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Blog/ Nov 22, 2022

Reduce Customer Churn with these Proven Tactics

Did you know that the estimated cost of customer churn is $1.6 trillion in the US alone? (Accenture). If every company implemented some of the strategies below to reduce that churn, just think of how much saved revenue that would translate into.

At this point, if you’re looking to reduce churn, you probably already have an idea of what churn is so we’re just going to jump right into strategies on how to avoid it.

Surprisingly, more than 2 out of 3 companies have no strategy for preventing customer churn.

Here are 9 effective strategies that are known to help reduce customer churn and build better relationships with your existing customers.

 

How to Reduce Customer Churn

 

Target the right audience

The biggest reason for high churn comes from targeting the wrong audience. There could be a mixture of possibilities as to why your target audience isn’t right:

  • You are marketing to the wrong department or persona within a company
  • You may have the right product but marketing it to the wrong industry (for example, VPN services students vs. high security companies) 
  • Your marketing/sales copy isn’t aligned with your product or right audience

Maybe it is time you review your target audience and User Personas research and see if it needs to be tweaked. Otherwise, you may need to look at the copy on your website, brochures, and any other sales material to verify it does a good job at showcasing your product/service.

For example, imagine that you offer a service like Crunchbase where you have an updated database of business contacts that could be used for outreach and prospecting. This is a tool that is generally used by SDRs and sales but if you have geared your copy and sales material to focus on the marketing team, there may be a misalignment in who this tool is really meant for. Marketers would sign up and see very little value for them which would make them churn a lot faster than an SDR or salesperson.

 

Provide a roadmap and vision for new customers

Targeting the right audience will get you on track to reducing your churn but in order to keep the right customers you need to provide a roadmap or vision for them to get to the “ah ha” moment of your product or service. The “ah ha” moment is the point in which your customer realizes the value and power of what you are providing and how it solves their problem. 

You must make value apparent from the very beginning stages of your relationship with your customers. You can quickly prove your value to customers with digital onboarding.

  • Offer dedicated account managers who can help guide customers through your various services and support options
  • Create digital onboarding tours or wizards to help guide them on how to use your platform
  • Streamline/optimize your product or service so they can get to the most powerful feature in the least amount of time

With any of these options, it is really important to establish goals and metrics to help optimize the entire customer journey. Read on to find out why collecting usage data and tracking customer activity matters so much.

 

Analyze churn when it happens

You are blind without analytics, period. The data collected becomes the breadcrumbs you use to turn the customer journey from a guessing game into a science. Track anything and everything you can. The more data, the better. For example:

  • Did they complete the onboarding wizard?
  • How many minutes/hours do they spend using your app or service?
  • What buttons are they clicking on?
  • What features are they using the most?
  • When was the last time they logged in?

To put this in a real scenario, imagine that you are a cloud storage company and after averaging out the usage data you have collected, you have found out your average user::

  • Logs in 2 times a day
  • Uploads 100 files a month
  • Average file size is 500mb
  • The most used feature is the encryption tool

Now compare that with a user that will potentially churn 

  • Logs in 2 times a month
  • Uploaded 1 file
  • Hasn’t click on any of the extra tools

When you start collecting this data and analyzing it, you will begin to have clear indicators that will alert you to customers that are more likely to churn. This is not only proactive, but you may end up providing a better customer experience because of it. 

Additionally, when you do run into a customer that churns (let’s be honest, it is going to happen once and a while), you now have a way to look at your data and see possible reasons why they decided to leave so you can correct it in the future. 

 

Lean into your best customers

In marketing, the Pareto principle says that 80% of your sales are represented by 20% of your customers. Your top 20% of users could be considered power users. They are the ones that use your product or service the most as well as bring in the most revenue. It is critical that you focus on keeping them as happy customers. Something seems to be working and you need to not only find out what that is, but ensure you keep it that way. Let’s take a look at what actions you can take.

  • Ask for feedback (quarterly surveys, NPM scoring, )
  • Create easy and fast ways to provide the best customer service (live chat, a dedicated representative, face-to-face meetings, etc. )
  • Make sure you are solving their problem in the best way possible
  • Help them to become advocates for your product and service so they can bring similar customers to you

Be proactive with communication

Proactive communication is a fundamental element to reducing your churn. You are much more likely to retain customers if you communicate with them before issues start popping up. 

  • Provide quarterly surveys that allow your customers to rate what they love or hate about your product or service as well as things they would love to see included in the future.
  • Automate email or notifications based on user behavior that your research has found to lead to churn. (e.g. haven’t logged in or haven’t used core functionality).
  • Have account reps schedule checkup calls every quarter with customers to have one-on-one conversations that could lead to a better relationship as well as deeper insights.
  • Have a public roadmap available where customers can upvote or voice their opinions for critical features they want to see in the future. 

