How to Reduce Customer Churn: 13 Strategies That Really Work

It takes months to find a customer… seconds to lose one.

Vince Lombardi

Have you ever had a customer service experience so bad that it made you walk away from a brand? I believe yes!

It could be due to the product being too expensive, encountering unfriendly staff, finding a better alternative, or some other reason. But it’s a setback for the brand you purchased from. They not only lose you as a customer, but if they don’t address these issues, they risk losing more customers in the future. 

And as once a wise person said, it just takes seconds to lose a customer. 

What is customer churn?

Customer churn is the percentage of customers who stopped purchasing your business’s products or services during a certain period of time. It’s like having a leaky bucket.

Imagine your business is like a bucket, and water is your customer. So you’re trying to fill your bucket with water. But, oops! There are holes in the bucket, and water keeps dripping out. This water dripping out symbolizes customer churn and when some of your customers leave your business through those holes in the bucket.

Now, if you see lots of water dripping out, that’s a high customer churn rate. It means many customers are leaving your business. 

Why does this happen? 

Well, it can be because they didn’t like your products or services, or maybe you’re not reaching the right people, or there may be both. It’s like your business isn’t holding customers very well.

Here’s the thing, getting new customers costs a lot more money than keeping the ones you already have. So, if you’re losing customers, it’s like wasting your hard-earned water and money!

To stop this leak, you need to figure out why customers are leaving and plug those holes by making your products better, listening to what your customers need, and for all these needs good customer service is very crucial. When you do this, you’re reducing your customer churn rate, which means you’re keeping more customers and, in the long run, saving money and making more money.

Well, that’s what we call a winner! 

So, the key takeaway is that customer churn you need to fix those leaks to keep your customers and your business strong and increase your success rate.

How do you calculate customer churn?

The calculating customer churn rate can be done with a simple formula. Let me show you how:

Customer churn rate: (Number of customer lost / Total number of customer at the start of time) X 100

Step 1

Imagine you have a milkshake center. At the beginning of the summer, you had 300 customers who loved your favorite milkshake in this hot summer. You’re curious about how many of them will still be your customers by the end of the season.

Step 2

Now, summer’s over, and when you count, you find that you have 240 customers left. That means during the summer, you lost 60 customers. These are the folks who decided not to buy your milkshake anymore.

Step 3

To figure out your customer churn rate, you’ll use a simple formula. You take the number of customers lost and divide it by the number of customers you had at the start. This gives you 60 divided by 300, and you can multiply the answer by 100. Your customer churn rate will be 20%.

Therefore, A customer churn rate of 20% means that during the summer, 20% of your customers left. That’s quite a lot! It suggests that many people stopped buying your milkshake.

You need to make sure the churn rate is as close to 0% as possible because that means you’re not losing many customers and people are happy with your milkshake. But in reality, a 0% churn rate is hard to achieve because some customer loss is normal for any business.

So what is an acceptable rate for customer churn?

In most cases, according to researchers, having a churn rate between 5% and 7% annually is considered acceptable. This means that every year, you might lose 5% to 7% of your customers, and that’s not so bad.

So calculating your customer churn rate helps you understand how many customers you’re losing. The lower, the better, but a small amount of churn is usually expected in business. It’s like making sure your milkshake stand stays tasteful and keeps customers coming back for more!

This customer churn is managed by you to make your business success rate better. So you need to know the issue and try to solve it. Less customer churn means more revenue for businesses and that is why you need to be on top of your game when it comes to customer service management. 

What causes Customer churn?

Why is your customer leaking from your bucket? Have you noticed why? 

These are some reasons why customer churn occurs in your business. 

Poor product fit

You need to match your product and services to the right target audience. If you offer products that don’t match what your customers really need or want, it can be a real drawback. No matter how much customers like the brand, they won’t keep buying products that don’t fit their needs.

Imagine you’re in a shoe store, and you see a fantastic pair of high heels. They look stunning, but here’s the catch: They’re several sizes too big for your feet. Even if you love the brand, you won’t buy those shoes because they’re just not the right fit for you. Your feet won’t be happy, and you won’t be comfortable walking in them. The same goes for your businesses.

