Turn the churn around: how to reduce customer churn

Turn the churn around: how to reduce customer churn

January 3, 2018
Turn the churn around: how to reduce customer churn

Customer churn is one of those metrics that every company must learn to live with, even when it invokes that fear of failure in us. The reasons why a customer would want to churn (which is to end or suspend their service) are long and varied. It could be anything from an ongoing problem with your software to a lack of focus on customer service. Not to mention, a customer might churn for reasons and that is beyond your control. Your customer’s business might be restructured in a way where your product doesn’t quite fit, or they might have encountered circumstances that have forced them to close up shop.

But when churn happens because your customer feels let down? When the customer loyalty that once existed is no longer there? That’s what needs to be mitigated, and what you definitely can.

Learning what can be controlled regarding churn is how you’ll recognize the predictive details and take the right steps to prevent defection. Here are a few tips to better prevent a customer from saying “thanks, but no thanks”.

Churn rate

Churn rate is the primary metric used for measuring churn. Determining churn rate is fairly simple: choose a timeframe (a month or a quarter) take the number of customers lost within that timeframe and divide it by the total number of customers you had at the beginning. So if you’re company started with 10,000 customers at the start of May, and lost 1,000 by the end, your churn rate would be 10%. It’s important to keep in mind that in addition to keeping current customers, one way for your company to improve churn rate is to earn new customers.

Analyze the churn related feedback…all of it

Feedback is a great resource for improving churn rate. Your company should focus on every potential source where there could be valuable feedback on your customer service, marketing, product, and/or brand. These can include:

  • Listening to the trends or problems discovered by your customer service representatives
  • Comments left on social media
  • Reactions from other professionals at industry events
  • Community forums

Keeping a finger to the pulse of your company means listening as much as possible and understanding what might contribute to churn rate. Listen to what others are saying about your competition as well–while it may not get you to the root causes of your customer churn, learning about what’s contributing to their churn may provide some extra (and valuable) context as to why it’s occurring. And, at the very least, your company’s marketers will appreciate the insights.

Use a customer churn survey

For your company to really get to the bottom of why a customer is leaving, use a customer churn survey. This is an excellent way to get specific customer feedback, especially if you’re a subscription-based business, that can prompt customers to tell you why they’re canceling their account. From the survey data, you can create a detailed report of your churn activity.

There are a few ways to accomplish this: it can be done within the user interface during the cancellation process or as a follow-up email request after the customer has canceled. The former method will lead to a much higher response rate than a marketing email (which might go directly to spam if your customer is deadset on churning), so taking the time to embed the survey in the user interface is worth the effort. Providing some kind of incentive, like a gift card or the chance to win a raffle, will also entice your valuable customers.

Implement a churn-reduction strategy

From the customer churn survey data and the feedback you’ve acquired, you should have the information you need to create an actionable strategy for reducing customer churn. This data can support things like your product roadmap, marketing, onboarding for new customers, or even for quick fixes like filling information gaps in your training materials. For instance, are new customers turned off by a complicated onboarding process? Is marketing sending too many emails to current customers? Is the company not meeting customer expectations?

It’s also not a bad idea to experiment with some smaller-scale strategies to see what reduces churn. Pick an area that could use improvement and determine how it can be measured, and set a reasonable goal for a drop in your churn rate percentage. This will help influence bigger-scale initiatives for reducing customer churn.

Be sure to also think about how the strategy can be implemented successfully within your business. A customer success manager or team will likely be integral in a churn reduction strategy, but it also starts with ensuring that customer service representatives are enabled to provide effective support. The expectation can fall on outbound sales and marketing teams, who are responsible for making a strong first impression. The stronger the first impression is, the less likely that customers will be willing to jump ship.

When you’re ready for large-scale churn-reduction strategy, it’s all hands on deck. The responsibility of measuring and reducing customer churn doesn’t just fall to customer service; every department in the company, from sales to marketing, should focus on it. If the needs of your customers are evolving, it’s up to everyone to recognize it and support each other’s efforts and reduce churn.

The Zendesk guide to customer service metrics

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