Do you know your churn rate? Churn rate, also known as the rate of attrition or customer churn, is the rate at which customers stop doing business with an entity. In sales, it’s when prospects drop off the sales funnel or clients cancel accounts or subscriptions. For a business to be profitable, its churn rate must be low, or its growth rate (or the rate at which it acquires new customers) must be a lot higher than its churn rate.
There’s a simple formula for calculating for your churn rate: Divide your number of churned customers in a given period by your total number of customers in the same period.
It’s important that businesses monitor their churn rate so they can keep their sales pipeline health in check. SaaS companies in particular have to pay close attention to their churn rates That's because curn rates are especially relevant in companies whose business models rely on subscriptions.
So what can you do to try to lower your churn rate? Here are 13 strategies you can start implementing today.
1. Determine what/where the problem is
If you see prospects and customers dropping, you have to ask: Where is the churn happening and why? It’s easy to know at what point in the sales funnel the churn is happening. If it happens, for example, after an initial meeting or demo, then that should suggest that you need to review your pitch and presentation.
What’s difficult to determine is the why. The best way to do so is asking the customer himself. Giving the customer a call, or sending him an email to ask why he opted out doesn’t just give you the answer you need, it also tells the customer that you care enough about him to get in touch. You can also ask the customer to answer a two- to three-question survey or questionnaire, which will act much like an exit interview. In the questionnaire, it’s important to not just ask why they’re exiting. You also have to ask them: “What can we do better?”
Getting the answers to these questions informs you on your weak points in the sales process and helps you take the steps to improve.
2. Use live chat
Customers these days do not purchase from a business without checking the company’s website or social media accounts. Businesses should seize this opportunity to engage with a customer through a live chat feature. Chatbots, for one, are a given in many websites these days. A chatbot is a piece of software that conducts a conversation via auditory or textual methods. Such programs are often designed to convincingly simulate how a human would behave as a conversational partner.
Site visitors can exit for many reasons. Some do when they can’t find what they need or when they have difficulty navigating the site. With a live chat feature, customers can ask their questions and get the answers in real time, and this helps reduce the risk of would-be customers leaving the site.
3. Increase customer engagement
Make sure that you keep your customers engaged. Use different touch points—email, phone call, social media, in person—to engage with them. For each attempt to make contact, make sure you offer something of value: new information, relevant articles and videos, convincing case studies, strong client testimonials, and the like. Offer something of value AND constantly remind them of your product’s value, too. If your product has undergone updates, let them know. Make sure to highlight the many benefits your product’s features offer.
4. Pump up the freebies and add-ons
People respond to freebies and valuable add-ons—or receiving anything on top of what they should only get. So offer free trial periods, give “buy now” discounts, offer incentives for upgrades, renewing subscriptions, or even successful referrals. The idea is to entice the prospect or existing customer with exciting offers so they won’t look for the exit door or jump ship.
5. Check out competition
Some prospects and clients opt out because they want to jump ship and move to your competition. So it only makes sense that you keep an eye on what your competition is doing. Be proactive in analyzing what your competition is doing better and what they’re gaining over you.
6. Identify and segment your customers
You have a lot of customers. Some are existing; some are new; some have been with you for years; some have churned; some are at risk of churning. Some are strong prospects; some are just there for the free trial… You get the picture. The point here is that you can’t talk to the loyal customer the same way you talk to the customer who’s still on a free trial.
Try to identify your pool of prospects and customers and segment them. Then strategize on your engagement per segment. For example: you can begin an email campaign targeting customers at-risk of churning and offer them incentives for re-subscribing. And don’t forget about your loyal customers. Remember: customer retention is great for revenue.
7. Hyper-personalize
Hyper-personalization combines customer, behavioral, and real-time data from different touch points. It also leverages on new technology, such as artificial intelligence and machine learning, to deliver more relevant content, communications, and service to clients and prospects.
To lower churn rate, you can send trigger-based emails, retarget, or perform other hyper-personalization tactics.
8. Have dedicated sales reps and account managers
Customers like to feel taken care of. They especially respond to companies who are available to assist them anytime. It’s important to have sales reps, agents, and account managers dedicated to managing and servicing your customers. The bottomline: If customers feel valued, they stay put. If they don’t, they leave.
9. Go the extra mile to pleasantly surprise
Never underestimate the value of the personalized, human touch. Going the extra mile to pleasantly surprise a client will never fail to put a smile on his face—and earn points for your team. Give loyal customers exclusive rewards and perks. Send them special tokens or gifts. Give a new customer a handwritten note, thanking him for his business. There are many ways to delight an old, new, or would-be customer.
10. Provide excellent service on all points of the buyer’s journey
At every point of the customer’s journey, he must be serviced well. Whether they’re still in discovery or in negotiation talks or already a paying customer, customer service must be top-notch. Provide support whenever it’s needed. Promptly respond to complaints and inquiries. When customers ask for information, data, or content, send them quickly. Your customer service team must be fully trained to respond to any and every issue.
11. Perfect your onboarding process
So a new customer has signed up for the 14-day trial or the free demo. You have to make certain that they can fulfill the onboarding process easily, minus any hassle or issue. Keep it simple; avoid unnecessary details that can overwhelm, distract, or confuse. Use tooltips throughout and fine-tune copy to concisely explain the product’s features, functions, values, and benefits.
12. Improve post-sale customer service
Many sales reps make the mistake of thinking that their job ends when the customer buys. But a new task begins when a customer buys: you have to work hard to keep that customer. In fact, there's the so-called Actual Moment of Truth. Amit Sharma, noted the gap that happens after purchase (or after the Second Moment of Truth). He proposes that this post-purchase moment—or the Actual Moment of Truth—is the perfect opportunity to engage a customer and turn him from a one-time buyer to a lifetime advocate.
What can you do post-sale? You can create new “experiences” for the buyer. Send him links (video or content) on how to use the product or service; call him to get feedback or updates on his use of the product or service; or simply send him messages to get in touch if there are problems. You also have to make sure to address all feedback—the positive and especially the negative. Just continue building relationships with your new customers after the sale.
13. Always ask for feedback
Check in on your customers all the time. Gathering feedback can help you identify your best practices, your strengths, and also your weaknesses. This will help you constantly improve on all points of your business—from the product down to the customer service. And every time a business works very hard to improve to keep customers happy, their customers never leave.
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