That’s why understanding your target audience is vital. It’s like knowing exactly what shoe size your customers wear. When you know their needs and preferences, you can adjust your products to be the perfect solution for them. Just like giving someone the right shoe size for their feet, you want to provide the right product for your customers. That way, they’ll keep coming back, and you’ll have happy, satisfied customers.

Wrong pricing

Wrong pricing means that the way you’ve set the prices for your products or services is not quite right. It could be too high or too low, and it doesn’t match what your customers are willing to pay, due to which you can lose them. If the price is higher, they might say it’s expensive, but if it’s way lower, they might feel pushy. So you need to be reasonable with your products and services.

Now, let’s look at an example:

Imagine you have a favorite online shopping site, like Meesho or Myntra. You find a lovely dress that you really want. But the twist is that this dress has two different prices on these websites. It’s the exact same dress.

Now, the problem comes when the price is too high compared to what you think is reasonable. If the price feels too expensive on one site, but you see it cheaper on the other, you’d probably prefer the less expensive one. So, even though the dress is the same, the pricing made you choose the more affordable option.

That’s how the wrong pricing strategy can lead to customers going elsewhere. They’ll pick the cheaper option, just like you would when shopping online. So, as a business, getting your pricing right is super important to keep your customers happy and loyal.

Poor customer experience

Connecting with customers is a crucial part of building brand loyalty for your business. However, sometimes customer service falls short, whether it’s before or after a purchase. To keep your customers happy, it’s vital to provide them with top-notch service at every stage.

If you start strong but then fail to provide good service later on, customers might get disappointed and leave. To prevent this, consistency in service is key throughout the customer’s journey. And if your in-house customer service team isn’t up to par, outsourcing customer service to experts like AM2PM will be the right choice. 

It is known for its professional-level service. This way, you can share the load with this BPO company and ensure your customers receive the care they deserve.

Competition

It’s important to remember that you’re not alone in your industry. There are others offering similar products and services. Customers tend to opt for better offerings at lower prices. So, if you’re seeking ways to reduce customer churn, consider what your competitors provide.

For example, take Swiggy and Zomato during a cricket match season; they each have their own unique marketing strategies and offers. Swiggy watches what Zomato is doing and vice versa, aiming to stand out by delivering exceptional customer service. It’s all about staying ahead in the game!

Which app are you going to choose after looking at their offer?

13 strategies to reduce customer churn

You do not need to worry; take these proactive steps to fight customer churn. Here are 13 effective strategies to get you started.

Analyze your customer churn when it happens

An effective strategy is to keep a close eye on your customers’ churn and understand why it’s happening. When a customer decides to leave, it’s like a puzzle. They might have left you because of pricing, a bad experience, or maybe they found a better offer elsewhere. You need to find out the core issue and try to solve it.

For instance, you analyze that your customer is leaving because of poor after-sales service; due to this, your customer switches to a different option. The calls that your customer service team was performing were not up to par.

At this point, when you get to know the issue, you should step up for the solution. In this situation, you need to outsource the professionals, like AM2PM, a call center outsourcing company, for your service. AM2PM Support gives your customers the best calling experience and provides a well-managed team. 

They deliver 24/7 customer service and Support to delight your customers. This is how you can reduce customer churn.

Target the right customer 

Customer retention becomes simpler when you start by engaging the right target audience. High customer churn often happens when your product or service isn’t the best match for the consumer.

To deal with this situation, create a buyer persona to understand your target customers’ characteristics and behavior patterns. During the sales process, ensure that your product matches the customer’s goals. The right customers are those who connect well with your offerings, fit your target market, and know how to collaborate with your brand. This leads to a win-win situation, reducing customer churn.

Know your competitor strategies

Why is it essential to keep tabs on your competitors when battling customer churn?

Well, staying ahead in this market race can be challenging for your business. It’s like a marathon where you must keep pace. You need to always know your competitors so that you can pace yourself in this market. It takes seconds to lose customers as soon as they find a better option in the market.

