Stemming the churn tide is hard work. But it is critical to ensure profitability and growth of your organization. The underlying goal of any successful business is the same – establish a strong relationship with customers and encourage them to remain loyal to your company.
To develop this effective churn strategy, it is essential to start by identifying the reasons why customers decide to terminate their contracts or stop purchasing from you. Here’s the strategy template from start to finish.
- Track when customers leave and why. If you don’t know, ask. Most often they’ll tell you.
- While you’re talking to customers, ask how they like to receive communication. Email, SMS, a phone call. Often, we’re stuck in our own channel, forcing customers to do business the way we do. A simple tweak can make a big difference.
- Don’t treat all customers the same. This is the biggest mistake we see manufacturers make when dealing with customers. It degrades your relationship quickly – avoid generic messaging whenever possible and take a little time to segment your customers by their preferred communication methods.
- Once lost is not always lost. Implement a re-engagement process. We all know the grass is not always greener. And what may have led them to leave could be something you’ve tried in the meantime. Having a well thought out reactivation plan can add back value.
- Reward loyal customers. Don’t take them for granted. As costs rise and our customers pay us more for the same or even less, we need them to know we really do appreciate their business. Create tangible benefits to being a loyal customer.
- Be a proactive content provider. This is also where you can squeeze in some upsell opportunities. Think like a customer and come up with purchase channels that make sense for those customers.
- Make sure you have feedback channels. You can’t fix it if you don’t know it’s broken. Whether it is a product issue or a service issue, make it super simple for customers to tell you what’s wrong and then fix it fast. Issues can be great opportunities to shine and build loyalty as well.
- Be responsive. Include multiple ways for customers to contact you and be there when they do. Having a chat option for pricing and service questions is a great way to improve customer satisfaction (if you staff it with knowledgeable people and not bots).
Let’s take each one in depth.
1. Identify and understand the causes of churn
Before going into details, we want to talk about the different types of churn, since the ways to address them differ.
- Voluntary churn: conscious decision made by the customer to cancel or stop doing business with you due to dissatisfaction, changing needs, financial constraints, or other personal motivations.
- Involuntary churn: happens when customers are forced to leave your business relationship even though they have no intention of doing so. This type of churn is most often due to issues like expired payment method or internal processing problems.
- Passive churn: customers gradually drift away from the business relationship without formally deciding to leave. This is most commonly seen in the product industry when they discover a competitor and try out the product/service on a limited basis.
Once the type of churn is identified, you can start to examine the factors that led to the churn. This is not an exhaustive list – you’ll want to create your own customized list based on your research.
- User experience issues
- Product/quality
- Unsatisfactory customer service
- Price
- Competition
- Evolution of customer needs
- Poor communication
To evaluate the contributing factors and assemble your research, ask these five questions:
- Who are the customers who churn?
- Why do they leave? What are their motivations?
- When do they leave?
- How do they terminate? What is their journey?
- Are there already anti-churn measures in place? What are they?
2. Communication: Have a personalized approach
To combat churn, it is essential to personalize your customer interactions, whether it’s via email, SMS, or phone. Nothing irritates a customer more than when you clearly don’t know or understand them, when you have data that you could be using to make communication personal.
Personalization is not as time-consuming as one might think, and it’s more than just using their name in an email subject line or greeting. You want to understand their communication preferences. These might sound silly, or unnecessary. But it costs business.
Example: A client was using a CPA firm, and the primary accountant refused to use email to communicate. He only did business by phone. The customer even mentioned it to the accountant, that he really liked to have emails to refer to when he asked a question. CPA pushed back, saying, “well, I’m not going to write an email when a 10-second phone call will handle it.” He would not respond to emails, would call instead and leave a voicemail or just not answer the emails. The client was so irritated, they looked for a new firm. This is an extreme example. But it illustrates the point of working how your customers want you to, when possible.
3. Segment your customer base
Segmentation goes hand in hand with personalization. Gathering and tracking the specific characteristics and needs of each customer group means that you can target your retention efforts more effectively.
You can segment your customers based on their location, purchasing habits, or preferences. Then you can adapt your strategies to fit. For example, offer exclusive benefits to those that frequently purchase from you.
4. Reactivate inactive customers
Inactive customers pose a high churn risk. Re-engagement campaigns have a high rate of success with these groups. Include personal details and offers that align with their purchasing history. If using email, use an engaging subject that creates a positive emotion like, “we miss you.”
Be thoughtful with the content of the email and personalize it using your customer knowledge tools. G2 has a listing of the best customer success software tools.
5. Start a loyalty program
A well-designed loyalty program strengthens the relationship with your customers and reduces churn. But for the love of all that is holy, test your loyalty programs with real customers (or try it out yourself). Nothing is worse than a program that is hard to sign up for or use.
Offer rewards and exclusive benefits to loyal customers. Consider a referral program. And always keep an eye on the loyalty program’s usage. Adapt your program based on customer feedback to make the most of your efforts.
6. Produce useful content
Provide your customers with relevant, helpful and informative content, such as guides, tutorials, or use case examples. How-to articles and videos are the number one type of content used by customers. Video tutorials, especially when part of a welcome package, help your customers use your products and facilitate their onboarding.
Make sure you are paying attention to the consumption of video or written content, so you know what to make more of, and what to ditch.
7. Pay attention and be proactive
Anticipate potential issues and address them promptly. Keep an eye on customer satisfaction through surveys (you may need to provide incentives to get people to fill these out). Send contract renewal reminders with plenty of notice. Demonstrate your commitment to your customers and their challenges by getting in front of product issues and communicating your plans to fix any problems. Exceed their expectations.
8. Provide 5-star customer service
You wouldn’t use a band-aid on a broken leg. The same is true in customer service – match the solution to the problem. If you’re not sure what level is needed, ASK. Customers are very likely to tell you what they want!
Invest in rigorous training for all your customer-facing agents. Give them the power to resolve problems quickly and efficiently. Ensure that your agents are available when and how your customers need them to be. Ask customers to rate their experience and reward your agents for great reviews. With good customer service, you have the power to turn negative experiences encountered by your customers into positive ones.
To go further
Have you successfully regained your customers? Good for you…but…you’re not done. The connection you have with customers that have considered leaving remains fragile. Your retention measures must be combined with a reactivation onboarding plan, that is highly personalized.
A good retention strategy requires people and money. It must align with your overall business policies. Offering benefits incurs costs, so it is essential to allocate your budget wisely to ensure the effectiveness of your strategy. If you have questions about your customer churn, contact us and let’s talk about your business.
