Updated on September 16, 2022

steps to reduce customer churn

The primary goal of a business is to acquire customers to whom they can sell their products and services. Despite businesses aiming to retain the customers they have acquired, they lose a fraction of these customers for various reasons over a period of time, and this is called Customer Churn. Over the course of this article, we will explore the significance of churn, churn rate, and how related aspects affect a company’s growth and revenue.

Customer churn is the percentage of customers that have stopped using your company’s product or service over a period of time. 

Why does customer churn occur?

There are a lot of reasons for customer churn depending upon the business you consider. Below are the few common reasons for customer churn.

  • Poor customer service/support
  • Bad user experience
  • Not meeting expectations of the customers
  • No engagement with customers
  • High price and low value

Customer churn rate by industry

churn rate by industry
Source: Wordstream

Managing customer churn in a business

The growth of any business depends on the LTV (Lifetime Value) of its customers. The growth rate of business is inversely proportional to the churn rate ina business 

You might be strong in marketing and generating as many leads as possible but remember, the cost of acquiring a new customer is exponentially higher than the cost of retaining the old customer.

Now, how do you reduce customer churn?

The first step is to calculate the churn rate of your business.

Formula for customer churn calculation 

Churn rate = (No of customers at the beginning of the time period – No of customers at the end of the time period)/No of customers at the beginning of the time period

In the current cut-throat and intensely competitive market environment, effective customer support is the surest way to gain an edge over your competitors.

Your products or services should be cost-effective and always guarantee total customer satisfaction. Moreover, effective support can be immensely useful in lowering your customer churn rate.

Once you calculate churn rate you can then follow the steps below to reduce customer churn.

  • Put your loyal customers first
  • Actively engage your customers to halt customer churn in its tracks
  • Design a specific process for effective customer guidance
  • Reward your customers
  • Know your customer’s perceptions and requirements
  • Have that X-factor over your competitors
  • Implement Cutting-edge technology to stay ahead of the competition

Put your loyal customers first

Many organizations make a mistake by placing the most emphasis on those customers who show the least interest in their services and are extremely likely to opt-out.

Finding loyal customer base

Too much precious time and valuable resources are spent on retaining these customers resulting in decreased profits for the organization. So the correct game plan should be to focus on your most loyal customers in order to maximize your revenues first, as only then will you be able to commence the process of reducing customer churn rate.

Analyzing the customers who are loyal to your brand and rewarding them with benefits and offers not given to the rest is a good start towards retaining loyal customers.

Actively engage your customers to halt customer churn in its tracks

The onus is always on you to connect with your customers even before they require your products or services. By doing this, you are giving out a clear indication of your utmost commitment to providing them with the maximum possible value through your products and services.

Always make sure that you never connect with them by sending irrelevant information instead,all your interactions must be tuned to their interests and requirements.

For instance, if a certain customer happens to show interest in your services by signing up on your company’s website but are not fully aware of the benefits that they will get by using your services, then you should politely contact them by sending a message and provide them with the necessary information. Such a proactive step is key to minimizing customer churn right from the time of customer acquisition. 

Suggested Read: 5 customer engagement techniques you must try

Design a specific process for effective customer guidance

When your customers first start using your company’s products or services,they will most likely  are that they do not know how to use them properly. This can lead to drastic disinterest and in turn, increase the churn rate.

To avoid this, you have to chalk out a user-specific onboarding design which can help your customers to properly understand the various attributes of your product or service and make them aware of what to expect from the same and the ways in which it can benefit them.

onboard design process

Always remember to regularly evaluate your design-oriented approach for any modifications which might be required due to the ever-changing customer requirements in today’s market scenario.

If you can execute this approach properly, then it will instill a sense of confidence and reliability in the minds of your customers about your company’s products and services. This can definitely prevent them from discontinuing their usage.

Reward your customers

Incentivizing your customers through discounts etc. is a small step that will enable you to take a giant leap forward in reducing the user churn rate in the long run as it will remind your customers of your unmatched and unwavering support and dedication towards them.

customer reward

But there are certain aspects which you have to keep in mind when giving out these rewards.For example, if a particular customer is on the brink of terminating their contract with your organization, then an effective way of retaining them is by providing substantial discounts on their renewal rates.

Also, if a customer is on the verge of leaving your company since your products or services were not able to match their individual requirements, then you can prevent them from opting out by doling out generous incentives such as free gifts and add-ons to make them continue a little longer.

In the meantime, you can formulate an effective plan which will enable your products and services to match all your customer requirements so that they are satisfied with the same and decide against leaving your company.

Know your customer’s perceptions and requirements

When your customers are not satisfied with the quality of your products or services and do not receive adequate support due to lack of proper interaction and feedback, then the churn rate is likely to go up.

You will need to establish a proper platform such as installing various applications on your company’s website for collecting their feedback.

This will help you in initiating the necessary measures to remove the pain points that are hindering customer satisfaction.Therefore effective customer feedback can help you can identify the areas of improvement letting you work on these until all the negative customer reviews are replaced by positive ones.

Have that X-factor over your competitors

The market scenario of today is changing all the time as with new technological innovations that are coming up every now and then. The customer preferences are varying quite rapidly. Every organization is struggling to keep up with these changes and how successfully you are able to do this will determine the fate of your business.

To gain a competitive advantage over your competitors is no longer a simple task., Firstly you need to come up with products and services that are of the highest quality and in accordance with the market trends and customer tastes at that specific point of time. Next you will need to build on what your competitors are lacking in to offer holistic solutions in the form of your products and services. 

For this, you need to study their strategies for attracting, supporting and retaining customers and design your own ones in a much superior manner. For example, you have to gauge whether your competitor firms are getting user feedback through social media platforms etc and the extent of their knowledge levels. Then you have to use these to enhance your own strategic effectiveness in terms of customer retention.

Implement cutting-edge technology to stay ahead of the competition

An example of this may be analytics which many top organizations are now using to take the experience of the customers to the next level, gather useful information regarding customer perceptions across the organization and keep a track of the communication which takes place between the company and its customers.

New analytics technologies have now arrived on scene that can easily analyze complex information regarding inventories and provide extremely accurate results concerning the mindsets of the customers. This will enable the company to upgrade its products and services accordingly.

They can also assist you in studying the various parameters of customer experience and satisfaction and your company’s progress in that direction like up-sell rates etc. This will arm you with the necessary l know-how that you can use to maximize your customer satisfaction and thereby minimize your user churn rates.

If you do not take the right measures in time, then user churn can prove to be detrimental to your organization’s future prospects.

Through adequate foresight you can promote your products and services to convince the innovators and early adopters to try your products or services. This can help create momentum to convince the early and late majority to believe in your brand of product and support it.  to Overall, your main aim should be to provide your customer with such a unique and mind-blowing experience that they do not even think of leaving or switching over to an alternative brand.

For this, you must be absolutely clear about the exact vision and objectives of your business and what you want from it. Then, you have to formulate your strategy by keeping the customer experience and satisfaction aspect at the forefront. Then and only then will your business be able to outperform its competitors and scale new heights.

Bonus > Customer churn prediction model

Never forget the fact that effective customer support initiatives that keep your user churn to a bare minimum are the key determinant factor of the long-term success of your organization. Always play your cards right. So go ahead and give it your best shot!

At Kommunicate, we are envisioning a world-beating customer support solution to empower the new era of customer support. We would love to have you on board to have a first-hand experience of Kommunicate. You can signup here and start delighting your customers right away.

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Devashish Mamgain

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