Ask for feedback often

Feedback loops help you prevent customer churn by regularly asking customers for feedback.

Gathering feedback is a key part of retaining customers, regardless of whether your product or service is mature. Feedback is an important part of a customer's relationship with a business. If you can take meaningful action and implement what you customers suggest, you will:

  • Keep your current customers happy
  • Differentiate yourself from the competition
  • Improve based on real data, not opinion

You can come up with a lot of interesting ways to collect feedback and we have even mentioned a few possible ways to collect that info in some of the other sections above and below. But the feedback you collect such as:

  • Do you actually solve their problem?
  • What do they like least?
  • What do they like most?
  • What is the feature/service that is missing?
  • How easy is the product/service to use?

You can provide follow-up questions to these to dive deeper into the subject but if you can get answers to these, it will give you a great roadmap for where to go in the future. But make sure that this becomes a routine every quarter, or year. By continually asking these questions, you will be able to compare data to know if you are making progress or regressing. 

 

Provide excellent customer service

The top three traits that consumers look for in a company are fair prices (78%), good customer service (74%), and quality products (73%). (Accenture)

To add to that, a study by Emplifi found that 86% of consumers would leave a brand they trusted after two bad customer experiences. So imagine being a customer and find out that you have been double-billed, over-billed, or billed for the wrong usage. This would provide a bad experience for anyone. 

It doesn’t matter how good your product is, if your customer service is horrible, your customers will jump ship as soon as they can find an alternative.

There are generally two main categories that impact customer service, billing and support. If you can create great experiences there, it will be hard for your competitors to match.

 

Support

Create multiple contact points - Provide easy and fast ways to give support. That can be through a chat bot, live support, a 24-hour toll free number. Make it easy for customers to contact you and your team. 

Zero complications - If a customer isn’t happy, do everything you can to solve it. 

  • Was there an overage charge that they caused but were shocked by? Refund it (within reason)
  • Was there a service interruption? Refund or make up for it?

Billing

Make payments easy - Make it easy for your customers to pay their bill. Go with a billing solution that allows your customers to easily pay their bills. For example, being able to pay through an SMS message, portal, or email.

Usage-based billing - According to a survey done by Overview, 45% of the SaaS companies that were surveyed had switched to a usage-based pricing model in 2021. 

 

 

Automated notifications - Remember how one of the strategies above was to be proactive with your communication with clients? Regardless of whether you have a flat subscription or usage-based service, your billing solution should allow you to set up automated notifications for usage limits, collections and dunning. 

As an example:

  • Allow your customers to set up usage-limit notifications so that they never exceed their data cap limit.
  • Sending a late payment email once 10 days past the invoice date has been reached.

 

Create a community around your customers

This may take some creativity based on your business but building a community will ensure your customers will create an emotional attachment. 

When you build an ecosystem around your product or service, you are adding a layer stickiness that is hard to walk away from. 

Build a Slack or Discord channel - Bring like-minded people together to talk about your product, company, or niche.

Launch social media accounts - Provide your target audience and customer base content that they can relate to. Whether that be content like “how-to videos”, “memes”, or “product news”, you will help create a better experience for everyone. For example, Firefox does a great job with that on Reddit.

Create team or family plans - Your product or service is hard to get rid of when everyone you know is using it. Look at Slack, Teams, or telecommunication companies like Virgin. By doing this, you add a huge amount of value to the customer (either in features or discounts) but you also make it harder to leave. 

Create a support forum - Probably one of the best ways to minimize churn and maximize customer support and satisfaction is to build out a community where people can solve their problem with your product or service from other people in the community or from your team.

 

Offer incentives

Offering incentives to reduce customer churn can be a way to keep customers from canceling their subscription. It's important to consider the customer's timeline, needs, and goals when offering incentives.

  • Discount the annual plans to incentivize customers into longer contracts
  • Discounts based on the number members added to plan
  • Discount based on usage or tier
  • Offer discount or perks for feedback

 

Final Thoughts

These tactics and strategies are not overnight quick fixes to customer churn. Regardless if you implement all of them or just a few, it will take planning, commitment, and time before you start seeing an impact. The important thing is that you measure your success and try to constantly improve.

About the Author

Rich Kozub /

Rich leads the Global Services charge for LogiSense. His strong leadership skills and work ethic have been instrumental in creating the high level of customer reference-ability and reputation for service that LogiSense has achieved.

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