Every month you have loads of new customers sign up for your product. And that’s awesome. But how many of those customers stick around for the long haul?
If you’re like most business owners, you’ll probably struggle with customer churn at some point.
That’s why, in today’s post, we’re going to teach 13 proven strategies to reduce customer churn and create life-long relationships with your clients. By the end of this article, you’ll be able to answer the following questions:
- What does customer churn mean?
- How can you run a quick churn analysis to set the right goals?
- How do you retain customers and avoid needless churn?
So let’s get started and define what we mean by the term “customer churn.”
What Is Customer Churn?
Customer churn is the number of customers who stop using your product or service over a given period of time.
Running a customer churn analysis is easy. Simply select a time frame, look at how many customers quit your product or service within that time, and divide that by the number of existing customers you had at the start.
Then you multiply all that by 100 to get your churn rate percentage.
So, for example, let’s say you were doing this every month. And you would like to know your customer churn rate for April.
For the entire month, you had 15 customers stop using your product. On April 1st, you had a total of 217 customers. You simply divide 15 (customers who left your business) by 217.
Multiply the answer by 100, and you have your churn rate percentage. In the example above, that would be a churn rate of 6.91%.
You want your churn rate percentage to be as low as possible. But you’re bound to have at least a bit of churn, which begs the question, “What is an acceptable churn rate?”
What Is an Acceptable Churn Rate?
SixteenVentures and a few other companies argue that an acceptable churn rate is between 5–7% annually. We need to emphasize the word “annually” here.
Because as CoBloom points out, an annual churn rate of 5% can be misleading. Most marketers make the mistake of seeing a monthly churn rate of 5% and think they’re on track for a 5% churn rate year.
They forget that your churn rate will compound month to month. So if you have 1,000 customers to start, a 5% annual churn rate is the equivalent of a monthly 0.4% churn.
When business owners calculate their monthly churn rate, they need to do some forward-thinking to plan what their annual churn rate will be if the monthly trend continues.
In other words, you should use your monthly data to create an annual customer churn prediction. Then you can create a more fine-tuned customer relationship strategy to avoid potential pitfalls.
Only by taking into account the way these churn rates compound month to month will marketers have an accurate metric to rely on.
But does reducing churn rate even matter? Can’t you just get more customers to replace them?
Unfortunately, no. Because the truth is that it can cost 6–7 times more to attract new customers than it does to retain the ones you already have. Which is exactly why customer retention rates are so important.
So, how can you improve customer churn to avoid those losses?
Keep reading. Because we’ve got the 13 techniques you need right here.
13 Tips to Reduce Customer Churn
Before diving into our strategies for reducing customer churn, let’s first discuss the big question on everyone’s mind:
Why do customers churn in the first place? Or, in other words, what causes customer churn?
Customers can leave your business for many reasons, but here are the most popular 3:
- Your product or services aren’t what was advertised
- Clients found a better product or service through a competitor
- You didn’t spend enough time building a relationship with your existing customers
Again, sometimes people just leave, and there’s nothing you can do about it. But more often than not, reducing customer churn rates are totally in your control.
The following 13 tips are going to help you solve the 3 most common reasons for customer churn listed above. Let’s get started.
1. Target the Right Customers at the Start
You should be attracting the right clients to you through targeted marketing campaigns. To do this, you need to have a few things set up:
- Create a buyer persona
- Write your web copy to attract that ideal audience
- Build more targeted optin campaigns throughout your website with OptinMonster
OptinMonster’s blog will walk you through the first two items on the list. With our resources, you can learn how to create the perfect content marketing strategy and tailor your content for a specific audience.
Then, our software takes care of the rest with exit popups, spin-a-wheel campaigns, floating bars, and more:
This conversion optimization toolkit comes locked and loaded to help companies out-of-the-box, but it helps to know how to target your campaigns.
To attract the right clients to your business, you should have multiple campaigns throughout your site with various trigger settings. With OptinMonster, you can target users with:
- Time on page
- Exit-Intent Technology®
- Ad-Block Detection
- Device-Based Technology
- Cookie Retargeting
Plus much more.
