6 Ways You Can Improve Churn Rate and Increase Revenue
- Talk to Your Customers.
- Know Your Weaknesses.
- Deliver on Your Competitive Advantage.
- Know Why Customers Cancel.
- Avoid Stupid Decisions and Bad PR.
- Assure Them While They’re Customers That They’re Using the Best Product.
What is a good revenue churn rate?
an acceptable churn rate is in the 5 – 7% range ANNUALLY, depending upon whether you measure customers or revenue.
What is churn in customer success?
The term “churn” describes the loss of customers who don’t resign their contract at the time of their renewal. This could mean many things—they found a different product better suited to their needs, they’re dissatisfied with their experience, your price point is too high, they’re under new management, etc.
How do I reduce app churn rate?
The following five strategies for boosting app engagement and retention can help lower your app’s churn rate: efficient onboarding, interacting and connecting with users, in-app messages, rewards, and two-way communication.
How do you reduce churn in SaaS?
Different Ways to Reduce SaaS customer Churn
- Reach Out Proactively.
- ID Service Weaknesses.
- Offer Added-Value Elements.
- Segment Customers Effectively.
- Use Intelligent Automated Emails.
- Target Customers at Risk of Churning.
- Focus Most on Your Most Valuable Customers.
- Get New Customers Up to Speed.
How churn affects a SaaS business?
As the limiting factor to growth, the SaaS churn rate has a very negative impact on both SaaS profitability and SaaS company valuation. Moreover, SaaS churn increases with the size of the customer base, so it is essentially negative virality, and as such is incredibly difficult to overcome.
What is revenue churn?
Revenue churn is the percentage of subscription dollars up for renewal that a company loses over a given period, or the ability to keep the contract value of existing customers.
How do you improve customer success?
13 Proven Customer Success Strategies
- Be selective. What it means: Don’t try to target everyone.
- Offer in-app onboarding.
- Enhance support.
- Expand education.
- Monitor user engagement.
- Personalize the experience.
- Communicate clearly.
- Follow up.
How do you increase repurchase rate?
Here are seven strategies to help you increase your average repeat purchase rate.
- Continue to engage with targeted post-purchase messaging.
- Trigger action in real time.
- Optimize transactional emails.
- Increase share of wallet based on external interests.
- Incentivize a second purchase.
- Consider loyalty programs.
What are the top three ways a customer success rep can minimize churn?
To get you started, here are 12 ways you can reduce customer churn.
- Analyze why churn occurs.
- Engage with your customers.
- Educate the customer.
- Know who is at risk.
- Define your most valuable customers.
- Offer incentives.
- Target the right audience.
- Give better service.
How can I protect my customers from Cancelling?
What can you do to prevent customer cancellations?
- Learn as much as you can about why they want to cancel.
- Think about what you could do to save this customer.
- Determine how to measure success going forward.
- Regularly review customer data.
- Reward customers for loyalty.
- Look for ways to add value.
What is churn rate in business?
Churn rate, sometimes known as attrition rate, is the rate at which customers stop doing business with a company over a given period of time. Churn may also apply to the number of subscribers who cancel or don’t renew a subscription. The higher your churn rate, the more customers stop buying from your business.
What is churn app?
App churn rate is the percentage of users who uninstall or stop engaging with an app over time. App churn can also be used interchangeably with abandonment rate. This app metric is typically measured at 30 days, 7 days, and 1 day after users first install the app.
What is reducing churn?
Preventing churn is key to improving revenue. Simply put, churn rate is the rate at which customers cut ties with your service during a given period. This percentage gives you a clear idea about your customer retention, which is an important factor defining a company’s success.
What is churn mitigation?
The New Customer Acquisition strategy means acquiring new customers to fill the void of churned customers. This is the most expensive strategy to mitigate churn because each new customer costs about 15 months’ worth of contract value to acquire.
6 Research-Backed Ways to Reduce Churn
When you talk about the churn rate, or rate of attrition, you’re talking about the proportion of consumers that discontinue using your products or services within a specified time frame. Although your churn rate may be calculated yearly, quarterly, or on a month-to-month basis, it provides you with a clear picture of how many people are moving into your organization against how many are leaving. A company’s turnover rate is the main measure that, when properly studied and all other factors are held constant, provides the most accurate indication of how long the organization will be in operation.
According to estimates, firms in the United States lose $136 billion in revenue each year due to avoidable client turnover.
Customer attrition may be reduced from 2.5 percent to 1 percent, according to a study conducted by Zoho.
So, what strategies can you use to minimize churn and increase client retention?
