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It’s the end of the year, and your customers are busier than ever. They might not even remember signing up for your service—and if they do, it’s possible they don’t have the patience to figure out the system if they’re new, or your product very well may slip from their minds entirely if it’s not yet firmly part of their regular habits.
And so, customer churn sets in.
What is customer churn? It’s a complicated metric used to describe a simple act—people dropping off from your product. It’s most worrisome with SaaS products, for which returning users are critical for growth, but other small businesses can look at churn rates as well, including media companies, agencies, and other subscription-based companies.
Calculating customer churn is done most easily by analyzing a period of time and dividing two numbers: the number of customers you’ve lost versus the number of customers you started out with. So if you had 200 customers at the beginning of January and lost two by the end of the month, your churn calculation is 2 ÷ 200 = 0.01. That’s a churn rate of 1%. Not bad!
But what if your churn rate is so high that it’s troublesome? There are steps you can take to mitigate customer loss. Churn will invariably be impacted by elements of your business such as web design, understanding customer behavior, effective onboarding, and more.
Here are five important ways to beat your customer churn at the year’s end.
If customer churn is a problem, the solution is to figure out why they’re leaving. (If you knew, you would probably have addressed the issue already, right?) One sure way to never find out why they’re leaving: never ask.
There’s a reason that whenever you cancel a subscription, you’re prompted to tell the company why. The language is common: “We’re sorry to see you go. Would you mind telling us why you’re leaving?”
Most often it’s because the product isn’t working for the customer the way they’d hoped it would, but you can get more specific than that. What didn’t it do? How could you do it better? Even if just 10% of your customers respond to follow-up questions, you’ll have more data to work with.
Are customers churning out before they even get started? Do they sign up, play around with the site for a few minutes, and leave forever? Either you’re missing something during the onboarding process, or they are.
Some business owners have found success setting up an automated email chain for people who haven’t finished setting up their system at the beginning, which creates both a personal connection between them and their customers and discourages churn.
You may also discover that people are getting caught at the same place. You can use this data to redesign your onboarding process and make their activation or registration smoother. Clarity is key, and a lot of the time, if your onboarding process is so smooth that it takes a few seconds, your customers won’t have time to hit a wall and leave.
Who are your current regular users? Why do they stick with your product? How have you helped them? These are questions worth asking to your audience of already engaged fans, who use your product regularly. Direct communication (surveys, for example) can also work for you here, but analyzing your current usage data should also reveal moments of success.
If you have customer goals set up in your analytics dashboard, then knowing what leads people to these goals and how often they’re actually hit can help clarify what’s working. If you isolate the successful parts of your business, it could help highlight the distinction between what’s working and what isn’t.
If people have a problem with your product—even if they’re engaged—the strongest deterrent to them outright quitting will be your customer service team. Long wait times and ongoing technical issues are the quickest way to ensure people get fed up and move to a competitor.
Conversely, great customer service can literally be the difference-maker between two products that are otherwise equal. In a world rife with competition, you can’t give your customers any reason to get fed up and leave—especially at the end of the year, when everyone is stressed about dozens of everyday irritations anyway.
There’s a reason subscription services offer discounted rates to yearlong subscribers: commit to a year with us, and you’ll save money. What else does this yearlong commitment guarantee? Lower churn rates. It’s far easier to quit a month-to-month contract, especially if they’re confused by the onboarding process. Agencies working on one project specifically are likely to see higher churn than those that are on client retainers.
We don’t suggest you rely on long-term contracts exclusively, but promoting them as an attractive option and following up quickly to reward their investment is a good idea. It also establishes a deeper connection between you and your customer, which is, after all, what good business is all about.
No one wants to think about losing customers before the end of the year, but it’s almost inevitable when clients or users are cutting budgets and staying lean. This year, make sure you’ve set up your small business to prevent churn as effectively as possible. You may still lose a few customers, but at least you’ll have done everything in your power to retain them.