11 Proven Strategies to Reduce Customer Churn Rate (Validated by Experts)

It’s a lot easier to acquire new customers than to retain existing ones. But if you can get your customers to stick around, then your chances of building a thriving business are high.

This is where your customer churn rate really comes into play. It’s a critical metric in determining your overall business success.

According to a study by Kolsky, 1 in 26 unhappy customers will complain, the rest will churn. And as Zoho reveals, the higher your churn rate, the bigger the negative impact on your business.

Of course, some level of churn is inevitable, no matter how much effort you put into satisfying your customers. There are a number of reasons why customers stop doing business with you that are beyond your control.

When churn rate is high though, it can affect the decisions you make for your business, as well as your revenue.

We’ll discuss 11 prominent ways to reduce your customer churn rate, but let’s begin with a quick definition:

What is customer churn rate?

Investopedia defines churn rate as “the percentage of subscribers to a service who discontinue their subscriptions to that service within a given time period.”

In simple terms then, customer churn rate represents your loss of customers.

Customers leave your business for a lot of reasons, including:

Churn rate formula

Churn Rate = Number of customers lost / Total number of customers

Why should reducing customer churn rate be a priority?

If your customer churn rate is higher than your new customer acquisition rate, your business will struggle.

The table below highlights how quickly churn can decrease revenue and erode profit.

That is why experts place so much emphasis on reducing customer churn and increasing retention.

So, what does it take to reduce your churn rate and retain your customers month to month?

1. Analyze and determine why your churn is happening

Before you tackle a problem, it’s important to identify the cause. Sounds obvious, but it’s a useful tactic.

Whenever we see unexpected churn in our business, there are three simple ways we use to find out why.

• We send a customer exit survey
• We call the customer
• We send a personalized email

I recommend you actually talk to your customers over the phone. It’s a great way to show you really care. Call and ask them why they left. Most likely, you’ll get a useful answer, or at least a hint you can work with.

You can also use surveys, but it’s best not to ask too many questions. One or two is fine. Just make sure they get to the heart of what you need to know. Surveys are a good method for collecting feedback from customers who closed their accounts. Send surveys via email or let them complete surveys on your website.

You can also send a personalized email to account closers. Bulk emails are often used, but personalized ones perform much better.

2. Use cobrowsing to offer a personalized customer service

“Be it on phone or in person, engaging with a strong welcome makes your customer feel comfortable and appreciated.” – Shep Hyken

Cobrowsing is one of the best ways to add a personal touch to customer service. Quality customer service is helpful in reducing customer churn rate, saving you effort in convincing customers to stay when they want to cancel.

Cobrowsing brings your customer and customer rep together on the same page, quite literally, providing a visual connection and helping to rapidly build trust.

There are a few cobrowsing solutions you can use. Acquire.io, in particular, is a powerful tool, enabling reps to view and interact with customers’ web browsers, thus helping customers navigate through complex processes and giving them another reason to stay loyal.

At this point, you may have legitimate concerns over the data security of these cobrowsing tools. Are they safe?

The answer is yes, they are. Agents don’t see any other open browser tabs or applications on a customer’s computer, only the information they want to show.

Use cobrowsing tools to cut down on explanation time, instead demonstrating visually what customers need to do and guiding them through it.

3. Improve the user onboarding process

“People will forget what you said. People will forget what you did. But people will never forget how you made them feel.” – Maya Angelou

After signing up for a free SaaS application trial, 40 - 60% of users will use it once, but then never again. One of the reasons is that users are unable to perceive how your offering could add value to them or their business. Improving your onboarding process and communicating clearly with your users throughout each stage of the sales funnel is important in mitigating against this.

4. Use a proactive approach

Sometimes customers leave your website if they cannot navigate pages properly or find information regarding products, leading to an increase in churn rate. To address this, your customer support team can take a proactive approach, engaging customers at certain points via live chat, phone or email, based on the behavior they exhibit.

With proactive service, customers get immediate solutions, reducing churn rate, and creating a better customer experience.

A cloud-services provider company named CornerstoneOnDemand adopted a proactive approach to enhancing their clients’ experience, which helped them build a strong customer base, now more than 12 million users.

5.  Make it hard for your customers to ignore you

Think of a way of integrating something into your offering that is indispensable to your customers. You’ll make it 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, the results you’ve seen with the software means it’s difficult to go back.

6. Create a community around your product

People like to feel like part of a community. The desire to belong is ingrained in our very nature. To reduce customer churn rate, 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 and engaged community around its brand.

They run a guest post-driven blog, to which any member of the community is welcome to submit a guest post. Moz’s questions and answers discussion board is very active and usually very educative.

Online communities such as Moz, Copyblogger, Marie Forleo, and the like, educate and engage users, always keeping their brand front of mind.

7.  Remind your customers how much value you provide them

“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” – Steve Jobs

Customers may forget to appreciate the true worth of your services unless you make it explicitly clear to them.

Collect metrics and data that pay testament to the impact your service is having on their business — how it’s helping drive revenue, or saving resources. Keep them regularly updated by sharing the progress being made.

8. Increase customer engagement

In this competitive world, your customers are constantly being bombarded by options and information from all around. Your company is not the only one that can fulfill their needs after all. 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 marketing strategy in place, and by focusing on customer satisfaction and retention, you can increase customer engagement and nurture long-term relationships. Plan and implement specifically tailored programs to help your customers understand the benefits of your products/services.

For example, you could arrange webinars or Q&As, or share blogs and newsletters on social media platforms, increasing awareness among your customers and increasing retention rate.

9. Offer dedicated account managers

How do you follow up with new customers? Do you send them a welcome email and nothing else?

You could do so much more.

When customers feel they have a personal relationship with someone in the company, someone they can always ask questions, that connection increases the likelihood of them staying.

Here’s a snippet from my chat with a customer representative at Siteground, when I asked the customer rep to wait for me while I finished something else.

That statement made me happy and I felt the need to hurry up and get back to Pavlin. At the end of the chat, I gave him a 5-star rating.

Leverage this customer psychology to increase your customer retention rate (CRR) and customer lifetime value (CLV).

10. Surprise and delight your customers

“A satisfied customer is the best strategy of all.” – Michael Leboeuf

Put a smile on your customer’s face — it can be as simple as giving the best customers recognition awards — a digital certificate perhaps. Or you could do something out of the ordinary to show how much you value them.

Here’s a good example from a Reddit user who received a handwritten thank you message from a company he’s subscribed to (as a customer). He logged onto his Reddit account to share his 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.

11. Provide additional services

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 and increase revenue.

You could host free webinars packed with valuable information, create PDF reports, or even provide interesting and educational tutorial videos.

This builds trust, and demonstrates how your products work — giving your customers a chance to interact with you as well.

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.

The reality is, a customer who is well educated in your offering is less likely to churn. Just as importantly, these same customers can refer other customers to your business.

The last word

Great customer experience should be central to the strategy of every forward-thinking company. If you treat your customers well, they’re much more likely to stick around. In the end, they may even become advocates, referring other customers to you and helping your business grow.

Sam Suthar

CMO, Acquire.io