1. Over-deliver during the first customer interaction
When it comes to client attrition, first impressions are important to remember. The majority of clients will establish an opinion about your company based on their initial engagement with you, and it can be tough to change their views after an impression has been formed. This welcome email from Envira Gallery serves as an excellent example of making a strong first impression. The welcome email accomplishes a number of important tasks that help to establish trust with consumers and perhaps minimize churn:
- It helps people feel welcome and comfortable while they are utilizing the product. It leads people through the process of getting started and provides links to comprehensive documentation and instructions to assist them
- In addition to indicating that consumers may contact the company with complaints, questions, or criticism, it also encourages them to do so
The importance of paying close attention to consumers’ initial connection with your business is so great that, according to research conducted by thinkJar, 67 percent of customer turnover may be avoided when a client’s issue is fixed at the first engagement. Of course, it’s important to point out that there are both direct and indirect methods of accomplishing this goal:
- If you notice a common customer complaint or issue during the initial stage of using your product or service, you may want to investigate whether there is a way to automate the resolution of this complaint or problem. In order to work around a problem, you could include a feature that either resolves it or introduces a tutorial that shows users how to work around it. You can prevent users from having to file a formal complaint about a major issue with your services by automatically reaching out to them and asking if they require assistance in resolving the issue before they have reason to file a formal complaint.
2. Educate people about using your products
Your product is great and all, but it’s necessary to accept the potential that you’re suffering from the curse of knowledge before moving on. In communication, the curse of knowledge refers to a cognitive bias in which someone speaking with another unintentionally thinks that people being contacted with have the necessary background knowledge to comprehend what is being said. Although it is natural to think that your software or any other product would be simple to use for the majority of your consumers when developing software or any other product, this is not always the case; for example, In addition, when customers have difficulties while using your product, they will sooner cancel than than go through the effort of contacting customer service.
A case study conducted by a firm that specializes in payments and subscription analytics In this case, Baremetrics demonstrates how critical it is to ensure that people are well-informed about the features of your goods and how to utilize them.
They made the decision to implement a set of steps since user churn was at 10% and revenue churn was at 13.1 percent at the time. In order to make these improvements, the company worked on better teaching people about how to utilize the product using various techniques, such as:
- Increasing the size of the company’s support desk
- Increasing the number of educational webinars
- Changing the timing of lifecycle emails to better meet the demands of customers
- Handling customer service calls and emails by hand to guarantee that consumers understand how to utilize the product
Following the implementation of these modifications, Baremetrics was able to cut churn by 68 percent in just one month! They were able to reduce user churn to 3 percent while also reducing revenue churn to 5 percent.
3. Focus on security to gain each user’s trust
Churn and user security are intertwined concepts. If you are the victim of a cybersecurity assault or just appear to be a less safe choice to users, it is nearly certain that they will seek other services. Terrorists, thieves, and muggers are all feared more by the ordinary American, according to acompilation of cybersecurity information published byRestore Privacy. As an example, in the banking business, a Harris Interactive survey (conducted on behalf of Entersekt) discovered that 71% of Americans are inclined to transfer banks if they become a victim of phishing.
It is possible to establish and reinforce confidence in your brand by implementing the following strategies:
- Users will appreciate knowing that you are concerned about their privacy and security if you display secure trust marks and seals
- This includes employing SSL, secure seals, and making investments to ensure that user data is always safe. Communicate to users on a consistent basis that they are safe when they utilize your services. Utilise trusted third-party services to handle payments and other critical security aspects of your website whenever possible (PayPal’s reputation as a trustworthy payment processor is one of the primary reasons why many people prefer to pay via PayPal rather than directly with their credit card on most websites)
- Customer success stories and case studies should be published on a regular basis to allow people to see what can be accomplished when they use your brand and to indicate to users that they are not alone in their business dealings with you.
4. Work on your onboarding experience
One of the most significant causes for high turnover is a poor onboarding experience. Up to 60% of consumers who sign up for your SaaS program will only use it once and will never use it again, according to research. This isn’t always the result of a flaw in your product or a poor customer experience on your website. As a result, consumers are not getting the most out of their purchases because of a lack of adequate onboarding. Onboarding is the process through which you acquaint customers with your goods or services and encourage them to maximize the value they derive from utilizing them.
Rather than focusing on a one-size-fits-all impersonal approach for all customers, QuickBooks instead allows each user to select what they want to use QuickBooks for and then customizes the experience based on that selection.You can improve your onboarding experience in a variety of ways, including the following:
- Each customer’s onboarding procedure should be customized for them. In addition, by ensuring that the onboarding process is tailored to each customer’s requirements, you indicate to clients that their needs are important and make it simple for them to contact you (rather than canceling!) if they have any difficulties while using your product. Customers should be provided with milestones and goals. In order to achieve these milestones and goals, make sure that the experience of using your product or service is centered on them. They will know where they are headed and will be able to simply measure the value of utilizing your product as a result. Users should be contacted to learn how they are using your product so that you can rectify any issues they are encountering and assist them in making the most of your product. Provide consumers with instructional information targeted at assisting them in more efficiently using your product
5. Increase communication with your customers
A lack of regular connection with consumers can frequently result in significant levels of churn. When customers don’t hear from you over an extended period of time, they gradually begin to forget about you or believe you to be of lower importance to them. Increased communication is the solution to this problem. Brand monitoring service available online Mention is a noteworthy case study that demonstrates the value of maintaining continual connection with clients. The organization, which was experiencing significant churn, devised a three-month strategy to increase communication and minimize turnover.
