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.
So, if your business wants to:
- Retain existing customers
- Increase profits and revenue
- Scale and grow
- Create loyal customers
You'll need to learn how to reduce customer churn rate.
Let's dive in.
What is customer churn rate?
Customer churn rate is defined as the rate at which customers stop doing business with a company or brand. The higher your churn rate, the more customers you lose. A lower churn rate means more customers you keep on your books.
Your churn rate is the opposite of customer retention rate. It's always looked at as the remainder, so if you have a customer retention rate of 75%, then your churn is 25%.
How to calculate churn rate
To calculate your churn rate, you’ll need to divide the number of lost customers by the total number of customers you had at the start of that period of time. Then multiple it by 100 to create a percentage.
Churn rate formula
Churn Rate = (Number of customers lost / Total number of customers at start of time frame) 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% for that month.
Related: Customer Service KPIs You Need to Measure
What causes customer churn?
Because every company is different, the factors that lead to customer churn vary by industry. But the leading causes tend to stay the same:
- Poor onboarding process
- Weak customer relationships or communication
- Terrible or lack of customer service
- Difficult user experience with the product
- Completely ignoring complaints and feedback
So, what does it take to reduce customer churn rate and create more repeat customers?
Here are a set of customer churn strategies to do just that.
How to reduce customer churn rate and increase retention
- Analyze why churn is happening
- Use cobrowsing for personalized service
- Improve the user onboarding process
- Provide proactive customer service
- Make yourself indispensable
- Create a community around your project
- Remind customers the value you provide
- Increase customer engagement
- Offer dedicated account managers
- Surprise and delight your customers
- Provide additional services
1. Analyze why churn is happening
Before tackling a problem, you need to identify the cause. 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.
- Call the customer (if possible)
- Send a customer exit survey (if not)
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.
2. Use cobrowsing for personalized customer service
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.
3. Improve the user onboarding process
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 this problem. Once customers understand how to get the most out of your product or service, they’re far more likely to stick around.
4. Provide proactive customer service
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 team take a proactive customer service 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.
5. Make yourself indispensable
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.
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. So, one way to reduce customer churn is to make your customers feel like they're part of your brand.
Moz runs a guest post-driven blog, to which any member of the community is welcome to submit a guest. Their 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.
7. Remind customers of the value you provide
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.
To better reduce customer churn, 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.
8. Increase customer engagement
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.
9. Offer dedicated account managers
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).
10. Surprise and delight your customers
Little gifts ‘just because’, some customer recognition through a digital certificate perhaps — anything that helps put a smile on your customer’s face can really help reduce customer churn.
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.
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 or improve their lives.
Improve churn rate with a better customer experience
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.
Which of these customer churn reduction strategies are you going to implement? Are there any missing strategies you know that work?
Let us know in the comments.
