and ensure you retain customers.
To calculate your churn rate, you’ll need to divide the number of customers you lost in the specific time period you are measuring by the total number of customers you had at the start of that time period. As you want this figure to be a percentage you’ll then need to multiply it by one hundred.
Here’s the formula you’ll need:
Churn Rate = (Number of customers lost / Total number of customers at start of time period) x 100
For example, if you have 1,000 customers and lose 250 of those customers across the course of a month, then your customer churn rate will be 25 percent for that month.
(250/1000) x 100 = 25 percent
So, what does it take to reduce your churn rate and create more repeat customers?
Here are a set of strategies to help you do just that.
Before tackling a problem, you need to identify the cause. And that means gathering customer feedback and measuring what is going on.
Whenever you detect churn in your business, use these methods to find out why.
Talking to your customers over the phone isn’t just a great way to show that you care, it’s your best shot at getting the depth of information around their reasons for churning that can make a real difference. It also gives you the chance to ask follow up questions, probe deeper, and clarify things if needed.
Surveys can be a useful tactic if customers don’t want to speak on the phone or if it’s simply impractical to do so. Just bear in mind not to ask too many questions. One or two that really get to the heart of the matter is just fine.
When you use surveys, send them via email, or let customers complete them on your site. For ultimate convenience, you could even distribute the survey to mobile devices via app or SMS.
Quality customer service is one of the most effective ways to reduce customer churn rate. So, adding a personal touch to your customer service with a tool like cobrowsing can really help in maintaining a solid customer base.
Cobrowsing is so powerful because it brings your customer and agent together on the same page — literally — providing a visual reference point around which to interact.
This helps to cut down time spent on explaining. That means less chance of customers getting frustrated trying to understand the solutions to issues being explained over the phone. Agents can demonstrate visually what customers need to do and guide them through it instead.
If you’re a SaaS company, take note: after signing up for a free SaaS application trial, 40 - 60 percent of users will use it once, and then never return.
One of the reasons is that users can’t see the value it adds to their life or business. It just goes to show how important a watertight onboarding process is in your customer success efforts.
So, improving your onboarding process and communicating clearly with your users as they pass through the funnel is vital if you want to mitigate against this problem. Once customers understand how to get the most out of your product or service, they’re far more likely to stick around.
Want to learn how to achieve customer success? Check our our on demand webinar. https://acquire.io/webinars-events/customer-success-teams/
Sometimes customers leave your website because they struggle to navigate it properly or find the product information they’re after. In fact, customers may get so frustrated they stop doing business with you all together.
To help you address this, have your customer support team take a proactive approach. That means engaging customers at certain points in their journey — often using live chat — based on the behavior they exhibit.This way, customers get immediate solutions, reducing your churn rate, and creating a better overall customer experience.
Get ahead of all the top trends in customer support with our ultimate guide. https://whitepaper.acquire.io/the-ultimate-guide-to-customer-support
Think of a way of integrating your offering into people’s lives that makes you indispensable. Then it’s extremely difficult for them to switch to your competitors or cancel their accounts.
For example, Zapier provides a 14-day free trial plan to allow users to test their service before purchasing a pro plan. During this trial period, you (the user) will be given all the support a premium customer would, and be allowed to use all of the best features of their service in all plans.
At the end of the 14 days trial, you’re already so embedded with the software that it’s difficult to go back.
People like to feel like part of a community. The desire to belong is ingrained in our very nature. So, one way of reducing customer churn rate is to make your customers feel like they're part of your brand.
Moz is a good example of a company that has done well in building an active community.
They run a guest post-driven blog, to which any member of the community is welcome to submit a guest. Moz’s questions and answers discussion board is also very active and usually very educational.
Using online communities in this way helps educate and engage users, always keeping the brand front of mind.
Sometimes existing customers lose sight of the worth of your product or service as the initial novelty wears off. That is, unless you explicitly communicate it to them.
Collect metrics and data that pay testament to the impact your service is having on their life or business — how it’s helping drive revenue, or saving them time. Then keep them updated with this data and share the progress being made.
Customers are constantly being bombarded from every angle by different options and information. Remember, your company isn’t the only one that can fulfill their needs. If they feel they are not getting the most value out of their relationship with you, they can — and will — change to your competitors.
With the proper strategy in place, focusing on customer satisfaction and retention rates, you can increase customer engagement and nurture long-term relationships. This can involve regular communication through product-led content, blogs, newsletter, videos and so on, reinforcing what they can get out of your product or service. You could also arrange webinars or Q&As, or even share information on social media platforms.
Depending on the type of company you are, having someone dedicated to dealing with a particular customer can be a powerful way to retain them. When customers feel they have a personal relationship with someone in the company, that connection increases the likelihood of them staying.
Of course, this isn’t always possible. To make up for this, you can take an omnichannel approach that provides your agents with information and context about customers and creates a conversational experience. That way, they can feel they have a personal relationship with your company as a whole instead.
Leverage this type of approach to improve your customer retention strategy, and up your customer retention rate (CRR) and customer lifetime value (CLV).
A little gift ‘just because’, some customer recognition through a digital certificate perhaps — anything that helps puts a smile on your customer’s face can really help reduce customer churn rate.
Here’s a good example from a Reddit user who received a handwritten thank you message from a company they’re subscribed to (as a customer). They logged onto their Reddit account to share their testimony and enthusiasm.
The likelihood is, not only have they kept that customer, but they’ve attracted a few more to their business as well.
Additional services, above and beyond your core business offering, can make a big difference when it comes to giving your customers reasons to stay. Think how you can provide services that enable them to scale their business or improve their lives.
Develop useful tools and give them away for free, for example.
HubSpot offers inbound marketing software and automation tools for online marketers. The company provides helpful resources, as well as useful information on how these tools can be used effectively.
All of this comes down to creating a great customer experience — it’s the surest way to reduce customer churn rate.
Treat your customers well and they’re much more likely to stick around. They may even become advocates, referring other customers to you and helping your business grow.