6. Incentivize customers to keep using your product
If everything else fails, you might want to think about offering people incentives to keep using your product or services in the future. Lead Peep is a case study that demonstrates the usefulness of this particular strategy. When consumers are on the verge of canceling their accounts, the firm provides an incentive to keep them. As a result, churn has decreased by more than 50%. What Lead Peep does is provide subscribers with a 20 percent discount on their existing plan or a free upgrade to a more expensive package at the time of termination of their subscription.
It’s also possible to take advantage of a comparable option—perhaps with a personal touch added.
It is important to note that this will only work if you are aware of the true cause for the cancellation in the first place.
Prioritize customer experience to reduce churn
The turnover rate of your customers is the most crucial indicator for determining the health of your organization. Customer turnover may be reduced and the customer experience can be prioritized by implementing the following six techniques:
- It is the most significant indicator to measure the health of your business since it indicates how many customers are abandoning your brand. Customer turnover may be reduced and the customer experience can be prioritized by using the following six strategies:
a little about the author A digital marketing agency founded by Segun Onibalusi, who serves as its founder and chief executive officer (CEO). Twitter handle is @iamsegun oni, and he may be reached at [email protected].
3 Factors that Impact Your Customer Churn Rate
The churn rate of a firm has a significant influence on its revenue. If you ask the majority of people what they believe about losses, they’ll say things like overhead, advertising campaigns, the marketing team’s regular parties, and other such things: looking for money that has been spent and the return on investment it has (or has not) produced. Even if Churn prefers not to be the center of attention in these talks, it is frequently precisely where it should be. Now, let’s take a deeper look at what customer turnover rate truly means for your company and how it might have a negative influence on the bottom line of your organization.
What is churn?
It is the measurement of the number of subscription customers that have canceled their subscriptions during a specified period of time that is referred to as “churn rate.” Because most subscription payments are made on a monthly basis, the most typical way to monitor churn is to use a monthly figure. Assume you have 200 users at the beginning of May. By the end of the month, your sales staff had recruited another 42 users to the system, but you had lost 14 current clients in the process. This would translate to a monthly churn rate of 14/242 or 5.785 percent.
The usual churn rate formula is as follows: While a variety of factors impact customer turnover rates, the most common reasons for customer attrition may be ascribed to one of “the big three”: Continue reading or skip forward to the subjects listed below:
- Average subscription term
- Client acquisition cost
- Customer lifetime value (CLV)
- Calculating churn rate
- The importance of customer retention
- And other topics.
The three leading factors that impact customer churn rate:
The length of time a typical consumer spends paying for a company’s goods or services is referred to as the subscription duration. The length of a typical subscription varies depending on the sort of service provided. In contrast to a mobile fitness app that may provide monthly subscriptions, a tax preparation software firm that offers annual renewals will find it more practical. When it comes to acquiring new consumers, a month-to-month subscription payment model may be appealing and advantageous.
Customers who are still in their first month are excluded from certain firms’ statistics since the first month is usually difficult for them.
A company’s churn rate is influenced by a variety of acquisition variables, and keeping track of those characteristics may make a significant difference in long-term income.
2. Customer acquisition cost
Client acquisition cost, or the amount of money invested to acquire one new customer, is another important component in determining attrition rate. If a firm has a high cost of client acquisition, it will need to maintain a high percentage of customer retention in order to develop profitably and effectively. A high customer acquisition cost combined with a high customer retention rate means that businesses are burning valuable resources to attract new users, only for those consumers to abandon ship in a short period of time.
When both of these quantities are under control, things are rather straightforward.
Improved onboarding experience
The majority of users (40-60 percent) abandon the product after only a single use. This is frequently due to the fact that customers are unable to rapidly comprehend how a product genuinely delivers value to their company. This may be mitigated by improving the onboarding process and communicating properly with users across each stage of the sales funnel. The fact that consumers are aware of what they are signing up for makes it reasonable to expect that they will not abandon it after only one use.
Improved customer service
The provision of excellent customer service should be a major component of any company’s strategy if it wishes to retain consumers over the long run. Many businesses consider customer service to be a cost that should be cut to the greatest extent feasible, rather than an investment in the success of their customers. The likelihood of consumers being loyal to a company increases when they are treated well by the company. If your company has a stellar customer service staff, your customers will reward you by referring their friends and family, so assisting the company in its growth.
Almost nine out of ten clients have abandoned a company as a result of a negative customer experience. In contrast, 86 percent of customers are prepared to spend extra simply for a better customer experience, regardless of whether or not the product is superior.
