How to Reduce Customer Churn Rate

How to Reduce Customer Churn: The Best Tips for Your Business

Every business has churn, and more often than not, it is considerably easier (and less expensive) to retain a current customer than it is to acquire a new one. It is also far easier to save a customer before they go than to persuade them to return. Understanding and reducing churn is crucial to building customer loyalty, which is something that all companies aspire for.

So, how can you tell whether a customer is about to leave? And how do you intervene before it’s too late?

In this post, we’ll look at how to monitor churn indicators, how to utilize that data to anticipate customer attrition, and how to keep at-risk customers from leaving before it’s too late.

Some facts to show the role of customer service in reducing the churn rate-

  • 69% of people surveyed said that they choose to shop more frequently at retailers with consistent customer service. 
  • PWC found that 32% of the people they asked said that, after just one negative experience, new and current customers would stop doing business with a brand or company 
  • 66% of consumers had terminated their relationship with a company due to poor customer service.
  • Customer churn can be reduced by 67% if companies succeed in solving customer issues during the first time interaction and successfully managing customer expectations.
  • More than half (54%) of survey respondents said that companies need to do better at providing a good customer experience and customer satisfaction.


What is customer churn?

Customer churn, also known as customer attrition, is the occurrence in which a company’s customers no longer buy from or engage with the company. A high churn rate indicates that a large proportion of customers no longer wish to acquire goods and services from the company. 

For instance, if you begin the quarter with 400 customers and conclude with 380, your churn rate is 5% since you lost 5% of your customers. Naturally, your organization should strive for a churn rate as near to 0% as feasible. To do this, your organization must always be aware of its churn rate and treat it as a high priority.

A high customer churn rate might harm earnings and hinder expansion. The churn rate in the telecommunications business is critical. Many of these organizations compete in most areas, making it simple for individuals to switch from one supplier to another.

The churn rate includes both customers transferring providers and customers terminating service without switching. This metric is especially useful in subscription-based organizations where subscription payments account for the majority of income.

Analyzing and finding ways to reduce the customer churn is extremely important for the success of an organization.


Types of customer churn

There are different types of customer churn that are listed below and that will give you a better understanding of customer churn.

1. Revenue churn

Revenue churn differs differently from customer churn, yet it is still crucial to consider when evaluating this metric. The quantity of income lost in a particular period is referred to as revenue churn. This does not necessarily imply that you are losing customers, but rather that you are not generating as much money from your existing customer base as you were previously.

This can occur if your customers downgrade to a lower-cost subscription or version of your product. While customers continue to shop at your establishment, they are spending less money than previously. This is a number that your customer success team will want to keep an eye on, particularly as they track your most loyal customers.


2. Competitors 

Every company has competition, and customers will always leave you for another. It’s not ideal, but life happens, and you can’t spend all of your time worrying about it.

Investigating why these customers are leaving for your competition is more important. Are they a bad fit for your company? Is there anything you’re doing that makes others want to avoid you?

Once you’ve identified the fundamental cause, you’ll know which customers you should try to keep and which will leave your firm regardless.

Doing better than your competitors or going an extra mile for your customers can help you gain an advantage over the competition.


3. Complex onboarding process

Bad onboarding experiences can be the first reason for the customers to churn out and go to the competitors. Customer churn is typical in the start of the customer journey for various firms. This is because these businesses often do not provide an onboarding program that teaches the customer how to utilize the product or service. That means it’s up to the customer to find out how the product works and how it can suit their needs. 

When customers don’t get proper guidance from the company, they make up their minds for switching companies as soon as the contract is, which results in customer churn.


4. Desired feature

Customers want individualized experiences, therefore most will expect your company to provide new services or items that meet their wants. If you have a broad customer base, some may be unhappy if you introduce a new product or feature that appears to be unrelated to their objectives. While this new product may be fantastic for the majority of your target group, there may be a lingering section who believes your brand is taking a different path than they expected.

This sort of customer churn isn’t necessarily a bad thing. If your brand is moving in a new direction, it may result in some customer churn. Just be sure to keep an eye on your churn rate to make sure it doesn’t go higher than you expected.


Reasons behind customer churn

Customer churn may happen for so many reasons but listed below are a few common reasons responsible for customer churn.

