Just for a quick clarification, churn rate represents the number of customers that cancel their subscription to a service or product (in other words, cut all ties to the company) within a certain time period.
Let’s say that in June you had a 100 new clients and, at the end of the month, you’ve lost 5 of them. You divide the number of lost clients with the number of new ones, so in this case 5/100=5% and that’s your churn rate. Ideally, it would be 0, but that is rarely a case in real life. Win some, lose some, right? Wrong.
While customer acquisition is important, making sure that your customers actually remain customers is even more vital and there actually are ways that you can decrease your churn rate.
1. Provide quality service
This seems pretty obvious, but it’s worth mentioning anyway, since bad service is the fastest way to drive customers away. Be prompt, nice to clients, helpful and all those other things that make for a great service. If customers have a good experience, they are less likely to walk over to another company.
2. Be reachable for customers
Often times, customers will have questions regarding products, how to use them or how to get something to work. If they are not sure where to turn for help, you will unintentionally get them annoyed. Make sure that you are constantly available to answer their questions and that you’ve made it clear how they can reach you.
3. Know your weak points
If you don’t know where your weaknesses lie, you won’t be able to figure out what made the customer unsubscribe from your service. Analyze how you do business and try to think like a customer, in order to figure out what you can do better. When you know what you need to pay attention to, it will be much easier to get to the root of the problem and fix it.
4. Listen to customer feedback
The previous tip brings me to this next one, which is – listen to feedback. It provides you with invaluable data about customer experience, satisfaction and issues with your service. You exist and will continue to exist only because of your clients, so if they have something to say, you need to listen.
5. Be better than the competition
Let’s take Photoshop as an example. For a long time, it was the only program that you could use for design and photography, which made the creators turn lazy. It was complicated and expensive, but hey, there really weren’t many alternatives. Their lack of improvement and innovation opened a gap for other companies to jump in and create easier and more user-friendly programs. Of course, many people still use Photoshop, but it doesn’t change the fact that they’ve allowed users to look for a better service.
Moral of the story – always strive to be the best that you can be, as well as better than your competition.
6. Prepare before you make a big change
Perhaps you want to increase prices or change the way you operated previously. Whatever the big change is, before you make the decision, think of the customer response. If you increase prices, it could result in a bigger churn rate.
I’m not saying that changes can’t be made, but you need to think about how it will influence your customer numbers and whether the losses could potentially overshadow the benefits.
7. Be irreplaceable
Let’s face it, pretty much everyone is replaceable, but what makes clients stay is giving them something they can’t find anywhere else. If you don’t have a product that is completely unique and can’t be substituted with a better or cheaper alternative, you need to approach your clients from a different perspective. Whether it’s having unique values, a strong personality or something else entirely, find what makes you irreplaceable and highlight it.
8. Don’t offer incentives to every customer with a high churn probability
What companies usually do is they see which customers are most likely to avert from the company and offer special conditions to them. While this usually keeps the person from going to a different company, it isn’t the best long-term solution because not every client is equally valuable to your business. You have to consider how much a client spends, how often and other factors that determine how much value to your business a specific person has. Instead of wasting money on everyone, focus on clients that are actually important.
9. Make a great first impression
The way you present yourself during the initial meeting greatly influences the client’s opinion of you. It’s pretty simple: it’s much easier to continue to build a good relationship, than to start off on the wrong foot and try to mend it later on.
The more you impress during your first encounter, the better you will look from your customer’s point of view. Over time, they will be more likely to forgive you a slipup here and there, because you’ve made an amazing first impression.
10. Increase customer loyalty
If you have a long history with customers, they will be more invested in your company and less likely to go to a different source. Building loyalty is one of the crucial steps to decrease churn rate. Having an emotional advantage is often one of the things that allows companies to keep certain clients, even if they might be better off with a competitor.
Surely you know someone who sticks to a certain brand, even though there’s a different one that has a better offer. That’s because of loyalty – it’s familiar and the person has been using the company’s services for a long time.
11. Don’t overwhelm the customer
Giving the customer too much information at once could result in them getting confused and going to a different company. Let’s say you have a photo editing app. I’m sure it’s great and has many features, but if you present all of them at once, it might make it seem too complicated and the user might think: “This is too much, I don’t know how to use it, I need to find something simpler.” Start small, with simple options that users are probably already familiar with and introduce other features as you go.
Canva is a great example of this – they offer tutorials, starting from the most basic things, like adding a font or a background and gradually explain more difficult features. This way, people don’t get lost in all the features and annoyed that they can’t make it work.
There will be times when you will lose a client no matter how much you try. People are different and have diverse tastes, so sometimes, it won’t have anything to do with you. However, more often, customers will have a specific reason why they moved to another company, so it’s up to you to do everything in your power to prevent them from even considering going to a competitor.