One of the most effective methods of attracting new clients is to provide first-time users with unique discounts or free trial periods. A period of free usage might provide the consumer with adequate time to determine whether or not your product is a good match for them at their own speed. ImageSource
3. Customer lifetime value (CLV)
Customer lifetime value (CLV) is a metric that assesses a customer’s entire worth to a business throughout the course of their engagement with the company. When seen in conjunction with client acquisition expenses, this measure is quite valuable. Whenever the company’s client acquisition costs outweigh its customer lifetime value, it is experiencing negative return on investment (ROI) with respect to each individual customer. Companies work hard to find strategies to boost the lifetime value of their clients in order to prevent this situation.
Providing additional services
Additional services, which are typically complimentary to a firm’s primary business offering, may make a significant impact in terms of giving clients with even more reasons to stay with a company, according to a recent study. Companies may, for example, hold free webinars that provide vital information, generate downloadable reports, or even provide interesting and instructional training videos.
Calculating churn rate
Customers who have left a company (also known as churned customers) are divided by the total number of customers to arrive at a churn rate. Number of customers that have left compared to the total number of customers When trying to determine the overall number of clients over a period of time, it might be tough. It is not always possible to identify the number of total customers for a particular month, for example, since the number of total customers might fluctuate over the month as a result of new consumers onboarding and cancellations from the present user base.
Calculations of churn rates that include new customers who are still in their first month of service (for example, during a trial period) cause the percentage to skew higher than it otherwise would.
Defining the moment of churn
Typically, companies describe the time of churn in one of two ways:
- The point at which a subscription expires or is not renewed
- The point at when the cancellation is made
When a subscriber cancels their membership, they are not considered to have churned because there is still time to win that client back and elicit a renewal before their subscription expires, according to industry standards. There are other industry-specific considerations at play, such as seasonality, which is one example. The total number of customers is the most typical way to evaluate churn; however, firms may choose to monitor churn using other metrics, such as revenue, number of product licenses, or even product downgrades, to establish a baseline.
Actually, 69 percent of SaaS organizations employ this way of measuring their performance. Nice! ImageSource
Why customer retention is vital
Customer retention rates may be improved by as little as 5 percent, which can result in a profit boost of at least 25 percent. Increased customer retention has the potential to have a long-term influence on the overall performance of a business. It doesn’t matter how many new customers a firm acquires each month; if it has a low customer retention rate, it is losing out on significant amounts of potential money. Customers who leave a firm may have a huge influence on its bottom line, with an estimated $1.6 trillion in revenue lost each year as a result of a company’s inability to retain existing customers.
While many businesses place a high priority on expanding their client base and developing strategies to reduce customer acquisition expenses, it is important to remember that it costs five times more to acquire a new customer than it does to retain an existing one.
Gaining a thorough grasp of a company’s turnover rate helps to set the foundation for long-term success and can result in a significant rise in overall income. Knowing the importance of repeat customers will guarantee that customer retention is emphasized over just acquiring new consumers at a constant pace in the future. In spite of the fact that all businesses will experience some level of churn, savvy organizations may survive and thrive by lowering the impact turnover has on their bottom line and growing revenue by actively working towards having a negative churn rate.
Having the proper tools in place to collect and analyze this information allows businesses to boost sales possibilities, add value to their customers’ experiences, and generate revenue while also increasing customer loyalty.
11 Proven Strategies to Reduce Customer Churn Rate (Updated)
To keep your customers happy, it’s critical that you understand how to lower the turnover rate of your business. Of course, some degree of customer churn is unavoidable – no matter how much work you put into ensuring that your consumers are completely satisfied. There are a variety of reasons why clients choose not to do business with you that are completely out of your control. Although you may not be able to manage everything, if you can identify and solve the issues that are under your control, you may significantly reduce the negative impact on your organization.
Let’s first define what customer churn is and how it’s calculated before we get into the meat of the discussion.
What is customer churn rate?
Customer churn rate measures the rate at which customers abandon their relationship with you over a specified period of time. Customer attrition is another term you may have heard used to describe this phenomenon. The higher your turnover rate, the greater the number of clients you will lose. The lower your churn rate, on the other hand, the greater the number of consumers you are able to retain. The pace at which customers leave your company stands in direct opposition to the rate at which they stay with you.
For example, if you have a retention percentage of 75 percent, your churn rate will be 25 percent of your total customers. Generally speaking, you’ll want to strive for a reduced churn rate and to guarantee that you keep consumers.
How to calculate churn rate
In the context of a certain time period, the customer churn rate indicates the rate at which consumers discontinue doing business with you. In certain circles, client attrition is referred to as “churn.” More consumers are lost as a result of a greater turnover rate. However, the lower your churn rate is, the more consumers you are able to retain on your roster. The pace at which customers leave your company runs counter to the rate at which they stay. As a result, if you have a 75 percent retention rate, you will have a 25 percent churn rate.
