Elevate Your Churn Management Process

While a churn rate, or the percentage of customers who stop using your product or service, may be inevitable in business there are ways to reduce the risk to your bottom line. Churn management involves examining the reasons why customers want to leave your business, and addressing those problems with strategies that help maintain customer retention.

It is crucial to ensure that your existing customers remain satisfied and continue to support your company because that ultimately affects revenue, customer loyalty, and the brand’s overall reputation.

We will explore different churn management strategies you can implement to help minimize the risk of high customer churn.

Understanding Churn

Before we can explore churn management strategies, it is important to have a clear understanding of what leads to a high churn rate and how to eliminate those red flags before they escalate. The specific reasons behind why a customer may choose to discontinue their relationship may vary, but on a general scale, it usually has something to do with poor customer service, issues with product quality or usability, and lack of proper engagement with the business.

You want to calculate your churn rate on a regular basis to stay ahead of the game and aware. To put it simply, you can calculate your churn by taking the starting number of customers in a period of time with how many you had at the end of the time period.

How often you do so depends on the size of your customer base, but it’s common to review the metric on either a monthly or quarterly basis. 

How can you effectively reduce the churn rate?

A major way to improve the way you manage customer churn is to find ways to reduce the risk of churn altogether. There are two different types of response strategies: Proactive and Reactive.

The proactive strategies are designed to prevent customers from leaving, while reactive strategies are designed for customers who have already left. They both work consecutively to find better ways to reduce customer churn, which ultimately reduces business churn.

Proactive Churn Management: How can it benefit your business?

Proactive churn management is the most effective process to implement because the strategies are focused on keeping customers around. This requires you to anticipate issues before they come and plan ways to address them to prevent churn. Some proactive strategies include: 

• Improve Product or Service: Don’t get comfortable. Always look for ways to make your product or service better. Also, constantly check to make sure that it’s meeting the needs of your customers. 
• Onboarding: Make sure the onboarding process is seamless and easy to complete so that customers are able to get started with your product or service hassle-free. This helps create trust and establish a positive customer experience from the very beginning. 
• Journey Mapping: Pay attention to the customer journey, meaning the connected series of experiences that turn a prospect into a loyal customer, and identify potential problem areas. This way you can strengthen the process and boost customer acquisition. 

How Can Customer Experience Be Enhanced?

Proactive churn management is ultimately about actively improving the customer experience. You will increase your customer retention by strengthening the customer relationship you have with your customers. They are more likely to remain loyal to your company if they feel connected, heard, and appreciated.

For example, provide constant opportunities for users to give their customer feedback through follow-up emails, surveys, interactive marketing, or social media posts. This is a great way to let them know you value their opinion and also presents an opportunity to gather data on positive things they enjoy.

Here are a few factors that can make the customer experience enjoyable:  

1. Excellent and Responsive Customer Service: Make sure that the customer success team is well-trained and equipped with the proper resources to respond to customers quickly and effectively.
2. Constant Communication and Updates: Customers are always interested in learning about what is new and improved. This is also a great way to stay at the forefront of their mind.
3. Personalized Marketing: Your customers should feel like you truly care about them and help them with what they need. This could include the use of individual names, birthdays, or specific products they’ve shown interest in. 
4. Smooth Buying Process: People don’t enjoy jumping through a lot of hoops when it comes to buying your product or service. Ensure your checkout and payment process is friction-free with minimal steps.
5. Loyalty Programs and Deals: Let your customers know that their consistent support is appreciated and can be rewarded through loyalty programs and new features.

Reactive Churn Management to reduce customer attrition

Reactive strategies apply to at-risk customers that display signs of lost interest in the business, or people that have already decided to churn. The most important part of this strategic process is to identify the root cause of your customer’s dissatisfaction. When really trying to narrow down what exactly led to a customer being unhappy, it makes sense to ask the customer themselves.

Some reactive strategies include:

• Win-back Campaigns: Staying in touch with churned customers and offering them deals and incentives for returning to your company.
• Direct Customer support: Reaching out directly to customers who have complained or asked for help to personally address any issues that customers may have.
• Exit surveys: Collecting feedback from customers who have decided to leave so you can identify areas that need improvement.

Reactive strategies are great for analyzing the common issues that users are facing. Once you can identify what is causing most of the churn, you can leverage the data analytics to develop more effective proactive strategies for managing churn. This is a very important part of the reactive process because then you can better predict churn by recognizing the trends of at-risk customers.

KPIs (key performance indicators) like the customer lifetime value and customer acquisition cost are also very important data analytics that you should continue to monitor during this process.

Strategies to Reduce Customer Churn and Boost Revenue

It’s very easy to understand that the more customers you stay connected to your brand, the more money your brand makes. The two metrics are directly connected. There are factors in revenue metrics like the Gross MRR Churn Rate that you should pay attention to because that tells you how much money was lost or gained due to changes in customer subscriptions.

Managing customer churn is a critical process for any business that wants to be successful, retain its customers, and remain competitive. A great way to ensure that your customer satisfaction is high is to take care of preliminary factors that affect the way people engage with and think about your brand.

By understanding the root causes of churn, improving the customer experience for both existing and new customers, and implementing proactive and reactive management strategies, you can elevate your churn management process and reduce your churn rate. 

Learn everything about churn, and best practices to tackle it in this course by Chargebee Academy and get certified today!