Churn is one of our least favorite words. And when we hear it, it usually means one thing: We’ve lost a customer.
Like it or not, churn is an inevitable part of any business owner’s life.
But it doesn’t have to keep you up at night.
While it’s impossible to eliminate churn entirely, it is possible to reduce it.
And in this post, I’ll show you 7 strategies for reducing churn and increasing customer loyalty.
Without further ado:
Let’s go get ‘em!
Table of Contents
1. Make a good first impression
You’ve probably heard it before:
A good first impression is key!
Whether you’re on a date, at a job interview, or browsing Netflix for the next movie to watch—first impressions count (and they count a lot).
It’s not always easy to make a good first impression (trust me, I’ve had my fair share of embarrassing moments), which is why it’s at the top of my list.
When onboarding new customers, you don’t always have the opportunity to charm them with your winning personality, so you have to let your product do that for you.
The goal, then, is to create a seamless onboarding experience that gives new customers a quick overview of your product and get them started right away.
Thus, no 30 minute video guides demonstrating all its features, or long onboarding processes that require completing a million steps to get started.
Think about it:
You’ve just bought a new car. What’s the first thing you wanna do?
Read the manual?
No—you want to take it for a drive and see how fast it can go.
The same applies to other products.
Get users started using your product right after purchase, and let them experience how awesome it is.
This doesn’t mean you shouldn’t follow up.
Once you’ve gotten them started, you should offer them advice on how to make full use of your product.
This is the part of the onboarding process where you show them the results they can achieve and make your product indispensable.
If you make your product indispensable you’ll naturally reduce churn.
What problem does your product help your customers overcome? And why is your product the best tool to do so?
If you can answer these questions and convince your customers your product is the best solution, you’re already well on your way to reducing churn.
This brings me to the next item on my list.
2. Offer value to get value
You’re probably tired of hearing me say this but I can’t help myself because it’s so important.
Value is the only thing your customers want from you.
There’s no recipe for the perfect email, but here are my own best practices when it comes to writing an effective email that generates engagement:
- Focus on how the customer can get the most out of your newsletter or product
- Don’t list all the features of your product—let your users experience it for themselves.
- Be personal—never send from a no-reply email.
- Ask people to answer your email—what would they like to get out of your product? Do they need help getting started? Do they have ideas for new developments? Show them that you care about them and that you are interested in hearing what they have to say.
Value doesn’t have to be a free gift or a discount, it can just as easily be you offering to be available and telling your new subscribers that you value them.
This is an example from our email onboarding flow where we encourage users to engage with our product and get even better results.
At Drip, we believe praising our users when they achieve great results is an important part of reducing churn.
We segment our emails based on event triggers and conversion rates which means every email we send is relevant to the person who receives it.
Thus, when a user has a conversion rate above 3 percent, we send them the above email telling them how great they’re doing.
This email has a click-through rate of 28 percent which is a great indicator that these emails increase engagement.
Furthermore, we invite users to chat with one of our experts to help increase their conversion rates further.
These emails provide value to both our users and us. We know that if our users get results using our product, they are less likely to churn.
3. Set and meet customer expectations
What is the number one reason people churn?
The product doesn’t live up to the expectations.
I know there might be a million other little things that can have an impact on churn as well, but all in all, this is why people churn.
With the vast amount of information available to consumers online, and the competitive market, it’s never been more important for businesses to be transparent in everything they do.
This is why the first email in your onboarding process needs to inform visitors what they’re going to get and what they can expect from you
Don’t make promises you can’t keep. Be honest.
If you promise your customers something and you don’t deliver on that promise, your churn rate with skyrocket.
Today’s consumers have very high expectations for businesses and products.
According to eMarketer, 47 percent of consumers want more personalized experiences with brands, and 38 percent of consumers want more transparency from brands.
One of the best ways to reduce churn, then, is to exceed these high expectations.
Do that one thing that makes users feel special or go that extra mile. It doesn’t require much, but it makes a huge difference when it comes to churn.
One example of how you can do that little extra is our “You’re awesome” email flow (Yes, we actually named it that).
This flow consists of 10 emails with the sole purpose of telling our customers how awesome they are:
This email, for instance, is sent to our customers when they reach 5000 new leads, just to let them know how great they’re doing.
Giving your customers a sense of success, and achievement is a great way to reduce churn.
Here are some examples of how you can do “that little extra”:
- Send them a personal note in their parcel
- Include a little treat (perhaps a small pack of gummy bears) in their first order
- Praise them when they achieve something
- Offer a discount when they have purchased an item from you 10 times
- Send them a personal message on their birthday
There are many small gestures you can do that don’t require much effort or resources, so it’s just about getting started.
However, you have to accept that you’ll always have customers whose expectations can’t be met no matter how transparent you are or how great of a result they’ve had with your product.
As a huge Pokémon fan it pains me to say this but: You can’t catch ‘em all.
4. Focus on competitive advantages
There is one question consumers repeatedly ask when considering a new product:
“Why is your product better than your competitors’?”
And it’s a question you need to have the answer to if you want new customers, but also if you want to lower your churn rate.
If people know why your product is the best from the very beginning, they are much less likely to churn if they become customers.
Because they know they won’t find a better product out there, and thus, are less likely to churn.
So how do you tell people this without sounding like an arrogant salesman?
One way of showing people how your product is superior to other, is to create landing pages on your website where you compare yourself to all your competitors.