Churn rate formula
A company’s churn rate is calculated as follows: (number of customers lost / total number of customers at the beginning of the time period) x 100. For example, if you have 1,000 customers and lose 250 of those customers over the course of a month, your customer churn rate will be 25 percent for that month and 25 percent for the next month. (250/1000) multiplied by 100 is 25 percent
11 Strategies to reduce customer churn rate
So, what exactly does it take to lower your churn rate and increase the number of repeat clients you have? Here is a series of techniques to assist you in accomplishing your goal.
1. Analyze why churn is happening
Prior to attempting to resolve a problem, it is necessary to determine its source. And that entails soliciting client input and tracking the progress of the project. When you notice churn in your company, utilize these ways to figure out why it is happening.
- If at all feasible, contact the consumer
- If you haven’t already, send a customer satisfaction survey.
Having a conversation with your clients over the phone is not only a terrific way to demonstrate your concern, but it is also your best bet for obtaining the depth of information about their reasons for churning that may make a genuine impact in your business. As a result, you will have the opportunity to ask follow-up questions to dig further and explain things if necessary. Customers who don’t want to speak on the phone or for whom it is just impractical to do so might benefit from surveys, which can be an effective strategy.
It is quite OK to have one or two that truly go to the heart of the problem.
You could also send the survey on mobile devices via an app or SMS, if you wanted to make things even more convenient.
2. Use cobrowsing for personalized customer service
Customer retention via excellent client service is one of the most efficient strategies to decrease customer turnover. As a result, incorporating a human touch into your customer care through the use of a solution such as cobrowsingcan be quite beneficial in keeping a strong client base. When used properly, cobrowsing may be quite effective since it brings your client and agent together on the same page, literally, and provides a visual reference point around which to communicate with one another.
The likelihood of clients becoming dissatisfied while attempting to comprehend the answers to challenges being discussed over the phone is reduced accordingly. Instead, agents may graphically illustrate what consumers need to accomplish and then lead them through the process.
3. Improve the user onboarding process
Consider how you can integrate your service into people’s life in such a manner that you become necessary. This makes switching to your competitors or canceling their accounts incredibly tough for them to accomplish. In the case of Zapier, the company offers a 14-day free trial plan that allows customers to evaluate the service before purchasing a pro plan. During this trial time, you (the user) will receive all of the assistance that a premium client would receive, as well as the ability to take use of all of the greatest features available on their service across all plans.
6. Create a community around your product
People enjoy feeling like they are a member of a group. The urge to be accepted and accepted by others is deeply established in our DNA. As a result, one method of lowering customer turnover is to make your consumers feel that they are an integral part of your business. Mozi is an excellent example of a firm that has done a wonderful job of fostering a vibrant community. They have a blog that is powered by guest posts, and any member of the community is invited to contribute a guest article to the blog.
Educating and engaging people through the usage of online communities in this manner helps to keep the brand at the forefront of their minds.
7.Remind customers of the value you provide
As the novelty of your product or service wears off, established clients may lose sight of the value of what you have to offer them. That is, unless you expressly tell them what you want them to do. Gather measurements and statistics that demonstrate the positive impact your service is having on their life or business — for example, how it is assisting them in increasing revenue or saving them time. Then keep them up to speed with this information and inform them of the progress that has been done.
8. Increase customer engagement
Customers are continuously assaulted with a plethora of alternatives and information from all directions. Keep in mind that your organization isn’t the only one capable of meeting their requirements. If they believe they are not receiving the maximum value out of their connection with you, they have the option — and the willingness — to switch to one of your rivals. You can enhance customer engagement and cultivate long-term connections if you have a solid plan in place that focuses on customer satisfaction and retention rates.
You may also host webinars or Q&A sessions, or you could just publish content on social media networks like Facebook and Twitter.
9. Offer dedicated account managers
A dedicated customer service representative, depending on the sort of company you run, can be a valuable tool in retaining customers who have been accustomed to working with you. Customer retention is increased when they believe they have a personal relationship with someone within the organization. It is true that this is not always achievable. Take an omnichannel strategy to compensate for this by providing your agents with information and context about consumers while also creating a conversational experience.
Instead, customers will have the impression that they have a personal relationship with your organization as a whole. Improve your customer retention strategy by implementing this sort of approach. This will help you increase your customer retention rate (CRR) and client lifetime value (CLV).
10. Surprise and delight your customers
If you can give a customer a small present ‘just because,’ or recognize them with a digital certificate, you may significantly lower customer turnover rates.an Here’s example of a handwritten thank you note received from a firm they’re subscribed to on Reddit (as a customer). They took to their Reddit account to share their story and enthusiasm.A simple thank you message may go a long wayIt’s likely that not only have they maintained that client, but they’ve also drawn a few more to their company as a result of this.
11. Provide additional services
If you can provide your clients with additional services that go above and beyond your primary company offering, it may make a significant difference in terms of increasing their likelihood of returning. Consider how you may supply services that will assist them in expanding their businesses or improving their quality of life. For example, you may create valuable tools and provide them for free. HubSpot is a company that provides inbound marketing software and automation solutions for internet marketers and small businesses.