  • Inadequate onboarding procedure
  • Customer connections or communication issues
  • Poor or non-existent customer service
  • Product user experience is difficult.
  • Ignoring all complaints and feedback

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How to Identify Customer Churn

The first step to reducing customer churn is to identify the reason behind it. Listed below are some ways that can be used to identify the reason behind customer churn and eliminate them.

  1. Set churn metrics and analyze them
  2. Collect customer feedback
  3. Take regular updates from the customer success team
  4. Promote proactive customer service
  5. Monitor third-party review sites

How to Reduce Customer Churn

Fundamentally, your aim with churning customers is to keep them using your product. You can do this by targeting the correct customers in the first place, offering them high-quality service suited to their requirements, and continuously watching their user behavior for signs of dissatisfaction.

Below given are the different ways that can be implemented to reduce or eliminate customer churn happening in your company.

1. Onboard the right target customers

Do you have a clear notion of your ideal customer profile (ICP)? If you don’t know what it is, go read the article. You should base your whole marketing approach on a single ICP.

If your product has broad appeal, establishing numerous individual ICPs is preferable to developing one broad ICP. By fine-tuning an ICP and targeting only prospects that fit this profile, you may reduce churn before the customer even joins up.

Because the correct customers will be able to get the most out of your goods. Customers will stay subscribed as long as they benefit from your app.


2. Under promise and over deliver

The most prevalent reason why customers quit firms is when they fail to deliver on their commitments. Overpromising and under delivering is a frequent trend in many sectors.

Over-promising begins with the first sales call and ends up doing more harm than good in the long run.

When huge promises are made, customers have high expectations, and when those expectations are not realized, they feel duped and disappointed.

Instead, firms should keep establishing pledges that they can realistically achieve in order to reduce client turnover. Salespeople must be educated to ask inquiries rather than make commitments in the dark.

Customers who are permitted to express their difficulties and goals will lead you to your destination. When you push a product to a customer while following a business script, their guard rises and remains raised.

However, by asking questions and proposing answers that will help them reach their resolution, you will be able to build an emotional connection with them. Customers will trust you because of your calm demeanor, courteous inquiry, and readiness to assist. After that, you’ll be well on your way to establishing customer loyalty.


3. Offer long-term packages

Create subscription packages with a longer length instead of month-to-month contracts. Perhaps six months, a year, or longer.

Offer long-term contracts at a reduced rate. Using this strategy, your customers will be able to access the products or services and witness firsthand the benefits they and their businesses will receive while saving money.

As a result, once they see the benefits, they will certainly stay for the long run.

“Contact customers who have canceled their accounts and inform them about your long-term programs.” Personalize the email as much as possible for the greatest outcomes.


4. Collect more and more feedback

Request feedback from your customers and learn what makes them happy. Once you’ve discovered it, do it and stick with it. That is how you develop a devoted customer base.

Including a review area on your website is an excellent method for getting feedback from both former and present customers.

Responding to those evaluations with a personalized email will encourage them to share additional feedback with you.

Regardless of the type of feedback, when responding to a customer’s review or query, acknowledge and handle it with appreciation and respect (be it a positive or negative one).

You might also simply contact them and request feedback. Reaching out to them will assist you in cultivating your relationship with your customers and winning their loyalty.

Talking with your customers can assist you to figure out where they’re stopped and walk them through the solution.

Kapture helps you collect feedback at the end of every customer interaction by sending a feedback form right after the conversation. This automates the entire feedback collection process, making it easier to keep track of the feedback.


5. Proactive customer service always helps

Customers may quit your website if they are unable to browse it correctly or discover the product information they seek. Customers may get so dissatisfied that they cease doing business with you entirely.

To assist you in dealing with this, have your customer support team adopt a proactive approach. This entails engaging customers at certain moments in their journey — frequently via live chat — based on their behavior. Customers will receive rapid answers, lowering your churn rate and delivering a better overall customer experience.


6. Knowledgeable and trained agents

Employee customer service training is an excellent approach to getting everyone on the same page. Deliver exceptional service while consistently communicating your brand’s beliefs. Training allows your staff to become happier and more confident in their roles. To ensure that the training “sticks,” it must be accompanied by systems and processes. When training is done correctly and then professionally applied, both staff and customers will be better happy with each engagement, which will boost your bottom line.