One of my favorite examples of this is from Groove.
They’ve created a landing page for each of their main competitors and compared their services so potential customers can get a quick overview of what the two services offer, and why Groove is the better option:
Once I saw this, I knew that we needed to do the same with our product.
Thus, I researched our competitors and wrote a comparison for each one, so potential customers get a quick overview of how we differentiate from our competitors.
Those landing pages generate direct free trials which shows their effectiveness.
The people who sign up through these pages have already seen how your product compares to others’ and they chose yours.
I know there are other reasons your customers churn, but at least you’ll lower the chances of them switching to your competitors.
When doing these pages, you need to be completely honest. You can’t say that your product is cheaper if it isn’t.
Focus on your skills and all the areas in which you truly deliver a better service or product.
Maybe you have better and faster customer service? Maybe you have more intelligent features? Maybe your product is of higher quality?
But remember: Don’t badmouth your competitors. Stick to the facts and don’t be insulting.
People don’t like bullies, so don’t be one.
5. Stay on top of new developments
This one can be tricky and it requires a bit more effort.
However, staying on top of new developments, rules, laws, shift in consumer behavior, and other environmental changes needs to be done if you want to reduce your churn rate.
New developments happen all the time, and you never know when it’s going to have an effect on your product.
As an example, Google announced in August 2016 that they would start to punish websites with intrusive interstitials by January 2017.
This potentially could have created a very negative effect on the use of our product and our churn rate, had we not already started developing a new product that could meet these requirements.
If we had not kept up with new developments and not listened to our customers, we might not have had a product ready in time for the new regulations.
This could just as easily happen to any other e-commerce business.
For instance, if you sell pet food, and an animal rights organization announces that they no longer support the use of a specific ingredient in pet food because it can have a negative effect on animals’ health, could do you do?
You could announce that you’ve stopped using this ingredient and that you’re working on a new and better recipe for pet food.
Granted, you can’t always fully plan for disruptions, but if you stay on top of the game, and take immediate action when it happens, you’ll undoubtedly reduce the likelihood of customer churn.
6. Make your weaknesses your advantage
We all make mistakes, but it’s how we handle the aftermath that defines who we are (or at least how people see us).
With new consumers, also known as digital natives or millennials, constantly sharing information, you don’t want that information to be about your mistakes and how poorly you handled it.
It’s all about transparency.
A great example of transparency done right is by Derek Halpern of Social Triggers.
After having technical difficulties for a webinar, Derek sent an email to his attendees, apologizing for wasting their time:
Whenever you make a mistake or don’t meet a deadline, you need to own up to it.
Don’t try to make excuses or blame others for your wrongdoings.
Tell people that you’ve made a mistake (before they find out themselves) and tell them how you’re going to fix it.
If you’re always 100 percent honest with your customers, you’ll increase customer loyalty, trust, and reduce churn.
The more loyal your customers are, the less likely they are to churn when you make a mistake (because it will happen at some point—we all make them).
Accept your weaknesses and work on improving them instead of ignoring them.
You don’t want to fall behind the competition so you need to improve constantly.
Listening to your customers is the best way you can identify your weaknesses and learn how to improve.
The best way to discover what your customers think, is to survey your customers. Watch the video below to see how you can set up a simple survey with Drip:
Customer surveys give the most valuable insights into your brand image and how people perceive your product.
Moreover, they offer insanely valuable feedback and create a better relationship between you and your customers.
You show them that you care about their opinion and that you listen to their needs and wishes.
7. Catch churning customers before they know they’ll churn
How can you predict if your customers are about to churn?
It’s not as difficult as it may sound.
You need to identify your “at-risk” customers.
If your customers are consciously or unconsciously in the process of churning, they’re most likely not using your product as much as they previously.
It’s important that you try to re-engage those customers.
This is where segmentation comes into play. You need to segment your visitors based on their interests, their progress, their results, their actions, and so on.
That way it will be much easier to send targeted emails to them with the purpose of re-engagement.
At Drip, we send trigger based emails to the customers we identify as “at-risk.”
Here’s an outtake of some of the emails we send to our customers to prevent churn:
As you can see, we send emails triggered on which actions our customers haven’t taken.
For instance, we send this email to users who haven’t had an active SleekBox for 14 days:
We always encourage our customers to have active SleekBoxes on their sites because it gives them results, and if they’re not getting results they’re more likely to churn.
You need to do the same. If your customers have been inactive for a longer period of time, you should reach out to them and try to re-engage them or ask them why they’ve been inactive (they might be facing a problem that you can help them overcome).
This brings me to my next point—surveys.
We know that some customers churn regardless of our efforts to prevent it.
But there’s one thing you can do that will reduce churn in the long run.
Ask them why they churned.
More often than not, people don’t mind giving feedback when they unsubscribe or in other ways churn.
Send your churned customers an email telling them you’re sorry they’re leaving, but if they wouldn’t mind telling you why they left.
This information is key, when identifying areas in need of improvement.
If you use this feedback to better your product and service, your new and existing customers are less likely to churn.
Customers churn and that’s a fact.
But with the right strategy you can lower your churn rate and increase customer loyalty.
Lower your churn rate and make more money. It’s simple math.
I hope one or more of these 7 strategies will help you reduce your churn rate and keep your business in the green for many years to come.
What tips do you have for reducing churn? Or have you tried any of these? Let us know in the comments below. We’d love to know!