Leave customers wanting more
All of this boils down to providing a positive customer experience, which is the most effective method of lowering customer turnover rates. Maintain a positive relationship with your consumers, and they’ll be far more inclined to return. They may even turn into brand ambassadors, introducing new clients to you and assisting in the expansion of your firm.
5 Proven Strategies to Reduce Customer Churn Rate
Your customer turnover rate is a fantastic indicator of how well your company is treating its consumers. Despite the fact that every organization would prefer to have a turnover rate of zero percent, in reality, this is not realistic. However, it is quite possible to maintain this rate as low as possible so that it does not negatively impact your chances of success. The path ahead is not without its challenges. However, keep in mind that even a 5 percent rise in retention rates may result in a 95 percent gain in earnings.
1. Have an Outstanding Customer Service
When it comes to client service, we truly believe that we are providing great service. The reason for this is straightforward: bad customer service is the number one reason why 89 percent of customers choose to deal with a competitor business rather than their own. Furthermore, 47 percent of customers would refer a firm to a friend or family member if the company offered superior customer service. Customers want to be acknowledged and appreciated. Even more importantly, consumers want to know how their input is contributing to the value of your product or service.
Here are a few things to think about before making your decision:
- Follow-up. Your consumers will call or write to you most often when they have a problem or an issue they want to discuss. Make contact with customers and inquire about their experience with your product or service rather than waiting for it to happen. Sending follow-up emails after they’ve subscribed is a simple way of accomplishing this. Make it clear to consumers that you are available to them. Moreover, send them follow-up emails even after you’ve repaired their problem to see whether everything is running well now.
- Make the messaging more personal. When it comes to building a successful customer connection, personalization is essential. It demonstrates to consumers that you put in the effort to become acquainted with them rather than sending a one-size-fits-all communication. The use of consumer data may have a significant impact on your income. Customers are more likely to engage with an offer if it is based on past encounters they have had with your company, according to nearly 79 percent of consumers.
- Take a more humane approach. Make sure you don’t just react mechanically or in a generic manner. To take the human approach to the next level, designate a specialized client representative and bring this into focus when speaking with customers who are unhappy. Seven out of ten customers appreciate being able to speak with the same agent each time they connect with the organization.
You’ve probably heard the expression “prevention is better than cure.” Encouraging communication not only allows you to build a strong customer connection, but it also allows you to gain true insights into your product or service from the people who use it – and they are the ideal source if you want to enhance your product or service.
2. Prove Your Value to the Customers
The fact that a consumer has registered to your email list or purchased your goods or service does not always imply that they will always regard your brand’s worth. In fact, demonstrating your value to clients is something you should do on a frequent basis to ensure that they don’t forget what it is that distinguishes you from your competition. If this is the root reason of your customer turnover rate, here are some suggestions for lowering it:
- Emphasize the positive aspects To do this, you may send automated emails to consumers, in which you remind them of the major advantages of your product or service and how it can add value to their lives. Distribute informational content Create infographics, templates, tutorials, and other educational material that will effectively communicate the value and main aspects of your organization in a visually appealing manner
- Case studies should be sent in. Anyone who has had a positive experience wants to hear about it, so if you have some to share with your consumers, that would be fantastic. If you have more to say, select to provide case studies involving your product or service on a weekly or monthly basis if you have more to say.
The competitive market is just too powerful for you to ignore the need to remind your customers of your significance. This is an area in which many businesses do not put out sufficient effort. Because of this, their competitors have an extremely simple time stealing their consumers. Customer loyalty is built on the foundation of providing value to your consumers. Customers will remember your company’s worth and what it can achieve for them in the future.
3. Improve Your Onboarding Process
The onboarding phase is the most important period of time for holding consumers’ attention. In most cases, it is the first time a user interacts with the program. If you don’t make an impression on users within the first 20 seconds of their onboarding, you’re going to have a big problem with client retention. Many aspects of your onboarding process may be lacking. However, based on our observations, the following is where organizations go wrong and what they can do right:
- Attempting to explain the apparent Users have previously engaged with a large number of various products and services, making it difficult to wow them further. Because of their extensive knowledge, they are not required to describe the apparent functions that are virtually universally applicable to every product or service. Instead, concentrate on what distinguishes you from the competition and how it may benefit your customers’ lives. On-the-fly instruction When your customers first begin utilizing your product or service, they will require your assistance. The most effective technique to assist them is to guide them through the program while they are using it. Users may not understand how to utilize a particular feature if all of the conceivable scenarios are shown in one step as a result of the instructions being displayed far too soon. The practice of requesting approval too soon The clients may withdraw their consent if you ask them to provide you access to a certain function on their device. When your desire is fulfilled immediately after they begin using your product or service, however, this is what occurs. So, first demonstrate to them how they may profit from your services, and then seek for their approval
If clients don’t immediately see your superiority, it will be difficult to convince them of your superiority later on. That is why the goal of the onboarding process is to leave a lasting impression on your consumers. In order for them to come back, you must establish a positive relationship with them from the beginning. First impressions are important, and they will undoubtedly aid you in averting an increase in client turnover rates in the future.
