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 (end or suspend their service) are long and varied. It could be anything from a an ongoing problem with your software to lack of focus on customer service. Not to mention, a customer might churn for reasons and that are beyond your control. Your customer’s business might be restructured in a way where your product doesn’t quite fit, or they might close up shop.

But when churn happens because your customer feels let down? That’s what needs to be mitigated, and what you definitely can.

Learning to be cognizant of what can be controlled with churn is how to reduce it. Here are a few steps 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 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 marketing team will appreciate the insight.

Use a customer churn survey

For your company 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 they’ve canceled. The former method will lead to a much higher response rate than a sent email (which might go directly to spam if your customer is really done with you), so taking the time to embed the survey in the user interface is worthwhile.

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 quicker 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.

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 recognize it and support each other’s efforts and reduce churn.

The Zendesk guide to customer service metrics

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