The churn rate, also known as attrition rate, is the rate at which customers stop doing business with a company after a certain amount of time has passed. The number of subscribers who cancel or do not renew a subscription is also known as churn. The higher your churn rate, the fewer customers are willing to buy from you.
What Factors Contribute to Customer Churn?
Because every business is unique, the factors that cause customer churn differ by industry. However, the most common causes tend to remain the same:
- The onboarding process was poor.
- Customer relationships or communication that isn’t up to par
- Customer service is either terrible or non-existent.
- User experience with the product is challenging.
- Ignoring complaints and feedback completely.
Methods to Reduce Churn Rate
Your goal should not be to achieve a 0% churn rate. That’s a stretch. Your goal should be to reduce the churn rate to a level that allows you to grow your business in the long run. The exact figure will be determined by the nature of your business.
Communicate in a Proactive Manner
You demonstrate your commitment to helping your customers get the most out of your product or service by reaching out to them before they need it.
But not just any outreach will suffice. The message or resource you send to your customers should be directly on how they use your product or service.
For instance, if someone signs up for your product or service and you notice that they aren’t taking advantage of all of the features, you could send them a friendly nudge.
Create a Road Map for Your New Clients
It can be difficult to get started with a new product or service. And if a customer can’t figure out how to use your product or service right away, they’ll lose interest — quickly.
To make the transition easier, create a new customer onboarding process or roadmap that walks new customers through the features, functionality, and process of your product or service. This method makes it easier to manage customer expectations while also allowing you to control the rate at which new information is presented.
Customers who feel empowered to achieve success with the help of your company are less likely to leave, so it’s critical that you monitor and iterate on your onboarding process on a regular basis, looking for snags or roadblocks.
Give customers a reason to stick around by providing a special offer, such as a coupon, a discount, or a loyalty program. This small gesture can go a long way toward demonstrating how much you value your existing customers’ business.
There are a few factors to consider when deciding when to reveal these incentives. For starters, consider the customer’s timeline: if they’re nearing the end of their contract and you’re worried they won’t renew, offering a discounted renewal rate might be just the incentive they need to stay.
Another thing to think about is the customer’s requirements. If you think a customer will cancel because your product or service isn’t what they were looking for, offer an incentive to keep them on board while you work on developing a feature or strategy that will help them achieve their goals.
Request Feedback Frequently
When there is confusion about a product or service, or when there is a lack of effective support for a specific issue, customer frustration arises, which can lead to customer churn.
However, those concepts are hazy. And getting to the bottom of the specific problems plaguing your company necessitates collecting feedback early and often.
Creating a customer feedback loop can be as simple as setting up a survey or feedback form and sending an email, depending on your business needs. Taking feedback is really important to reduce the churn rate.
Examine Churn As Soon As it Occurs
If you wait until a customer leaves your establishment, it will be too late. Instead, you should be using data to develop strategies to prevent customer churn before it happens.
Churn is an inevitable part of any business, no matter how much effort you put into the steps above. The key is to use your churned customers (as well as your happy customers) to predict key signs of customer happiness and dissatisfaction so you can engage with them and save the relationship before they leave.
Begin by analyzing the situation. When are customers most likely to leave? Is it thirty, sixty, or ninety days after the first use of your product or service? When customers go a certain number of days without using a product or service, is that considered churn? Determine how and when your typical customer experiences churn.
Then, get feedback. Are there any specific reasons why customers are leaving? What were their reasons for canceling or stopping purchases? Determine why churn is so common.
Then, combine these trends to predict churn before it occurs, and reach out to at-risk customers with customized incentives and offers to re-engage them.
See Also: How to Calculate Your Business Burn
Remind Customers of the Benefits You Offer
As the novelty of your product or service wears off, existing customers may lose sight of its value. That is unless you express it to them explicitly.
Collect metrics and data that demonstrate the impact your service is having on their life or business, such as how it is assisting in revenue generation or saving them time. Then keep them up to date on this information and let them know how things are going.
All of this boils down to providing a positive customer experience, which is the most effective way to reduce the churn rate. If you treat your customers well, they’ll be more likely to return. They may even become advocates for you, referring other customers to you and assisting in the growth of your company.