For instance, your customer churn rate is suddenly spiking. It’s time to look at the competition. Are they launching new products? Cutting prices, maybe? or providing special offers? You should always have that competitor list handy, but when people start leaving without much explanation, that’s when you need to dust it off.

Tools like SEMrush can help you dig deep into your competitor’s marketing playbook. It’s like having a secret tool that reveals their strategies, giving you the edge you need to stay ahead.

Better your onboarding process

Customer churn tends to occur right at the start of the customer journey, but why?

It is when your company often skips the onboarding process, leaving the customer in the dark about how to use your product or service.

Imagine buying noodles. You might just need those basic cooking instructions on the side. But if you’re investing in business software, you’d rightly expect more support and resources from your provider.

It’s like buying a complex piece of machinery without a manual or guidance. Customers might feel lost and frustrated, and that’s when they decide to leave or all your team’s time goes into figuring out the best ways to handle a ton of customer complaints. So, ensuring a smooth onboarding process is like providing a roadmap for your customers, helping them get the most out of your product or service right from the beginning.

Focus on your loyal customers

Instead of spending all your resources on finding new customers, it’s a smart move to pay more attention to your loyal customers. Getting new customers can be a way more expensive process than keeping the ones you already have, so it’s vital to nurture your existing relationships.

When you focus on your loyal customers, you not only keep them around, but they often end up spending more and recommending your business to others. To connect with your customers, consider rewarding them for their loyalty, like offering discounts or loyalty programs. This not only encourages them to stick with you but also shows your appreciation.

And don’t forget to give a shout-out to your long-time loyal customers. It makes them feel emotionally connected to your brand and keeps their support coming your way. It’s a win-win for everyone involved and helps reduce the customer churn rate.

Provide excellent customer service

Customer experience is at the core of every business, no matter which industry sector your company belongs to, but it’s vital to ensure that customers have a fantastic experience throughout the entire sales cycle, whether it is about your website, before-sales service, or after-sales support. Providing a top-notch user experience will leave your customers satisfied and more likely to choose your business over others.

To make all of this happen, ensure that your website works well, is easy to use, and is visually appealing. Plus, your customer service should be top-notch, both before and after a purchase. Try to respond quickly to customer questions and provide excellent service. You can use different tools to make this process more efficient and keep giving your customers fantastic support. The goal is to leave your customers happy and wanting to come back for more.

For instance, you can add an X-factor to your website by including live chat, which will improve customer satisfaction. To handle the live chat support, you can hire AM2PM Support as your reliable live chat outsourcing partner. Their amazing expertise in work will improve the customer satisfaction rate.

Offer incentives

A strategy to keep your loyal customers coming back is to establish a rewards program. This program involves giving exclusive special offers and discounts to specific clients.

Although you realize the benefit of using discounts and promotions to draw in new customers, you often overlook how effective the same approach can be for retaining existing customers.

To express gratitude to your loyal customers, send them unique items or special offers that are unavailable elsewhere. It’s a way to formally show appreciation for their ongoing support.

For example, Amazon Prime membership customers have extra benefits like Prime Video, one-day access to the biggest sales, free delivery, and many more.

Ask your customer for feedback

Customer feedback can be positive or negative; both types of feedback can assist your organization in reducing customer churn. When your customer experiences frustration, it often points to issues that can drive them away, like product confusion or inadequate support, which can ultimately lead to customer churn. By paying attention to these pain points, you can work to resolve these problems.

When a customer has positive feedback, even that can help you reduce customer churn. Positive feedback analyzes what your organization is best at, and you can try to increase the products and services that your audience prefers.

For example, you own a cake shop. If you notice from feedback that your chocolate truffle pastry is a hit, you’ll make more to ensure all customers can enjoy it without disappointment. So, feedback, in both flavors, guides you in keeping your customers happy and loyal.

Hire best customer success staff

Have you ever walked into a store and liked what they had, but the way the staff treated you was so unpleasant that you decided to leave? 

Indeed, a bad customer experience can drive you away, no matter how much you initially liked the product. That’s why having a team of professional and customer-focused employees is crucial.