And that doesn’t even get into the number of triggers we offer to target your audience even more accurately. Page-level targeting, for instance, has been wildly successful for many of our clients.
Flywheel, a managed WordPress hosting company, increased user engagement by 660% with page-level targeting.
The bottom line is that if you want to reduce your churn rate, the best strategy is to attract the right people from the get-go. That way, you aren’t spending time, money, and energy trying to retain clients who aren’t a good fit to begin with.
2. Investigate Your Weaknesses
As a business owner, it may have been a while since you walked a mile in your customer’s shoes. But if your churn rates are higher than you’d like, you may want to go back to the basics.
Sign up for your product and go through the entire customer journey. Take special notes of things that you don’t like as well as things that you love. That way, you don’t only focus on the negative.
The goal here is to stay as objective as possible.
Sometimes things that are obvious to you as the business owner won’t be nearly as obvious to your customers. Try to review your customer’s journey as if you had zero knowledge about your product or service.
3. Review Your Onboarding Process
As you’re looking through your customer’s journey, pay special attention to the onboarding process. When a customer signs up for your product or service, they’re likely full of excitement and anticipation.
Your onboarding process is probably their first experience with your product. That means it needs to be stellar.
If your onboarding process is too complicated, full of glitches and bugs, or does anything to hurt user experience (UX), your new customers can get uneasy about their recent purchase.
After all, if it’s this difficult to get started, how much more difficult will it be when they try to use the product?
4. Overdeliver on Your Marketing Promises
One thing that some business owners forget is the difference between getting good with marketing tools and having a great product.
It’s getting them to stay that you struggle with.
If that’s the case, you may not be over-delivering on your marketing promises. Go back and look at the web copy you use to get people to sign up with you. What types of things are you promising they’ll receive with your product?
Not only should your customers be getting everything you promised, but they should also get the sense that they’re getting even more.
One way to overdeliver is by offering potential customers a free trial. This gives users a taste of how all your products at no risk to them. These kinds of thoughtful gestures go above and beyond for your clients.
And when you have customers transition from a free trial to a paid account, they’re more likely to be satisfied, long term customers.
If you need to, create a checklist of all of the things that your marketing materials promise. Then as you go through the customer’s journey with your product, make sure that you’re actually delivering what you said you would.
5. Monitor Your Competition
One of the biggest struggles for online companies is keeping up with their competition. But it’s crucial that you try.
If you notice your customer churn rate taking a sudden spike, you may want to look at your competition. Has your competition released a new product? Or have they lowered their prices?
You should always have a list of competitors on hand. But you should pull it out if you notice that people are leaving your product or service and not giving you much feedback as to why.
Use a tool like SEMrush to dive into your competitor’s marketing strategy.
With SEMrush, you can see your competition’s popular blog posts, keywords they rank for, and much more. From there, it will be easy to tell if your competition has been doing something different that is attracting your clients away.
Sometimes all it takes is a small amount of investigation to see what you need to do to improve your product and remain competitive.
To help you out even more, here are 25 competitor research tools you need to know about.
6. Hire the Best Support Staff
When was the last time you went to the DMV? Whether it was 1 month or 10 years ago, you likely weren’t blown away by their customer service.
If anything, the DMV has a reputation for having some of the most negative and complicated customer experiences on the planet.
Don’t be like the DMV:
You can avoid this at the hiring level. Make sure that your support staff is full of people with the right personalities and attitudes. Not just people who are looking for a quick paycheck.
Because every single person that interacts with a customer from your company represents the entire business.
If your customer service staff are impatient, negative, or don’t intimately know your services, they may not be in the right role.
One easy way to lower this risk is by using a live chat feature.
Live chat customer support is awesome for many reasons. But one of the main ones is that you can keep your customer service experience consistent across the board with canned responses or chatbots.
And let’s be honest: everyone has a bad day from time to time, including your support staff. But with a live chat customer support option, it’s a lot easier to hide a bad day than it is over the phone or face-to-face.
Here’s a list of the pros and cons of 12 live chat plugins on WordPress to help you out.
7. Assign Customer Success Representatives to Each Client
Depending on the number of customers that you have, you may want to consider assigning each client a customer success representative to handle their account.
