How to reduce your customer loss rate, and churn |

Churning customers is taking a chunk off your earnings? Read this complete guide to discover the reason why your churn rates are high and how to slow the process.

Churn bites.

It doesn't matter who you are or what field you're operating dealing with, losing customers-- a.k.a., having them churn -- is fast kick in the financial drain.

This is also normal and no matter what someone says, it's there is no way to get rid of it completely.

But there are ways you can keep your customers around for longer while reducing churn, and in this guide we'll go over the most common ones.

Even better, each of the areas covered that are covered in this article can help reduce the number of customers who leave your store and increase purchases from every customer.

That's right -- we offer you ways to improve customer retention, and convert your members at risk into loyal customers with an increased life-time value.

As usual, let's start with getting everyone in the same boat as well as a review of the causes of customer churn and various possible reasons for it.

What's the cause of customer churn? And how does it hurt your company?

Simply put, customer churn -- also known as customer attrition -- is when customers stop purchasing at your company.

In particular, this happens when customers stop purchasing often, as they do with the case of recurring subscriptions.

One of the main reasons it's so harmful to your business is the fact that customer turnover, which is a drain on your pocket and in the short as well as the longer-term.

In the short term, as far as it goes, a customer may leave before you can earn the money back from your cost of acquisition (CAC). If you're unfamiliar, CAC includes costs like your investment in advertising campaigns, or in the equipment you utilized to gain an individual's company.

However, recouping the cost of your CAC investment can be a constant uphill battle. It's true for both B2B as well as B2C businesses between 2013 and 2018 in particular, when CAC has increased by almost 50% .

In the long run, customers who churn won't likely purchase from you again. They likely won't introduce potential customers to your organization also -- and both negatively impact your future earnings.

If you consider the potential of word-of mouth marketing, this is an enormous blow on your bottom line.

Not everything is doom and gloom.

There's good newsThere are strategies to decrease your customers' churn, and you can get yourself into a an excellent rhythm of earning steady monthly recurring income (MRR).

For this, you need to begin by calculating your churn rate , so you can understand just how much churn is costing you.

You can do this by subtracting the number of clients you have at the end of a period (say, one month or one quarter) from the amount of customers you were able to acquire at the start of the time.

Then, divide this amount by the number of clients who have accessed the service at the beginning of the time.

For example, let's say you have 500 customers on the 1st of January and 450 customers on March 31. Utilizing the calculation for churn, (500-450)/500 puts your quarterly the churn rate to 10 10%.

From there, you can use this customer calculation tool to determine the amount that customer churn taking away from your business.

Be gentle with yourself if your customer churn rate is higher than expected.

Subscription businesses have an average turnover rate of 5.6%  However, the rates differ between businesses.

In a small company with little resources to reduce churn, it's not unreasonable to experience a number of churns that are slightly higher than normal.

This is the case for newly established business. The benchmark above -- that gold 5.6% rate -- originates from companies in the later stages. In the case of just a handful of customers the beginning of your era and your churn percentage can as well be higher and more unpredictable.

If you work to reduce your customer churn, you'll gradually observe your churn percentage getting closer to -- or lower than the 5.6% average.

In terms of how to make what works, it starts by being aware of the causes behind your problems.

Top reasons why you have a high churn

Delivering a poor customer experience

A mismatch between your marketing and your product

Not staying ahead of your competition

Less-than-stellar customer engagement

Let's examine customer experience first.

A lot is riding on the quality of your customer experience. 73% of customers think that the customer experience is going to be important in their buying decisions.

In addition, 63% of customers also believe that an excellent customer experience to be more influential than great advertising.

I.e., if your customers aren't feeling valued or struggle to use your product, chances are that they'll not stay with you for long.

It's no surprise that a bad customer experience can send more than a few consumers running to the hills. 32% customers are likely to leave the brand they like when they have a bad encounter, and only 49% believe that businesses provide good customer service.

Another reason customers lose interest is you may be attracting those who are not your ideal customers.

Let's take an example, for instance. you offer a course on writing best-selling mystery short stories. If your marketing campaigns focus on first-time independent writers, there's a high possibility of mismatching prospective clients to your online course offering.

In the same way, there may be a disconnect between the values of your (former) customers and brand value.

After all, one in six consumers decide to stay away from a business because the brand's values don't coincide with their own.

Positively, though 35% of customers are more likely to buy from brands that align with their own values following making purchases at least the first time.

The third reason for why the churn rate of your customers could be higher than you'd like is that you're not ahead of the pack. If you're customers believe that different brand's products are more valuable over yours, it's an excellent reason to drop your brand.

38% of shoppers stated getting quality for the money they spend as a reason for selecting a new product or brand.