4. Reward Loyal Customers
Customers that are loyal to your company are one of the most effective strategies of lowering your customer turnover. This is accomplished by a consistent investment in the relationship you have with them. There’s a compelling argument for doing so. Customers that are loyal spend 67 percent more than new customers, and they are four times more likely to suggest others. Here are a few examples of how you might begin to invest in loyal customers:
- Discounts should be provided. It’s difficult to say no to a nice price drop! Making offers of discounts is an excellent behavior-based trigger for increasing your profit margin. For example, if a loyal customer’s membership is due to expire, you may offer them a discount in order to persuade them to renew their subscription. Freebies should be sent. Investigate every aspect of your niche. What do your (possible) consumers think of your products? The creation of a customer milestone, where the client receives a prize each time they accomplish the milestone, is an excellent strategy for converting them into loyal customers. They will be more motivated to return since they will be aware that they will ultimately obtain free merchandise if they do. Provide a customer loyalty program. Providing your loyal users with a referral incentive or reward is another effective strategy to keep them engaged. The result is that you pay a bonus or incentive to your consumers whenever they successfully bring in new clients to your business. This might be in the form of money, a discount, courses, or books, among other things.
Customers like to have a good time, so be sure to provide them with opportunities to do so on occasion. Rewarding customers is not only cost-effective, but it may also considerably increase your profit margins and cut your customer turnover rate.
5. Create a community
Making an online community that revolves on a certain product or service (or perhaps your business as a whole) requires time and effort. However, if you’ve established a strong community, it may significantly improve your market position and assist you in sustaining a low churn rate in the long run. It’s all about having a group of devoted consumers who would help you spread the news, and in this situation, they would talk about it amongst themselves to spread the word further.
Building a community necessitates the development of a comprehensive marketing strategy, but we’ll highlight some of the aspects to consider throughout the planning process:
- Contests and prizes should be organized. Contests and giveaways may be extremely beneficial to your company in a variety of ways. They may increase interaction, assist you in growing your email list, and ultimately, if the contestants had a good time, it is highly likely that they will recommend you. Make certain that the award you offer is appealing to the clients in your niche and that it has the potential to be shared widely on social media. Gamification may be used to increase user engagement. Gamification strategies are effective for two reasons: first, they assist to develop a larger community, and second, they drive customers to become active members of that community after they have signed up. Creating avatars and badges for users is one of the most effective gamification ways for improving user engagement in communities, according to research. These would be determined depending on the user’s previous activities. For example, in order to earn the greatest ranking possible, the user must engage in a certain quantity of activity or do a certain action, such as like you on social media or introducing a friend. This form of peer review, which also allows users to evaluate and rank one another, is an excellent idea, and it should be implemented. Encourage people to engage with one another. It is in your best interests to keep your consumers talking. Not only are you fostering involvement in this manner, but by exchanging experiences and ideas, you may be able to convert regular consumers into loyal ones. In the case of a consumer experiencing difficulties with one of your products or services, they can seek help from the community and find a solution there. Knowing that they have a place to turn when they are confronted with an issue is a compelling incentive for them to remain a client rather than terminate their relationship with you.
The community is a place where consumers come first, not where you come first. Provide an environment that is focused on the needs of the community’s members and inform them that it is a location where their relationship with the brand is elevated. The process of developing a community is fraught with ups and downs. Nonetheless, in the long term, it has the potential to significantly reduce customer turnover rates, among many other advantages.
In many circumstances, client retention is not taken into consideration. Many businesses eventually come to the understanding that they cannot continue to operate in the acquisition mode indefinitely. At the end of the day, it’s all about keeping your consumers happy enough that they don’t terminate their business relationship with you. When you use the appropriate strategy, you may lower your customer churn rate by turning one-time consumers into loyal customers who will continue to purchase from your company on a regular basis.
Please do not hesitate to contact Alite International if you require assistance with the process of developing and implementing win-back initiatives.
Send us an email at [email protected] if you have any questions.
How to beat customer churn and improve retention
If you run a business that operates on a subscription basis, one of the most important metrics to track is client attrition. Churn is one measure that does not hold back when it comes to informing you how well your company is performing. You may use it as a hard fact to determine whether or not your clients are happy with your product or service.
What is customer churn?
When it comes to customer churn, it refers to the proportion of consumers that ceased using your product/service within a specified period of time. Customer churn rate is calculated as follows: number of customers lost within a certain time period (month, quarter, or year) divided by the number of customers you had at the start of that time period (month or quarter or annual) Here’s an intriguing chart to help you go more into the subject: If you lose 5 percent of your paying subscription clients each month, you will have a customer churn rate of close to 50% on a yearly basis!