As a customer, sometimes it can feel discouraging when you have a question but don’t know who to reach out to.
On the other hand, when you have a representative that you can email by name, build a relationship with, and learn to trust, user experience will go through the roof.
And that means you’ll reduce customer churn rate at the same time.
While your customer success team will each have more than one account to work on, they should be assigned specific clients to reach out to. Then, during the onboarding process, the customer success representative can reach out to the client to know that they are there for support.
Uber has done a great job with this:
By providing their clients with a specific customer support agent, Uber gives their customers more direction, more clarity, and a larger sense of security.
You can do the same. Remember, customer happiness will go a long way toward reducing churn rates. Dedicating an account manager to each of your customers is an excellent way to ensure positive user experience.
8. Surprise Customers With Exclusive Promotions
One way of retaining your loyal customers is by creating a rewards program. Essentially, that means providing special offers and discounts exclusively to certain clients.
While a lot of marketers understand the value of using discounts and promotions to attract customers, they underestimate how powerful the same concept can be for your customer retention rate.
To thank your loyal customers, send them some cool swag or special offers. This should be something they can’t get anywhere else.
Otherwise, it’s not exclusive.
You can use OptinMonster to easily create an exclusive promotion. Just create your campaign and then head over to the display rules. From there, you can choose exactly which visitors you want to target with your exclusive offer.
Want to reward users who took advantage of a coupon offer you promoted? Simply add a display rule to show your campaign to users who opted-in to that coupon offer:
If you’ve ever wondered, “how can customer retention be improved?” providing exclusive promotions might just be your answer.
9. Gamify Your Product With Milestones
Related to our last tip, you can gamify your loyalty program with specific milestones. That means every time your customer hits a particular metric, like “amount purchased,” for example, they’ll get an exclusive discount.
Turning your loyalty program into a game is one of the most powerful drivers to reduce churn.
It doesn’t just boost user engagement. It also trains your customers to continually log in to their customer account.
A perfect example of this is the loyalty program app from Starbucks. They give out gold stars for making purchases, which can then be redeemed for other Starbucks products.
But the display and user interface of the app makes it feels like you’re winning the gold stars rather than earning them:
As a result, they have one of the best loyalty programs around with over 16 million active participants.
You don’t need to build an entire app to see benefits like these, however. A cheaper solution could be to make a Coupon Wheel campaign with OptinMonster:
To create your own spin-a-wheel campaign just create a fullscreen optin, then drag and drop the Coupon Wheel block to your campaign:
You can change the design to your heart’s content.
Then when your users reach a certain milestone, you can send them an exclusive email with your Coupon Wheel campaign’s shareable Monster Link™.
Once your customer clicks on the link, they’ll be able to spin the wheel and redeem your offer.
With OptinMonster, you don’t need a big budget like Starbucks to gamify your loyalty rewards program.
10. Segment Your Users
Segmenting your email list allows you to further your relationship with your clients by sending more personalized communication.
You can send your users emails or promotions depending on where they are in their customer journey. Just like we discussed sending promotions when clients hit certain milestones, you can also send fun content, a warm thank-you message, or anything else that makes your customers feel valued.
This kind of targeted communication is only possible if you have an accurately segmented email list. And while it may seem tedious to set up, the payoff is well worth it.
OptinMonster makes it easy to segment your users by buyer persona using our page-level targeting feature:
You can also segment users by tagging your OptinMonster leads so they feed to the right list in your email service provider:
And, you can get creative with your campaigns to segment users right at the beginning with buttons, just like SnackNation:
Remember, the more your clients feel appreciated, the less likely they are to churn.
11. Build a Community Around Your Product
Here’s a tip that many small business owners and new marketers fail to do:
Turn your audience into a community.
Let your audience connect with and talk to each other about how awesome your product is. Building a community will strengthen your brand and create ambassadors out of all your customers.
Plus, it’ll leverage the psychological effects of fear of missing out (FOMO) from people who aren’t a part of the community yet.
A stronger community can also help SaaS companies provide support. Public forums can alleviate pressure from your support team by letting your clients troubleshoot each other’s problems.
