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8 Churn Reduction And Customer Retention Strategies to Win in 2022

A recurring revenue business model is a great way to ensure a steady revenue stream, whether that’s in the form of a software-as-a-service (SaaS) product, a financial investment service, or an asset management firm. As you gain more clients or subscribers over time, you should see an increase in your annual recurring revenue (ARR) — but this will only happen if your customers don't leave you.



The key to building and maintaining a successful subscription business model is customer retention. Many companies offer a trial or promotional period to sign up new customers, but after a customer signs up, you need to continue to deliver enough value for them to stay.

Retention is the key metric to any subscription-model business, and it reveals whether or not customers are sticking around. You can use different tools and metrics to report on retention and churn rates, but they are pointless if you don't do anything about them.


In the past, companies would only report on churn but, because it had already happened, there was nothing that could be done about it. In the last few years, companies have put the focus on customers that are about to leave or actually leaving, but it is a tough job to convince an unhappy customer to stay. Today, the most successful companies are focused on predicting customer actions to prevent them from churning, making life easier for their Customer Success and Client services teams, and solving the problem before it occurs.


What Is Customer Churn?


Customer churn is the percentage of customers that stopped using your company's product or service during a certain time frame. You can calculate the churn rate by dividing the number of customers you lost during that time period -- say a quarter -- by the number of customers you had at the beginning of that time period.


For example, if you start your quarter with 400 customers and end with 380, your churn rate is 5% because you lost 5% of your customers.


Why Is Customer Churn Rate Important?


Calculating your Customer Churn rate is important because businesses report that it costs more to acquire new customers than it does to retain existing customers. In fact, according to Harvard Business School, an increase in customer retention of just 5% can create at least a 25% increase in profit. This is because returning customers will likely spend 67% more on your company's products and services.


Today's business world is extremely competitive and customer acquisition costs can be very high. By retaining your existing customers, you don't need to invest large sums of money and resources in exploring the market, searching for leads, and engaging new prospects.

Find below 8 ways to help reduce your customer churn and improve customer retention. For more tips, check out this post on how to improve customer experience to prevent customer churn.

8 Churn Reduction And Customer Retention Strategies to Win in 2022:

These are some of the several ways to reduce and prevent churn while improving customer retention:


1. Analyse why churn occurs.


Yes, this may sound obvious, but let’s stress it once again: you have to simply find out why customers decided to leave.


If you're waiting until a customer leaves your business, you're already too late to do anything about it. Instead, you should be using data before customers churn in order to build strategies to proactively prevent it.


No matter how much effort you put into customer relationships and retention, churn is a part of any business, and it will happen. The key is to use your churned customers (and your happy customers) to predict key signs of customer happiness and customer dissatisfaction so you can engage with customers and repair the relationship before they churn.

2. Know who is at risk of churning.


The best way to avoid churn is to prevent it from happening in the first place, right? There is always a group of customers that is more likely to leave than others – so it’s in your best interests to know who is balancing on that dangerous edge. This way you can reach out to them in time to solve their problem or concern and repair the relationship.


Identifying at-risk customers is one of the most popular and effective churn tactics for B2B companies. By knowing who is more likely to leave you can focus your attention on them and try to implement actions that would help retain that customer.


3. Provide excellent customer service.


A great way to reduce churn is to provide excellent customer service. If a customer is genuinely happy with your customer service, they will be less likely to look at other providers.


Your customer success or client services reps should be empowered to deliver superb customer service. This means providing them with the tools, data, and customer insights that will give them the ability to anticipate customer needs or to quickly access the information needed to solve a problem if it occurs.


4. Combine automation with a human touch.


Marketing and customer service automation are excellent tools, but they can be a cause of customer frustration and ultimately result in churn if not used well. Humanistic automation is a process that combines automation with the human touch. If your communications feel robotic to customers, they won’t feel valued. Personalized automated marketing using humanistic automation means combining automated comms with a more personalised and human approach, and a safe balance can help you keep up with your business while still giving customers the personal attention they need to keep renewing.


5. Improve the renewal process.


Renewing has to be easy and frictionless. If your renewal process is difficult your customers will think twice about their commitment. You need to make sure to communicate with your customers efficiently and make sure they are being heard if they have any concerns. Inform customers of any changes in their contracts in advance and be available to respond to their queries as soon as possible.

6. Improve the onboarding process.


If customers don't understand your product or service, they are unlikely to enjoy all its benefits. Make sure the onboarding process is smooth and easy so customers understand the product and know how to reach you when they need help.


Improving your onboarding process and communicating clearly with your users as they pass through the funnel is vital if you want to mitigate churn. Once customers understand how to get the most out of your product or service, they’re far more likely to stick around.


7. Increase customer engagement.


Customers have many different options available to them and access to a lot of information. Remember, your company isn’t the only one that can fulfill their needs. If they feel they are not getting the most value out of their relationship with you, they will churn.


If your customers enjoy working and interacting with you, they are very likely to stay. With the proper strategy in place, focusing on customer satisfaction and retention rates, you can increase customer engagement and nurture long-term relationships.


Some of the ways you can increase customer engagement are through product-led content, blogs, newsletter, or videos of your product or service. You could also arrange webinars or Q&As, or even share information on social media platforms.

8. Make the right tools available to your team.


Traditional tools just don't do the job anymore. There was a time in which customer success and sales teams reported on churn and retention rates using spreadsheets or dashboarding tools, but this only allowed them to have a view on the rear mirror of things that have already happened.

Nowadays, there are tools available to analyse churn trends and customer behaviour and even tools to predict which customers are more likely to churn or even to discover upselling and cross-selling opportunities. By providing these tools to your team, they will save a lot of their time doing admin work or engaging with data scientists, and they will be able to focus on selling, retaining customers, and preventing churn.

Seeing a high churn rate can be alarming, but with the right strategy, you can overcome it. If your business is struggling with churn, work towards determining the root cause so you can implement a strategy to reduce churn and improve retention, and don't be afraid to engage with an expert to help you with the implementation.