Additionally, 20% of consumers prefer other brands' goods because of their superior design or performance.

Naturally, there might be nothing wrong with your brand -- your customers may simply like to keep their options open.

This is so common that seven-thirds of shoppers are willing to consider the possibility of a brand new in at least one area, and 70% of shoppers take into consideration two or four businesses when making an investment decision.

In addition, 36% of consumers just love to try new products.

The final reason your clients are abandoning your brand could be because the lack of engagement.

In one instance Bonjoro found that 80% of their churn came from customers who seldom used their platform or from people who had bought their services before they had gotten any benefits through the service (and going on to leave shortly thereafter).

What's more, if you don't have a good pulse on why people are making a resounding noise, it could lead to even more customers churning.

The only surefire way to find out why your customers are leaving your site is to inquire with the question directly. This way, you can correct the issue, just like Getsitecontrol did.

In the process of analyzing their clients' answers to a brief survey on pricing, which they published on their site, they lowered their price for subscriptions from $19 to $9 per month, and saw a reduction in churn and customer lifespan increase.

Similarly, Usersnap asked users on their unsubscribe page to explain why their churning was happening and analyzed the responses of customers. Then, they created a second product line, which resulted in increasing the number of customers who kept their accounts longer.

In the end:

Customers are leaving your business because of a range of factors that include poor customer service or a lack of connection between the customer and your company's the brand, or offering, and not allowing your competition to do a better job, or lack of engagement.

Asking customers for feedback, and then asking the audience directly why they leave your brand is the most accurate way to discover what's to the blame.

The ideal scenario is to be doing this in advance of when your clients are technically, your customers. Let me explain.

Convert trial users to free trials with above-the-curve onboarding

For this, encourage your customers who are trialing you towards a sale throughout the entire period of trial, which is a huge opportunity to make your customers become awestruck by your brand.

In the first place, you must provide the value.

It's something you could do straight out of the gates during the onboarding process, like the onboarding emails sent by Glitch  that suggests two steps for brand new users to start by. Also, it offers tips on how to utilize their service and spotlights apps available on their platform.

On top of that, Glitch likewise links to their help center as well as Customer Support Forum on the bottom of their email.

It is possible to follow in the footsteps of Glitch and give the new users of your trial valuable information, guidance, and support in an onboarding email. This will help them get instant benefits from your business.

If you do, you'll satisfy most consumers.

77% of consumers who feel that businesses need to provide valuable information to customers believe brands should provide information on ways to make the most out of their product.

Plus, another 73.4% want information on different ways to use an item from a company.

The lesson? Customers want to know how to be successful with your product, so give them everything they'll need.

As an example, Lowe's sends a re-engagement email to customers who aren't thrilled to inform them about what had changed, or improved during their absence.

This entices inactive users to revisit a brand that seems to be attractive, new, and improved.

A different method to convert trial users to customers is to offer discount and incentive programs.

Most likely, it's no surprise that consumers are awestruck by discounts. That's why nine out of ten customers are willing to make repeated purchases with a brand that offers good discounts.

You can offer free trial members discounts in a welcome email, like Charles Tyrwhitt sends in an email that gives new subscribers a 20% discount.

You can also follow Airbnb  the way they do it, in which they offer a coupon alongside a specific benefit of the offer. For example, this email with an offer of $200 and perks of 24-hour check-ins and local food and wine.

The best method to reduce churn follows the same logic as the most effective method to use medical treatment:

One ounce of preventive measures is worth a pound of cure.

So start early, give your users who are trialing the product the needed push, and provide value out of the gate.

You can do this, and in no time the churn rate of your business will start to drop as well. If you use the tools in our next section, you'll get to watch it happen in (almost) live-time.

Instruments to monitor, control the churn of customers and stop it from happening.

The most effective churn tool can will help you keep customers offering four options:

Failure to recover payment data

Customer insights

Analytics

Information on the customer's success

Wondering how important the analysis of your customer's insights and data can be in decreasing your customer's churn?

Answer: quite.

Having the right metrics, reporting, and analytics set up is vital for pinpointing where the growth issues are.

95% of analytics and professionals in business affirm that data and analytics are key to their organization's digital transformation plans.

It's true that they'd be kicked out of a job if they didn't say that, but that's a lot of people making smarter choices based on data.

What is your choice?

We'll start by looking at unsuccessful payment recovery tools. We like Churn Buster , which is a platform designed to help you catch passive churn caused by failed payment.

The Churn Buster's primary focus is the failure of payment recovery in ecommerce, SaaS companies, and digital subscription companies.

For a tool that helps uncover customer insights take a look at YesInsights  it is a platform designed to reduce customer turnover by providing satisfaction surveys.

