All businesses rely on their customers’ payments to earn a profit. However, not every customer will make payments successfully and this is why one of the most important metrics these businesses need to keep track of is their churn rate.
Churn rate is the metric that represents the rate at which customers cut ties with the company during a period of time. Your churn percentage gives you a clear view of your customer renting rates and how successful your business is.
Naturally, businesses are always looking for ways to reduce their churn rates, and if you want to set your business up for success in 2021, you need to do the same.
One of the best ways to avoid churn is to be proactive and prevent it before it even happens. Keep in mind that some customers are more likely to leave your business than others, so it’s important to identify those who have the potential to cause issues.
If you manage to find these flight risks, you can reach out to them in time, provide amazing customer service, and convince them to stay. These customers are usually the ones who haven’t contacted you in some time, or suddenly disappeared after getting a quote or a price list from you.
So, the best way to avoid churn is to be proactive and never give your customers any reason to be dissatisfied with your company or services. Even though customer service is one of the main things you need to focus on when improving customer satisfaction, it certainly isn’t the only one.
Things such as navigation and website design also play a huge role in customer satisfaction, and as much as 38% of people will stop engaging with a website if the content or layout is unattractive. If you don’t want to lose a lot of potential customers, you need to get the design of your website just right.
If you want to ensure your website design is perfect, it’s best to hire an agency that specializes in BigCommerce design, or a different platform, depending on the platform you used to create your website.
If you want to see substantial growth, you can’t expect to keep selling the same product to your customers. Even if something worked well for some time, you need to think about how you can improve your product to keep existing customers satisfied and even attract new ones.
Sometimes it can be very important to change something in product manufacturing just to make your customers stay. In some cases, you will have to address certain flaws and fix them, and in others, you will take a product that already works and improve it.
The point of this is to make your service valuable enough for customers so they never want to stop using it. By improving your existing products and adding new cutting-edge features, you’re adding more value to them.
Reduce involuntary churn
There are two types of churn businesses need to be aware of – voluntary and involuntary churn. Voluntary churn happens when the customer decides they’re not interested in your products or services anymore and simply stop paying for them or unsubscribe.
Involuntary churn is something completely different. It happens without the customer’s intent or knowledge when their payment fails. A lot of involuntary churn ends with canceled subscriptions and a loss of revenue that didn’t have to occur.
Some of the reasons for involuntary churn are:
- Expired credit cards
- Credit card fraud
- Maxing out a credit card
- Outdated billing or credit card information
Sadly, you can’t predict when involuntary churn will happen and it’s very hard to predict where it will come from, so you need to keep a close eye on it. Naturally, it is in your business’s best interest to reduce involuntary churn whenever possible. Even though this is a pressing issue, many companies don’t deal with involuntary churn before it’s too late and they’ve lost too many customers.
There are a few ways you can prevent involuntary churn from happening:
- Send reminder emails to customers whose payment method is about to expire.
- Keep all credit card information up to date automatically.
- Retry all declined charges automatically after a certain period of time (such as one week) has passed.
Unfortunately, you can never completely prevent involuntary churn, but that doesn’t mean you can’t recover all the payments you’ve lost. And since only about 15% of payment failures from credit cards are recovered every month, you need a good system in place for getting those failed payments back.
Unless you want to spend a copious amount of time writing dunning emails to your customers hoping they will make the payments they miss, you should use a failed payment recovery service. This way, experts will ensure that your involuntary churn is reduced to a minimum, keeping your bottom line higher.
Be prepared to listen to criticism
No matter how hard you try, customers will always leave, and churn rates can never be nonexistent. However, the customers who leave your business also have some value themselves, as they can provide you with useful criticism and point out the weaknesses in your business you might have missed.
Of course, you shouldn’t only look at your past customers for criticism, as your current customers undoubtedly also have something to say about how their experience can be improved. You can find all of this information out by sending customers an NPS survey after a customer service case.
Don’t shy away from criticisms and complaints. Instead, embrace them and make adjustments to your products and business to show customers how much you appreciate them and their opinion.
Take special care of your most valuable customers
Not all customers were created equal, and while you should work hard on keeping each customer you have, you might also consider paying more attention to your most valuable customers. Those who have been around for a while and bring in more profit than others deserve at least a bit more attention.
Segment your customers into different groups based on how long they’ve been with your business, how profitable they are to your business, as well as their readiness to leave. When you do this, you will identify your most valuable customers and know who to direct your focus on.
Later on, you can go through the history of your interaction with those customers. Find out how deeply they were involved in each purchasing stage, if they had any complaints in the past, and whether those complaints have been resolved. If not, make it a priority to resolve them.
Let your best employees deal with cancellations
In some cases, a customer who already decided they want to stop using your services can be convinced to stay. However, that can only happen if the employee they talk to when they decide to cancel their subscription is good at their job and knows how to sell the product again.
This is why you need to allow your best, most convincing, and most vocal sales reps to talk to those customers who want to leave and try to prevent churn as much as possible. As these experts already know how to deal with dissatisfied customers, they can remind the customer why they loved your product in the first place.
Without your customers, your business wouldn’t even be able to exist, so it’s very important to find ways to keep them around. Even though customer churn is inevitable, it can still be reduced with a few simple tactics.
As long as you don’t forget to look at both voluntary and involuntary churn at the same time and find ways to keep both of them as low as possible, you will be surprised by the results. After all, it’s much cheaper to keep an existing customer than acquire a new one, so low churn rates need to be a priority to all businesses.