According to the Harvard Business Review, a 5% increase in customer retention can increase profits anywhere from 25-95%. So if you’re worried about your cash flow, prioritize customer retention.
Besides just preserving revenue, low churn also gives you a big competitive advantage: The less time you need to spend replacing lost customers, the more space you have to improve your products, strategy and value proposition.
In this post, we’ll explain what causes churn, then give you some practical ways to reduce your own churn rates (and keep your customers happy for the long haul).
Why do customers churn?
Some churn is unavoidable: Someone’s marketing budget gets cut, so they need to shed a few tech tools. Or a change in strategy causes them to rethink their tech needs.
But often, churn comes down to a poor customer experience: 73% of consumers say that customer experience is a very important factor in their purchasing decision, so much so that even if they love a company or product, 59% will still walk away after several bad experiences and 17% will walk away after just one bad experience, per research from PwC.
Whatever the reason, unchecked churn compromises your revenue potential and can even hurt your credibility. So even if you’re OK with your churn rates right now, you need to understand why people leave your product or service. Some top reasons, besides price and product/market fit, include:
- Poor onboarding: Customers often quit when they have a hard time learning the product, so offering a comprehensive self-service knowledge base can disentangle stuck users, helping them reach their goals—and helping you keep more customers for the long haul.
- Lack of personalization: 71% of consumers expect companies to deliver personalized interactions and 76% percent get frustrated when this doesn’t happen, according to McKinsey’s Next In Personalization Report.
- Information silos: If your customer data is scattered across many different solutions, you can’t see how they engage with you across channels. This makes it more difficult to plan offers, products and campaigns that’ll meet all of their needs.
- Failed payments: Sometimes, your customers may not want to leave, but their payment methods fails and nobody resolves the issue. These unforced errors are expensive — up to half of subscription churn comes from failed payments.
6 ways to reduce churn and keep your customers happy
1. Invest in onboarding
Customers often quit when they have a hard time mastering your product. Offering a comprehensive self-service knowledge base (and promoting it via a welcome email series) will help your audience reach the goals you promised – and encourage them to stick around long term.
Not sure what to include in your knowledge base? Consult with your success team to see which questions surface most frequently, and also use your website analytics to identify your most frequently viewed pages.
2. Create a single view of each customer
9 out of 10 consumers value when a business knows their account history and current activities with that company. This way, your support team can pull up someone’s profile, see exactly how they engage with you across every platform, then give advice that’s geared specifically to their knowledge level and use case.
Need to establish a single customer view? Consider using a customer data platform, which takes in customer data from every channel and stores it in one place for everyone on your team to see at once. This way, your support team can pull up someone’s profile, see exactly how they engage with you across every platform, then give advice that’s geared specifically to their knowledge level and use case.
3. Personalize, personalize, personalize
To earn and retain someone’s business, you can’t just send them something generic and hope they like it. You need to prove you understand their individual needs — and that your product can address those needs.
Build up your audience data
You can’t personalize your offers to someone’s needs if you don’t know what they are. So step one is collecting more first-party data.
Worried about getting buy-in from your audience? Tell them you’ll use their data to improve their customer experience: According to PwC’s Customer Loyalty Survey, four out of five consumers would share some type of personal data for a better experience, with such information as email address, birthday and age, and sex/gender identity topping the list. (However, do make sure you’re following the GDPR, CCPA and other data privacy regulations.)
Segment your email lists
Ensure that your emails are relevant by splitting your email list into smaller groups, based on any combination of their job title and industry, browsing history, purchase history and more. This is especially important if you offer a wide variety of products or publications under one brand.
Use dynamic content in your emails
Dynamic content takes segmentation to the next level by giving individual recipients email content that’s personalized based on what they’ve read previously. This shows your audience that you’re tuned in to their individual needs and interests — without forcing you to manually tailor each email to each user.
Send targeted up-sells and cross-promotion offers
A well-placed cross-promotion introduces your customers to something else they’ll find valuable, which improves their experience while also generating new revenue for you. But if these offers aren’t highly personalized, they’ll seem spammy and backfire. Before creating your add-on offers, dig into your data to see:
- what products/publications are most commonly bought together
- what use case your customer is solving with your product
- what additional content your customers are viewing on your website, especially if it’s behind a paywall or meter (if someone’s providing their email address to view articles related to a topic, chances are that they’ll at least subscribing to a magazine on that topic)
- your customers’ job title, industry, age/location and other demographic information
- your customers’ average order volume
- If applicable, see what event sessions, breakouts and panel discussions, and webinars your subscribers attend.
4. Ask for feedback often
Nobody wants to disappoint their customers. But unless you’re in regular contact with your users, it’s easy to lose sight of what they need. Stay on top of your audience’s expectations by talking to them regularly, whether through customer interviews, feedback surveys or check-ins.
If you use a CDP, all of your customers’ survey responses are automatically added to their profile, so your success, marketing and product teams can account for their feedback when providing help or creating new features.
5. Remind subscribers with expiring cards to update before their payment date
Query your audience by their credit card expiration date, then send a reminder email (or series) for anyone whose card is set to expire in the next 30 days. If you create a renewal campaign on Omeda, you can also reach these people via website personalizations, increasing the chances that they update their card on time.
6. Recover failed payments via dunning emails
These are automated targeted messages or emails notifying the subscriber that their payment wasn’t received – and prompting them to address the issue.
This reminds customers to take action regarding their payment, whether it’s updating their credit card information or replacing their card on file. With Omeda’s subscription management solution, you can automate and send these messages as soon as a payment fails. This way, customers can immediately take action and maintain their subscription – and you get their payment more quickly.
Want an easier way to keep your subscribers engaged? Request a demo to see how Omeda can help with your subscriber onboarding and engagement.