Kapture comes with an excellent and interactive Learning Management System that makes the training process fun and easy for the agents. This helps them stay updated with all the knowledge making the customer conversations smooth and engaging.


7. Implement the feedback and work on your weakness

No business is perfect. No matter how efficient and streamlined your procedures have gotten, there is always one component that is weaker than the others – this is your weak point.

It is critical that you get feedback from customers who have recently discontinued using your product. Most of the time, you’ll be able to uncover a few common causes that most of your churned customers will cite.

Why would someone who visits your website not sign up for your service is a critical question you must address. There’s a strong probability your competition possesses what your product lacks. Using technologies that track your prospects’ activity on your website is a dependable technique to find the aspects that are off-putting to them.

You won’t know what to improve unless you know your flaws. It’s important to work on the customer feedback so that you can always match their expectations and eliminate customer churn.


8. Simplify your onboarding process

During the sign-up process, a customer will have their first touch with your product or service. As a result, this phase must be kept as simple as feasible.

Make it a goal to streamline your onboarding process if it is confusing or overwhelming. If you don’t, potential customers may abandon the sign-up process and/or go to another SaaS provider entirely. Consider including a visible progress indicator so they can see how far they’ve come.


9. Build a powerful knowledge base

A customer that fully comprehends your product’s features and benefits is an informed customer, and educated customers do not desert you.

If you establish a library of materials (articles, knowledge base, videos, and whitepapers) that educate your customers about the possible advantages of your product, they will begin to recognize its worth.

Every customer has an issue for which they hope to find a solution. If your resource collection can actually assist customers with solutions, you will go a long way toward winning their loyalty.

There are many customer service automation solutions like Kapture, that help you centralize your entire knowledge base and make it easily accessible for the customers. Customers can easily access the knowledge base whenever they have any query and get it resolved on their own. FAQs, articles, videos, and other knowledge material can be used to resolve their queries without having to interact with the customer service agents, saving their time.


10. Faster and better customer service

Poor customer service will result in a terrible client experience, which will almost certainly drive them away. Reduce churn by improving your customer service department.

Customers today don’t have the time to stay on hold to get a problem resolved that they are facing because of your company. They simply want the solution quickly and without any delay. Delivering fast customer service can help you save your customers from bouncing to competitors as fast service is something that can give you an edge over your competitors. This can help you reduce customer churn.

Kapture’s customer support software comes with amazing features that can help you deliver fast responses to customers. Canned responses can be used for quick responses like greetings or exit messages. Kapture also connects the customer to the agent who specializes in the query so that it’s resolved in one go without any transfer saving the customer’s time and delivering quick resolutions.


Bad Customer Service Statistics

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11. Omnichannel customer service

Customers build your brand and they have every right to choose their channel of communication with you. Customers should not be barred to one specific channel and should have the freedom to strike conversation via any channel may it be call, email, social media, or live chat.

It is your responsibility to deliver an omnichannel experience by being available on all channels. 

With Kapture, your customers can have a true omnichannel experience as it brings all the queries coming from different channels to a unified inbox. Agents can easily reply to and resolve queries without having to switch the platform making it fast and easier for them.


12. Reward your customers

Small ‘just because’ presents, customer recognition via a digital certificate – anything that puts a smile on your customer’s face will help minimize customer attrition.

Discounts or free upgrades can make a customer feel appreciated and encourage them to renew their contract. It may also inspire them to refer you to others. Customer appreciation does not have to be expensive. A short message written by hand would suffice.


Fast and efficient customer service can help you reduce customer churn

Kapture is one of the most dependable and recognized service automation solutions when it comes to providing a flawless customer experience. It can help you reduce churn by enabling your agents to provide rapid, omnichannel customer support and improve your customers’ overall experience.

Omnichannel, knowledge management systems, automated workflows, and many more features are there  to help your agents provide an enhanced customer experience and reduce customer churn.

The appropriate tool in the hands of your agent may be your savior and substantially lower your turnover rate. 

Talk to our experts and see how we can greatly help you.


About the Author

Nimit Kumar
Ankit Kochar
Ankit Kochar is a content writer at Kapture CRM who loves to write creative as well as informative content. He has worked as a creative and academic content writer in the past and has a keen knowledge of writing reports, essays and dissertations. His current field is helping him research and hone his SaaS knowledge.



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