Churn Prevention: 13 Churn Reduction Strategies That Work
Many businesses tend to put all their efforts into acquiring new customers. But what good is that if those same folks turn right around and leave in the following days? This is what’s referred to as churn, or the percentage of users who stop using a product or service during a period of time.
While churn is bound to happen — no company is immune to losing customers, after all — there are steps organizations can take to prevent and reduce churn. And in doing so, experience increased revenue and accelerated growth.
This article explores the concept of customer churn in further detail and dives into 13 proven churn reduction strategies that really work. Keep reading to learn how companies like yours can effectively minimize churn and build stronger, more loyal customer relationships that support sustainable growth.
What Is Customer Churn?
Let’s start at the beginning by defining churn. The customer churn rate is essentially the rate at which existing customers leave a company or stop doing business with them. When a business experiences high churn, even with customer acquisition strategies that work, the customers it’s capturing aren’t staying.
Naturally, it follows that a company’s churn rate is opposite its customer retention rate. So, for instance, if its customer retention rate is 70%, then the churn rate is 30%.
Companies typically strive to reduce customer churn and avoid churn risk to pocket more profit, lower their acquisition costs, raise CLV, increase brand loyalty, enjoy more predictable growth and gain a competitive edge.
Why Does Churn Matter?
Paying attention to how often and quickly customers churn is important because understanding these nuances can help a business retain more users, boosting its revenue and improving its customer lifetime value (CLV).
When churn is analyzed and broken down by region, product/service and so on, a company can identify trends and determine why customers leave and don’t return. Then, it can formulate and implement strategies to reduce churn, increase customer loyalty and spur continued growth.
Types of Customer Churn
No churn management guide would be complete without discussing the two primary types of customer churn: voluntary and involuntary. The below section explores the differences between them.
Voluntary
As its name implies, voluntary churn occurs when a customer actively discontinues using the company’s service or product. In other words, they voluntarily decide to take their business elsewhere.
This decision to leave could arise for multiple reasons. For example, perhaps they aren’t satisfied with the product or service, don’t think they’re getting the value they deserve or they’ve had a bad customer service experience. This list can go on and on.
Involuntary
Then there’s involuntary churn. In this case, the customer leaves for a reason outside the company's control. Some examples include outdated payment information or a lack of funds on behalf of the customer. The most common reason for involuntary churn is unprocessed payments.
When it comes to reducing churn and churn management for SaaS companies in particular, many times it’s easier for businesses to overcome involuntary churn since it doesn’t usually involve changes to the service/product or customer service processes. Sometimes, involuntary churn can be alleviated via automation or churn software.
13 Strategies to Reduce Customer Churn
The good news is that businesses can implement various customer retention strategies to increase customer loyalty and reduce churn. From crunching the data to prioritizing the customer experience, there are many different steps companies can take to better understand their customers and encourage them to stick around for the long haul. Below are 13 recommended churn management strategies.
Analyze Why Churn Is Happening
It’s impossible to fix something without first knowing what’s wrong. This is why companies must collect data and perform cohort analyses to figure out which groups of customers are churning and why. It becomes significantly easier to retain customers once these problem areas or issues have been identified.
Engage With Customers to Gather Feedback
Beyond analytics and other quantitative sources, it can be helpful to talk to users directly. Consider collecting customer feedback via surveys and focus groups to gauge overall customer satisfaction and understand why they like or dislike the product or service. Asking open-ended questions about how customers feel should furnish valuable information that can then be used to improve retention.
Define a Roadmap for New Customers and Prioritize Onboarding
One common reason for customer attrition is a lackluster onboarding process. Why?
If new customers lack support and/or don’t understand how to use the product or service, they’ll quickly become discouraged and want to move on. To avoid losing customers, businesses should prioritize the onboarding experience, ensuring it’s relevant, informative and timely.
