It’s no secret that many businesses are losing sales opportunities because of one recurring problem – customer churn. While churn is a natural order of doing business, if it’s not addressed early on and often, your business risks missing out on the revenue generated by returning customers.
In fact, it’s estimated that the average company loses 10-25% of its customers every year. Another survey shows that 39% of consumers have switched brands or retailers since the pandemic. But in reality, most customers don’t churn because they don’t like your business or its products; they churn because you didn’t give them a reason to stay.
In this guide, we will explain why a rock-solid customer churn reduction strategy is essential to the longevity of virtually every company on the planet. We’ll introduce you to Pipedrive automation and show you how this incredible sales CRM can help you reduce churn rate through effective processes, streamlined workflows, and other brilliant features.
Customer churn is the rate at which customers leave your business within a specified period. It is when a customer leaves your business, either because they defect to the competition or because they stop purchasing from you altogether. Most of the time, this happens as a result of customer dissatisfaction.
Churning can directly impact a company’s bottom line. Lost customers translate to
As such, the significance of identifying why customers leave and taking corrective action to reduce churn cannot be overstated.
A declining number of customers indicates that something needs to change in your business practices and offering; there may be an opportunity for improvement.
Here’s a brief illustration of top 6 reasons why customers leave the average business and switch to the next best alternative:
Top Reason Consumers Switch Service Providers Source: Customer Service Manager
If your churn rate is high, it may be worth investing more money and effort into retention campaigns, services, and products that can help keep your customers from leaving.
Although there isn’t a standard churn rate that all businesses can expect, a churn rate of 5% – 7% annually is acceptable. This translates to 0.42 – 0.58% monthly churn. Software companies have one of the highest average churn rates of any industry.
Here are the churn rates by industry according to Statista:
Churn rates by industry: Source: Statista Report 2020
Keeping customers happy and engaged is extremely important to businesses. But things don’t always go according to plan; for a returning customer, churn can occur at any stage of the sales process.
What you need to worry about, however, is the risk of churn after purchase. Churning may occur in these pipeline stages as well:
“Outreachly has assisted us in starting the EthixBase marketing automation programme. From the initial onboarding sessions through to ongoing support, they have been first class throughout and I would highly recommend them.”
Most companies attempt to reduce churn by making rigorous investments in training employees on how they can improve their service and experience. Others develop new, exciting products and services, and launch loyalty programs, promos, and discounts to keep customers coming back for more. But is that enough?
Unfortunately, no. Here’s how to reduce customer churn:
The onboarding process is the first impression users have of your product, so it needs to be top-notch. Here, you have a short period to get users excited about your product and see its benefits. It also needs to be timely and frictionless – 89% of clients go through a frustrating onboarding process.
And in that time, 13% switch to a competitor. Thankfully, you can smoothen out a few edges in the onboarding process with Pipedrive workflow automation. Pipedrive is a sales CRM that allows you to set up automated workflows based on certain actions and events. For instance, you can set up an automation that sends a welcome email to every new customer.
The system can also assign the new client to a sales representative immediately after they’ve been qualified and accepted into your sales pipeline. You can set up additional rules to determine when an event should trigger one or more activities.
If you want to reduce churn, you must prioritize it from day one of your interaction with the client. Customer engagement and retention is often an afterthought, something that businesses only really consider when the sales numbers don’t add up, and they’re struggling to make ends meet.
But retention should be a part of any business’s DNA; it should be a regular part of your day-to-day thought processes. If you make retention a priority from the get-go, you’ll be in a better position to reduce churn when it starts to become an issue. That said, here’s how to reduce customer churn:
You’ll thank yourself once you start seeing results.
Customer feedback is incredibly important, but it’s also something that customers can be fickle about. While you want to encourage customer feedback and use it to improve your products and services, you shouldn’t rely on it as the only indicator of churn risk.
Customers can be imprecise, inconsistent, or just plain wrong about their desires and needs. If a customer asks for something but then churns with no obvious reason, customer feedback only won’t tell you why. Feedback is still important, but you should use it to inform decisions and drive improvement rather than make deductions based solely on it.
It’s better to rely on data-driven approaches to managing churn risk.
Retrospectives and continuous improvement are two of the most important aspects of running a business. They’re also two areas that many startups fail to take seriously until something goes wrong. Successful startups are always looking back on their processes, analyzing data, and making improvements based on those findings.
When you have sufficient customer churn analysis data to support the changes you’re making, it’s best to go with it. That is, use past churn data to support the changes you’re making. If it shows you that a certain subset of customers is at risk of churning because they’re not getting what they signed up for with your product, don’t be afraid to make tweaks to your product or service.
Customers want to know that they’re getting a good deal from you. While many customers don’t know how much a product is worth to them, there are plenty who do. For those that don’t, it’s best to make known what value they’re getting from your product or service.
Showing that you understand their unique needs is very important, according to some 65% of global customers. Be transparent about your prices, your value proposition, and the value that customers get out of your product. Don’t be shy about touting your strengths; customers want to know what they’re getting out of their purchase.
This way, they’ll have something to reference when deciding to stick around.
Another great way to reduce churn is to give customers custom product/service options. Some will only want the bare-bones product/service, while others will be willing to pay more for additional benefits.
If you offer customers the option to pay more for added value, you create a sense of commitment and loyalty from the customers who truly value the product. You also create an option for customers who want to pay less to use specific features. This will help reduce churn by making customers feel like they have more control over their purchases.
Customers will always churn, but you can make it less frequent by giving them a reason to stay. In addition to improving your product and making it worth their while, give your customers a reason to stick with you.
Give your customers something that they can’t get anywhere else. Find ways to create value that benefits your customers while also benefiting your business. Give customers a reason to stay with you, and they’ll be less likely to churn.
You can’t make every customer stay, and you shouldn’t try to. If you have customers who are not a good fit for your business and they’re not getting any value from your product, they will churn eventually. Instead, focus on reducing the number of customers who fall into this category. Segment your customers and assign them a score based on selected criteria.
If a customer is not getting value from your product or service, there’s nothing wrong with letting them go. This will free up resources, time, and sales support for more qualified, sales-ready customers.
Not all churn is avoidable, but most of it is. If a customer churns, they’ll usually give you a reason, but only if you ask nicely (and don’t forget to ask, or better – automate this process to get consistent feedback). This presents a golden opportunity to learn from the experience. You can use this information to make your product better and to help keep other customers away from churn.
Pipedrive’s built-in communication tools allow you to monitor your customers and ask for feedback. With dozens of email templates to choose from, you can create a follow-up message once to collect feedback any time a client leaves your business. This way, you can learn from your mistakes and improve as a company. You can save other customers from experiencing the same problems as the customers who just left.
Asking customers why they churned is great, but it’s even better if you can educate them about how to use your product to solve their problems. This means creating articles, blogs, and product manuals, and hosting webinars. Make an effort to educate your customers on why they need your product or service.
There you have it. If you’re not sure how to reduce customer churn, get in touch with our growth professionals today!
Not sure how to reduce customer churn with Pipedrive? Don’t panic, we’re here to help! Automaly is a premier Pipedrive partner enabling businesses like yours set up the right Pipedrive integrations. We analyze your current Pipedrive setup and recommend the right integrations to meet your business needs.
What’s more, we help you nurture your prospects into sales with the right automation tools from the Pipedrive marketplace. Our team provides all the training and support your team needs to use Pipedrive.
So, what are you waiting for? Book a demo today!
All businesses have churn, but that doesn’t mean that you have to accept it as given. With the right strategies and a focus on retention, you can reduce churn and increase customer satisfaction, bringing in more revenue and growing your business.