Ensure that your support staff comprises individuals with the right personalities and attitudes. They shouldn’t just be looking for a paycheck; they should genuinely care about helping customers. This is because every interaction a customer has with your company reflects on the entire business.

If your customer service team appears impatient, negative or lacks deep knowledge of your services, it might be worth reconsidering their roles. It’s all about making sure that every touchpoint with your customers leaves a positive impression.

Let’s say your business sells tablets to customers, but your after-sales support team struggles to resolve the technical issues customers encounter. This situation could become a problem, leading customers to seek alternatives from competing brands. In this scenario, having a robust tech support team becomes absolutely critical.

The solution? You might consider hiring skilled tech support employees internally, or you can go with outsourcing tech support call centers with a specialized team. The goal is to ensure that your customers receive top-notch assistance with their technical problems, fostering trust and loyalty that keeps them coming back to your brand. It’s all about making sure your customers stay satisfied and keep choosing your products.

Build a Community Around Your Product

Customers tend to stick with brands that have fostered a community centered around their products, services, and fellow customers. In essence, your marketing team can focus on community management. This involves interacting with customers, providing them with a community platform, establishing a Facebook group, or organizing events for valued customers.

For instance, take the Midjourney Community. By nurturing such a community, customers are more likely to remain loyal, even when things don’t go as planned. For instance, if there’s a service hiccup, loyal customers who feel part of the Midjourney Community are more likely to stick around, knowing they’re part of a larger group that values their support. It’s like creating a loyal and supportive family that stands by your brand through thick and thin.

Preferred features

Wouldn’t it be great if you got a personalized experience from your favorite brand? Yes or no?

Imagine you like wearing Western clothes, and a salesperson tries to sell you traditional attire. You’d naturally not be too keen on it, right? It’s all about aligning with your preferences. So, you would expect a personalized customer experience.

This means your customers expect you to create new features or products tailored to their needs. However, if your customer base is diverse, some might be disappointed when you launch something that doesn’t align with their goals. While this new offering might benefit most of your customers, there could be a group that feels your brand is moving in a different direction.

This kind of customer churn isn’t always a bad thing. If your brand is indeed heading in a new direction, it might lead to some customers leaving. Just keep a close eye on your churn rate to ensure it doesn’t go too high. It’s all about finding the right balance between evolving and keeping your customers happy.

Offer Long term contract

Preventing customer churn comes down to providing your customers with compelling reasons to stick around. And sometimes, it can be as straightforward as offering them long-term subscription choices for your service or extended access to your product.

How does this work? Consider introducing annual or multi-year sign-up options alongside the typical month-to-month contracts. Alternatively, you could grant your customers unlimited access to your team of product specialists for a fixed period.

The key is to design your business structure in a way that entices customers to stay longer and explore the benefits of your service or product. It’s all about creating incentives that make them want to stick with your brand for the long haul.

Re-engage your customer with retention messages

When it comes to re-engaging the interest of customers who haven’t been active in your app, the best solution is email, WhatsApp message, or SMS, which is often your most reliable tool.

A carefully crafted retention email, WhatsApp message, or SMS can work like a charm, resurrecting inactive users and nudging them to remember the value your app offers. This proactive approach decreases the likelihood that they’ll bid farewell to your app forever. It’s like sending a friendly reminder to bring them back into the fold.

MyGlamm retention Whatsapp message, providing exclusive offers.

Level up your customer satisfaction and reduce customer churn

Customer churn can indeed have a significant impact on your business, but remember, it only becomes a problem if you let it. Take action now to change your company’s course by implementing the valuable tips discussed above. It’s worth noting that the primary reasons for churn often stem from issues unrelated to the product itself, with poor customer service being a major culprit.

If you find yourself struggling with after-sales service challenges, consider exploring the option of outsourcing to AM2PM Support. They offer cost-efficient services with well-trained staff, providing a potential solution to enhance your customer service and reduce churn. It’s all about taking proactive steps to ensure a brighter future for your business. 

AM2PM Support is loved by its customers for all the business it brings to them, especially through customer retention, maybe you could be next in line for growth. Waste no more time and contact AM2PM Support right away.