7 Ways to decrease your churn rate
There is not a single business that has never lost a customer. There are reasons why customers you can’t control will stop doing business with you. This problem is called customer churn or the churn rate, which is the number of customers who leave a company during a given period. Of course, no matter how hard you try to satisfy your customers, some churn is inevitable. If you want your customers to stick around, you must understand reducing customer churn rates.
What is the Churn Rate?
As Hubspot would describe it: Customer churn refers to the percentage of customers that ended the use of your company’s product or service during a set period. It is calculated by dividing the number of customers you lost in a quarter by the number of customers you started that quarter with.
There is a formula on how to calculate your churn rate
Churn Rate = (Number of customers lost / Total number of customers at the start of the period) x 100
For example, if you have 1,000 customers and lose 250 of those customers across the course of a month, then your customer churn rate will be 25 percent for that month.
(250/1000) x 100 = 25 percent
We’ll walk through these 7 tips/ strategies for reducing churn below. But first, let’s start by defining the term to establish some common ground. Before you approach this sector of why customers are leaving, please don’t get emotionally distraught when coming to the analysis. Cool, now jump right into it:
Before diving into the analysis of why your customers are leaving, try out your own product/ service to see how you feel/ experience it. Case in point, how would customers tell you trying new food; “have you tried it yourself”. Take notes on how you react to your very own product; you will know what needs to be enhanced.
This one will be a bit hard, just because of the nature of human behavior, and connecting with them back can overwhelming at first, but there is potential to onboard them back with the right messages. The purpose of contacting your churned customers is to; (most important) figure out why they left, and have room to get them to be a customer.
Sometimes customers like trying and doing new things that are new to their experience. According to AWS, incentives marketing reduces churn rate by 17-55%. The natural behavior of doing things for a cheaper/ reward gets motions involved and willing to participate. Please note that you need to correctly assess if the promotional offer will be beneficial to you.
By contacting your customers before they need you, you indicate that you are interested in helping them get the most out of your product or service. The type of message or resource you send them should be directly related to their use of the product or service. Nobody likes being left out or forgotten, doesn’t matter how well your product/ service is. There is a level of involvement people follow into a brand/ company.
Whether you like it or not, people like getting information fast. In ways that decide if they use your product/ service or leave. This section also fits into being proactive in your communication.
40-60% of churn rate happens at the realm of your onboarding. This concept all into the users that need info/ trying things out fast. There has been an uprise in reducing trends by giving the users the ability to demo out the product, and an interactive tutorial. This method will inform the users of what the product is about, what it does, and have the users try out your product/ service.
It provides a powerful alternative to cancellation. This could be a downgraded plan that better suits your needs, or it could be hours of negotiating with your customer care team to get your subscribers to take advantage of the product.
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