To put this into perspective, consider the following graph: a firm with 5 percent monthly turnover vs a company with 10 percent monthly churn that adds 100 clients every month, respectively.
Companies are becoming more aware than ever before of the critical necessity of client retention.
If you have a solid foundation on which to build, your growth will be exponential. However, if your customer turnover is out of control, no amount of advertising or marketing money will be able to save you.
Setting up the process to reduce customer churn
Early stage (between 0 and 3 months): Early-stage customer attrition is mostly caused by product acceptance issues. Most of the people that cycle through our site are unable to get set-up and are either not utilizing the tool or are only using a limited portion of it. To effectively prevent early stage churn, you must pay special attention to the user experience. Make certain that you have relevant training materials and one-on-one help, and that there are no UI confusions that are causing users to become confused.
- You might want to consider hiring some outside testers to go through the onboarding process with a new pair of eyes.
- Typically, this is due to the software or service having little or no influence on the business.
- After the first few months, many businesses cease paying attention to their clients unless they actively raise difficulties with them.
- Instead, make an investment in gathering information on how your clients are faring during the first year and early phases of the business.
- This occurs because consumers have discovered a better option, they do not see the software/service scaling with them, they have been burnt out, or they have seen a series of defects or flaws that have caused them to become dissatisfied with the product.
- Accounts that are upgrading are less likely to churn.
- Thank them for their loyalty.
- A small, personal gesture may make a big difference in this situation.
2. Reduce churn by building and optimizing engagement
The likelihood of churn is lower among customers who are active in your social groups as well as in the product. In order to maximize engagement, begin immediately once a new sign-up is received. Send them a personalized videoemail or plan a 1:1 Zoom conversation with them straight away to build a human connection right from the beginning. After that, invite them to become a member of the Facebook community. Engage them in conversation by asking them questions about their company and their objectives.
Customers provide you with the opportunity to go beyond simply selling them a product and to develop a lasting relationship with them. If you do this, if you take the time to get to know them as people, when they run into difficulties, they will be less inclined to just quit the project.
3. Focus on leading indicators, not lagging indicators
There are several measures, such as Monthly Active Users (MAU) and Net Promoter Score (NPS), that may be used to foretell what is to come in the near future. MAU and NPS are examples of leading indicators, because they detect issues months before they manifest themselves in a physical manifestation. Example: If your customers are not actively utilizing the program (MAU percent is low), they are likely to churn, and your income will suffer as a result when this occurs. If you want to reduce churn, you must be proactive rather than reactive.
4. Focus on annual contracts (double edged sword)
This one is really straightforward. Keeping a client for 12 months will almost always result in an increase in customer retention in some form. Annual contracts, in my opinion, make a lot of sense and give a great deal of stability for businesses. Many firms, from Hubspot to Infusionsoft, have spoken about how they have reduced churn directly as a result of putting this emphasis on it. Having said that, it may also be used to conceal or delay problems. If your net promoter score (NPS) is poor (i.e., your customers are dissatisfied), switching to yearly contracts might force those who are dissatisfied to continue paying for a service they don’t want, resulting in a public relations catastrophe.
5. Focus on niche specific collateral
When selling software or services that are applicable to a wide range of sectors, it is critical that you provide training guides, manuals and other assets that are specific to the many industries you serve. Consider the customer’s point of view on the matter. The greater the extent to which you can replicate exactly what other similar firms have done and achieved success with, the better off you will be in terms of fixing their issues. In particular, make an effort to create onboarding emails that are suited to the sector in which the new customer works.
Consider using personal video greetings from support representatives to welcome new clients, such as “Hello!
Aligning compensation plan to churn goals can be key
Salespeople will adhere to the guidelines outlined in their compensation schemes. In the event that they are compensated just for terminating business, they will endeavor to shut any and all accounts, which may result in increased churn. Sales representatives at Hubspot were initially compensated once accounts had been open for thirty days. When you look at retention rates for the first 90 days, they are great, and then after month 5, they begin to increase immediately after that! That was clearly not what Hubspot desired, and as a result, they had to restructure their remuneration system (which is detailed in the article linked above).
The lesson of the tale is that you must provide a clear incentive for both sales and CS (Customer Success) to retain clients, and you must factor this incentive into their pay plans.
It is a difficult problem to solve since it is always changing. It’s possible that you have a technical problem that generates significant churn for a month or two. In another month, a rival may bid aggressively on your keywords and outbid you. Another month has passed and your consumers are still having difficulty adjusting to your new user interface (UI) that you recently launched. There is no such thing as a one-size-fits-all solution. However, by employing some of the strategies outlined above, you may begin to identify areas where you are experiencing difficulties (early vs late stage, for example) and what you need to do to keep these firms on board.
Processes can be automated, but not relationships.