Consider Offering Incentives
Remember, the little extras matter. In other words, features that add value, like premium customer support and member-only content, improve the customer experience and help build brand loyalty. This is ideal because loyal customers typically spend more money, refer others and keep coming back.
Maintain a Competitive Edge
Companies that spend time studying consumer behavior and tweaking their product/service accordingly find it easier to stay ahead of the competition. They know what their customers want — by providing this and making continual adjustments, they can meet their users’ expectations, which helps reduce churn and edging out competitors.
Create a Customer Community
Think of the folks who own Jeeps. They wave to each other on the road, feeling like part of an exclusive tribe. Building a community for one’s customer base helps them feel connected to each other, the brand and the product or service at the center of it all. Online communities work, too, educating users and increasing customer engagement.
Dedicate CSMs to the Most Valuable Users
A customer success manager (CSM) ensures users are fully supported and can reach their goals. This type of proactive customer service puts customers first, giving them everything they need to understand how to use and enjoy the product or service. This emphasis on customer satisfaction, education and support generally leads to more satisfied users and lower churn.
Train Customers on Products and Services
A dedicated CSM goes hand-in-hand with training users on how to use the company’s offerings. Without this knowledge transfer, they will likely flounder and leave because they don’t understand the value of the product/service and don’t know how to properly use it. Providing demos and other training materials can help customers feel secure using the product or service, ensuring they get their money’s worth.
Focus on Attracting the Right Customers
Another retention tactic companies often employ is to aim to attract users who fit their ideal customer profile (ICP). Targeting the right audience will increase the odds these users want the product/service in front of them and will keep using it.
One way to reach them is through tailored marketing campaigns. Attracting the wrong customers will only increase churn because they will lack interest in the first place.
Make It Easy for Customers to Stay Long-Term
This might include making the process for customers to upgrade from a monthly subscription to an annual one both visible and simple, encouraging them to stay with the company longer. In fact, it’s been found that SaaS businesses with more annual subscribers tend to experience less churn.
Beyond that, companies that prioritize proactive customer service, provide customized experiences, build trust and offer unique products and services will entice users to stick around longer.
Identify Those About-to-Churn Customers
When a company takes steps to identify at-risk customers, it earns the opportunity to turn those relationships around, potentially even saving them.
To find these users, a business can examine NPS survey data, peruse online community interactions, look at support tickets, read through complaints and negative reviews and check with its customer success team. Once found, developing and implementing thoughtful strategies to re-engage these disgruntled customers is important.
Upsell and Cross-Sell Related Products and Services
Encouraging existing customers to purchase related products and add-on services via upselling and cross-selling techniques can also help reduce churn. These additional items might fill other users' needs, so the company ultimately ends up with more satisfied customers who don’t want to go anywhere.
Use Data to Drive Decisions
Finally, there are multiple ways a company can use data to learn about and understand consumer behaviors to retain users more effectively. From analyzing customer analytics to building predictive churn models and running A/B tests, a business should consistently use data to make decisions to lower churn.
Leveraging Technology for Churn Reduction
No business wants to suffer from high churn. It’s frustrating and eats into profits.
However, as seen above, a company can address churn in several ways. Using cohort analysis and other analytics, it can track customer behavior and engagement to determine why users leave.
Then, it can tackle these problems head-on by leveraging technology, improving its onboarding processes, prioritizing customer service, continually adjusting its products and services to match what its target audience wants and so on until it starts seeing a reduction in churn. Staying the course will eventually lead to fewer lost customers and happier existing ones.
How ProsperStack Can Help
There’s no reason to feel like your company needs to go it alone when it comes to retention. The ProsperStack team is standing by, eager to help turn your cancellation process into a place where you save up to 30% of your most valuable customers.
And the others? Capture their invaluable feedback and gain insights into why they’re leaving so your business can make the changes necessary to retain even more of your users in the future.
Hurry — contact ProsperStack today to immediately reduce churn, boost profits and drive growth!