You can build your tight-knit community in a couple of ways.
First, you have social media. Create a private Facebook group for your customers to interact with each other. They can ask you questions, talk about their experiences, or just meet new people.
This is also a great place to get some fresh testimonials.
But another option might be even better for you: turn your site into a membership site.
If you use WordPress, you can quickly turn any site into a membership site. We highly recommend using the plugin MemberPress.
MemberPress is super fast to set up, powerful, and, most importantly, has a community forum feature built-in.
Your audience will be able to log into their account and interact with other users. How is this better than using social media platforms like Facebook?
Because you’re training your users to consistently come back to your website.
Many of us have certain routines when we go online:
- Check Facebook
- Look at Twitter
- Browse through emails
- Read the news
And so on.
By creating a community directly on your website, you can become a part of your users’ daily online habit. That will translate into higher customer loyalty and reduce customer churn.
12. Ask for Feedback to Make Improvements
Usually, if you want to know about your customers’ satisfaction and experience with your brand, it’s best to go straight to the source.
In other words, reach out to your customers for direct feedback.
You can do that through surveys on your site or in your email series. If you already have a particularly good relationship with some customers, send a highly personalized email.
OptinMonster can help you quickly and easily get customer feedback right on your website. You can use OptinMonster with WPForms to create a custom form:
Then, you can add a feedback button to your site using our MonsterLinks™ feature:
Then take your feedback, make your improvements, and watch your churn rates drop.
Need help getting feedback? Check out this article on 10 ways to create a feedback strategy.
13. Show Enthusiasm and Gratefulness for Each Customer
Sometimes it can be hard not to take your customers for granted. If you’re working with thousands of clients at any given time, it’s not realistic to build a good 1:1 relationship with all of them.
But you should still be grateful for each of them and let that show through your interactions. This occurs (mainly) in two ways:
- Responding to online reviews
- Saying “thank you” in your marketing campaigns
First, when you respond to an online review, you should always approach the comment with respect and appreciation. Yes, even for the negative reviews.
Here’s an example of a business owner who clearly isn’t appreciative of his clients:
Even though he was responding to a negative review, this doesn’t encourage other readers to use his business.
But here’s an example from famous entrepreneur Gary Vaynerchuk. It’s obvious that he values everyone who takes the time and money to be his customer:
So, which one would you rather work with?
We’ll give you a hint: it’s the second one.
If you have a hard time dealing with negative feedback, then you need to read these 13 tips on responding to negative reviews.
But then you can also show your appreciation for customers in your marketing strategy. This means taking the time to thank your clients at each time they move deeper into your sales funnel.
The first place to start? The Success message in your optin campaigns:
Each of OptinMonster’s templates includes a professionally-designed success page so you can say “thank you” in style. To edit your success message, just click on the Success view.
This is likely going to be the first chance you get to say thank you, so take full advantage of it. Don’t stop there, though.
You should make the words “thank you” be a standard ending to most of your content production. A podcast or webinar, for example, should end with a “thank you for listening,” or a blog post should finish with “thanks for reading.”
No matter how you communicate with your current or potential clients, you should be showing how grateful you are for the chance to serve them.
Doing this will make each of your customers feel valued and, consequently, you can expect to reduce customer churn.
And that’s it!
You now have 13 proven churn reduction techniques to keep all the clients you’ve worked so hard to get. We hope you’ll never have to ask yourself, “Why do customers quit?” ever again!
We also hope you enjoyed this article, and while we know this list of strategies is thorough, it doesn’t mean it’s exhaustive. Which is why we want to hear from you:
Do you have any tips we didn’t cover for reducing customer churn?
Or, if you’re simply looking for more content marketing information and tutorials, head over to our YouTube channel. We’ve got loads of great stuff over there.
And finally, it’s hard to reduce customer churn if you don’t have many customers to start with. That’s where OptinMonster comes in.
OptinMonster is the world’s #1 conversion optimization kit. We help small to medium-sized businesses drive traffic, grow their leads, and increase revenue. In other words, we make sure you and your clients get off on the right foot.
So give us a try. Join the OptinMonster community today as no risk with our 14-day money-back guarantee!