Five strategies to reduce customer churn
"If your retention is poor then nothing else matters."- Brian Balfour.
Founder and CEO of Reforge, former VP Growth at HubSpot.
It is crucial that your customer stays with you in a subscription business for a more extended period to make a profit. The Customer Acquisition Cost (CAC) in a subscription business is pretty high. Therefore, it is essential that your customer stays with you for a minimum period of 6 months to break even.
Furthermore, they need to stay for a more extended period if you want to make a significant profit. Thus, customer churn can highly impact the growth of your business significantly if the churning percentage is increasing every month.
What is Customer Churn?
Customer churn is when your customers or subscribers stop using the services you provide. Customers can churn for any reason. However, most business focuses on two types, namely, voluntary or involuntary. A voluntary churn is when the customers willingly decide to leave your services. On the other hand, an involuntary churn is when the customers leave your services because of management or technical issues. For example, a customer may churn involuntarily due to credit payment failure.
How to prevent and reduce customer churn?
If you run a subscription business, you must learn the ways and mean to reduce customer churn. Preventing your customers from churning is the key strategy to achieving growth and making a profit in your business.
Because according to Harvard Business Review, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.
So, here is a list of the things you can do to prevent and reduce customer churn.
- Provide quality products or services
- Provide excellent customer care service
- Build on your dunning management
- Offering incentives and discounts
- Engage with your customers across all channels
1. Provide quality products or services
Your customers will inevitably churn if your products or services are not up to their satisfaction. So, it is crucial that you provide good services to your customer to earn their loyalty. Also, it is essential that you offer better services than your competitors and constantly upgrade the features of your service.
Stagnancy in your product may leave out the impression of lesser growth and outgrowing your customers. Hence, improving your product quality is paramount to your business’s bottom line. It helps build trust with your customers as they might feel their money's worth; ensuring their longer stay with your business.
2. Provide excellent customer care service
Customer care services play a significant role in gaining customer loyalty. Most of the customers will engage with a subscription business that provides exceptional customer service. Your customer care team must be amiable and helpful.
Providing availability during crisis times, especially during onboarding, gives a sense of security to your customer as they get accustomed to the product. Plus, it markets your product at a higher level, as a satisfied customer is an advertising one.
3. Build on your dunning management
Dunning management is essential to keep a check on the involuntary churning of your customers. An unanticipated decline of payment or credit card transaction failure can lead to customers cancelling their subscriptions. Thus, the software and your technical issues must be adequately managed to avoid involuntary customer churn.
It helps businesses to use strategies like automated billing reminders, professional email messaging to your clients, and automated payment retry messages if a payment gets failed so that your customers don't get panic about what has to be done. Also, automating this, allows you to focus on your business's growth, sparing your time and effort spent on chasing payments.
4. Offering incentives and discounts
Existing subscribers are more likely to renew their subscriptions since they have experienced your services. Moreover, the customer acquisition cost is higher than the cost of retaining existing customers. Therefore, you should make attractive offers and provide incentives to retain your current subscribers.
For instance, you can lower the package price or offer discounts while renewing their subscription. This strategy rewards your business especially when your customers are on the verge of churning out of your business. They may like to give a shot to the product to acquire the discount or cash in the promo code giving you the chance to win them back.
5. Engage with your customers across all channels
You must interact and engage with your customers to build a strong bond with them. Communication is the key to building a stronger relationship. Thus, you must communicate with your customers across various channels such as emails, apps, phone calls, etc. Providing a different platform to your customers increases communication and also reduces customer churn.
Everybody likes to know how well their money is worth. So, publishing updates which provide a solution to their pains would assure the customers more than anything else. Connecting and engaging with them via multi-channels would keep them reminded of your product and its usage.
As the trends of the world change, keeping your product updated according to the customer's demands and fitting their needs would keep your product alive and kicking in their lives. Thus, the thought of churning out of your business would be a big no-no, considerably reducing customer churn.
It's a never-ending fight but you can avoid it!
MYFUNDBOX is a subscription billing platform to help businesses handle recurring billing and revenue management operations.
MYFUNDBOX offers you a distinct set of metrics that will help you analyse your business and bring into sieve the areas you need to work on by letting you know the churn rate according to the month and graphically demonstrating its increase or decrease. So try MYFUNDBOX Subscription Platform today and shred off your customer churn worries!