Tips to Reduce Your Churn Rate

Customer churn is a scary word in the subscription business. After having invested thousands of dollars and considerable hours strategizing your sales and marketing to get new customers enrolled, watching them jump ship just as quickly can be heart-wrenching. Reducing your customer churn rate goes a long way in ensuring a steady, recurring revenue that keeps subscription businesses alive. Although it is impossible to retain 100% of your customers, it is possible to greatly improve your customer retention rate by systematically lowering your churn. 

In this article, we discuss some of the tried-and-tested ways employed by successful subscription businesses to reduce their customer churn rate.

Difference Between Customer Churn and Revenue Churn

Before we begin, let’s cover some basic churn rates that subscription businesses come across in their lifetimes.

Customer churn rate is the percentage of people unsubscribing to your products or services. This could either be because they found a better alternative or they no longer needed your product or service. However, many people confuse customer churn with revenue churn. Although related, these are two different business metrics. The revenue churn rate talks about the revenue that you have lost from a particular section. 

For example, let’s suppose your business offers multiple subscription plans with different prices. Even if the number of customers subscribed to each plan remained the same, the revenue generated by them would differ due to plan price differences.

If a monthly comparison of the total revenue generated shows a dip, it might not be because you lost more customers (customer churn), it could be because fewer customers subscribed to your higher pricing plans. Even if your customer churn is not much your revenue churn can be higher depending on the subscription plan. 

Subscription management platforms that offer SaaS metrics and detailed analysis are the best way to keep a tab on your different churn rates.

Top 5 Tips to Reduce Your Churn Rate

The following tips will help you reduce the churn rate and have better customer retention.

Communication and feedback – All efforts to improve your churn rate must begin by improving communication and engagement with your existing customers to find out what their pain points are and how you could help to improve their experience. Often your services might not be enough for some customers. Communication is the key to having more customer trust you and show more loyalty to you. Arrange for regular feedback sessions or forms that cover all aspects of your product or service line. 

Analyze your churn rate in regular intervals – Keeping a close watch on your churn is essential if you are really serious about improving customer retention. Even with lots of effort, it is possible to generate some churn. The important thing is you realize why and how it happened and how to avoid it in the future. Conducting regular churn analysis will help you uncover problem areas in your business or a particular product line that is causing an unpleasant customer experience. That is how you will be aware of the things that are working and things that are showing an adverse effect on your business.

Address involuntary churn – An involuntary churn occurs when technical errors lead to failed payment processing and subscription renewal. In such cases, the customer is usually not aware of the payment issue, and it is the responsibility of the business to alert them of the same. Many subscription businesses register high revenue loss due to unchecked involuntary churn, which can be anywhere between 20-40% of your total churn rate.  Having an automated process in place is one of the best ways to combat involuntary churn. 

Offer options to downgrade or pause subscriptions – So your customer feels like looking at other options or taking a break from your subscription. Wouldn’t it be great if you could let them know that they don’t have to unsubscribe – just downgrade to a basic plan or pause their subscription. Not only does this gesture make your customers feel more understood and cared for, but it also gives you a window to win them back with a more tailored offering down the line. 
Focus on your best customers – Every business usually has a group of customers that are the most loyal brand ambassadors they could hope for. Recognizing them and offering them your best service is a sure-shot way to improve customer retention rates. If you provide better service to them and offer some discounts or any other benefits which are publicly not available to all customers, they will feel special and be more inclined towards your brand products and services. Focusing on your special clients also helps to gain more customers as they will talk well about your brand to others. Promotion through word of mouth has a better effect than any other marketing technique.

Reducing Your Churn Rate with saaslogic

The SaaS metrics and analytics dashboard in saaslogic is your solution to understanding and reducing your churn rates – both customer and revenue. Our platform will not only calculate your churn rates but also convert them into meaningful insights that will help you understand the ‘why’ and ‘how’ of your churn situation. Based on past and current customer information, we can also help build churn models for your business. To start optimizing your churn rates, get in touch with us today!