Businesses that continually increase their customer base are the most successful. These businesses work hard on their churn reduction.
Losing customers or customer churn can become a serious problem if you do not get it under control. It is generally accepted that customer retention is more cost-effective than customer acquisition. With an effective churn reduction strategy, you not only increase your customer loyalty but also reduce your acquisition costs.
Explore this guide to learn 5 proven strategies for reducing customer churn.
Key Takeaways
- When customers stop using your products or services, that is customer churn.
- Customer churn is caused by pricing and poor customer experience, among other things.
- Businesses should focus on keeping their best customers with continual communication and incentives for loyalty.
- Sending out thorough onboarding information can help new customers get the best experience from your products or services.
What Is Customer Churn?
Customer churn is the number of customers who stopped using your company’s products or services during a certain period. This is usually calculated by dividing the total number of customers you lost by the number of customers you started with during that period. Many businesses calculate their churn rate for each quarter.
Consider this example. Company A started in 2022 with 1,000 customers. By the end of March, they had lost 50 customers. If you divide 50 by 1,000, you get a churn rate of 5% for the first quarter of the year.
While a company may still be gaining more customers than they are losing, keeping the churn rate as low as possible leads to a stronger business and more revenue.
This video goes into more detail about what churn is and how to prevent it.
What Causes Customer Churn?
While each customer may have a unique reason for leaving a brand behind, these are some of the most common causes of customer churn:
- Customer Experience: If a customer has a negative experience with your brand, they will most likely leave. One study found that 96% of customers abandon a brand because of bad customer service.
- Price: No one wants to pay more for something than they have to. If a customer can find a better price without sacrificing quality, they may move on. It is important to prove your value to your customers again and again to prevent churn.
- Poor Product Fit: Sometimes, your product or service is simply not a good fit for a customer. If this happens frequently, you may need to adjust your sales and marketing strategies to target more suited customers.
Master Churn Reduction With These 5 Strategies
Overcoming a high churn rate is crucial to a business’s success. Study after study shows that supporting your existing customers is easier and cheaper than working towards new ones. One statistic shows that the odds of selling to your current customers are 60-70% while selling to a new customer is only 5-20%.
Source: invespcro
By focusing on your current customers, you can slow down the churn and increase your revenue. Try some of these 5 strategies.
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Pay Attention to Your Best Customers
Your best customers are the ones that generate the most profit for you. These customers should be your primary focus. If you have any high-value customers who are on the edge of churning, this is where your attention should go. Do what you can to show them that you appreciate their business and loyalty.
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Focus on Communication
Communication should be ongoing with all your customers. When a new customer signs up, send them a welcome message that introduces your products and services to them. If you notice they are underutilizing some of your services, send them a reminder about your brand’s capabilities.
You want to try to anticipate problems before they happen. While you can’t read their minds, an automated system with AI capabilities may be able to predict needs and respond to issues in advance. Imagine being a customer and struggling with a certain aspect of your technology and then getting an email that highlights some tips on how to do that task.
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Give New Customers a Roadmap
Signing up for a new service or buying a new product can easily be overwhelming when a customer doesn’t understand how something works. To ease those feelings, your company should send new customers an onboarding message that works as a roadmap for your products and services. It should highlight common features and basic how-tos.
Depending on what you sell, you could even create a new customer email series that periodically highlights new features and products. This gives your customers a better understanding of what they signed up for and gives them more control over their use. Customers who feel empowered are less likely to leave your brand.
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Get Some Feedback
Some amount of customer churn is inevitable. When customers request to end their service, send them a thank you along with a request for feedback. Ask them why they were unsatisfied and what ultimately caused them to leave.
You should also routinely survey your current customers to gauge how satisfied they are feeling. If you notice overall satisfaction trending downward, work quickly to uncover its source and repair the problem. This creates a customer feedback loop, which is key to improving the customer experience. Make sure to complete the final step in the loop and follow up with your customers.
Source: Convas
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Create Incentives
Before a customer calls, emails, or unsubscribes, it’s important to show them how much you appreciate their business. Creating incentive or customer loyalty programs gives them a reason to stay. For example, when a customer is approaching the end of their contract or subscription, and you are worried they might not stay, offer them a discounted rate.
Another incentive is to create a loyalty program. Depending on your business, this could mean a discount after purchasing a certain number of items or staying subscribed for a certain amount of time.
Improve Your Churn Reduction Strategies With MXTR
If your customer churn rate is higher than it should be, you need a new strategy that will improve your customer retention. Your business will suffer and could potentially close if you can’t target and retain the customers you need.
MXTR is here to help. We offer full-service packages that can help reduce customer churn. Our services include lead generation and nurturing, marketing automation, and maximizing the customer lifetime value.
Are you ready to see your business and customers transformed? Schedule a demo with MXTR today to get started.
Featured Image: istockphoto