Conversely, tools like FirstOfficer  which is a subscription-based analytics application, allows you to track and analyze your company's growth challenges.

The application helps you monitor the churn of customers by analysing the metrics of your subscription for payments made through Stripe.

In addition, if you're looking for an application that can assist you with analyzing customer success and customer satisfaction data Look into tools like ChurnZero .

ChurnZero is a live customer service that offers subscription-based insights for businesses (like membership sites) about product use and customer health. These are important metrics to track if you want to keep your customers engaged and happy.

As great as all of these tools can be, there will and are clients you won't be able to save -- and some of them will demand refunds.

However, that's never an issue.

Actually, it's an opportunity.

How do you create and implement an effective refund policy for products that are sold

Contrary to what you might believe, nothing is wasted after losing a customer or getting a refund request.

A seamless return and refund policy customer experience can encourage them to return at some point in the future. It could also reduce the odds of them abandoning your company altogether.

How?

For one, 90% of consumers believe that how the company handles return policies affects whether they purchase from them again.

Furthermore, 96% of people claim they'd be willing to shop at the same brand next time if they have an "easy" or "very simple" returning experience with the firm.

Plus, each time a customer asks for a refund, it's an opportunity for you to recommend a substitute product that is more suitable for the customer.

How do you turn an unrefunded request to a sales opportunity?

By recommending a product that's the best fit for the customer you have a chance to show your customer how much you care about the happiness of their family and also that you've given careful in assessing their desires and requirements.

I.e. You get the chance to stop churn prior to it happening.

To capitalize on this fantastic possibility, develop a policy that first looks at the conditions under which customers may be eligible for refunds, including questions about:

Are you going to have a no-questions asked policy? Or

It is only when the customer is an active member of the company for a specific amount of time that they are eligible for the refund?

In addition, you may offer a credit or an exchange for a product, and only provide a refund when there are no alternatives for the customer. Most important is to clearly define your refund conditions and then most importantly, adhere to the terms.

If you want to see how this applies to creators, check out Creative Strategies , which offered refunds to those who bought a digital item however didn't download the product. The requests for downloads are assessed on a case-by-case basis.

Once you have set your terms The next step is to decide on how long you'd like to offer the possibility of refunds (i.e. two weeks? A month? A year?) and then decide which of the items your refund policy will apply to.

The refunds might not be applicable to monthly memberships, for instance and are suitable for online ebooks or courses. Or, you may only be willing to refund annual membership fees in the event of unused membership months.

If you're wondering where to start with your policy, use templates or the refund policy generator to get started for crafting your policy.

You can then modify the template to reflect your company's brand and to address your company's specific policies and situations with customers.

If you're using templates or don't begin, you must be sure to write your policy in simple and transparent language, so that it's easy for your customers to comprehend.

Then, once you have the policies in place put it on your site so that your clients can quickly find it.

This is a significant detail when you consider that three-quarters of shoppers say they will not buy from a merchant if they find it difficult to identify a firm's Return and Exchange policy.

For that reason you should have an independent page which outlines the refund policy.

Marie Forleo , for instance, has a separate page dedicated to her business' terms and conditions  which include the policy on refunds.

If you want to be more explicit You can also send an email with the policy on refunds after clients have made a purchase.

That way, you can give a quick refund or offer a substitute product and minimize any potential frustrations your customer may face.

It creates a win-win both for your clients and you in that you not only provide them with an easy experience, but it also lets them know you've thoroughly considered the customer's needs and views, which may inspire them to continue making purchases.

Reduce the churn of your customers by employing our churn-burning strategies

Although avoiding the entire churn of customers is not possible, there are methods that have been proven to lower the rate of churn.

In order to win the battle against the churn of customers, here's a recap:

Churn occurs when customers quit your company. While it's detrimental to your company but there are ways to boost your retention rates and lower the churn rate.

Customers are churned out for a variety of causes, such as a poor customer service, an inconsistency between your audience and brand and/or offers, delivering less than your competition or having a lower level of customer engagement.

To convert your free trial members to lifetime customers, provide them with immediate benefits, help to fully experience the advantages of your product, reminder messages, and discount incentives.

Tools like Churn Buster, YesInsights, FirstOfficer, and ChurnZero help you analyze the customer information, keep track of your churn metrics and take proactive steps to reduce the amount of churn.

By drafting an easy-to-understand refund policy that is easily available for your customers it opens the door to a smooth customer experience. It can transform to opportunities. This is a "you missed every chance that you do not take" method to stop the churn process.

With these strategies in your arsenal It's the time to put the fear of customer churn on the side and begin your plan to combat churn now. Avengers, I'm talking about Creators and Avengers -- join forces!