Small changes in customer churn rate can have massive impacts on your business. It’s been proven that reducing your churn rate by just 5% can increase profits by 25%-125%. That’s right – reducing your churn rate by 5% can double your profits.
For small and medium-sized subscription-based businesses today – especially in the SaaS space – customer churn rate is a major concern. So many resources are invested in marketing and sales to acquire new customers that sometimes they lose focus on retention. If your customers don’t stick around for long enough, then you don’t recoup the cost of acquisition.
By reducing your customer churn rate, you’re making your business more sustainable. You’re setting yourself up for long term success. You’re helping your investors sleep at night. But most importantly, you’re making sure that customers find it worthwhile to do business with you.
However, it isn’t a walk in the park. Reducing customer churn rate takes calculated dedication and focus. But with the right approach, you’ll be well on your way to shrinking your churn rate in no time.
Follow these 4 steps to start reducing your customer churn rate today:
1. Align with Customer Expectations
During the onboarding process, create a plan for success. Make sure that you understand your customers’ goals and lay out the steps you will take to achieve them.
2. Stay in Touch with Customers
Don’t wait for customer to contact you – be proactive. Monitor the health of your customers and reach out if they’re not using your product regularly.
3. Find Out Why Customers Leave
Most of the reasons customers leave have nothing to do with the product or pricing – many trace back to customer service. Once you find out why you’re missing out on renewal opportunities, prioritize your efforts accordingly.
4. Discover Your Retention Brights Spots
Not only should you know why customers leave your business, but you should also know why they choose to continue doing business with you. Identify common threads amongst your successes so you can replicate them as often as possible.
In order to reduce your customer churn rate, you must understand the factors that contribute to customer attrition and renewal. With that knowledge, you can set your customers up for success and maximize their lifetime value.
To learn more about reducing your customer churn rate, click here to download our free guide: How to Reduce Customer Churn.