Five Ways to Reduce Customer Churn for Digital or Service Businesses

Customer churn rate refers to the percentage of customers who cancel or stop doing business with you. While some turnover of customers is expected, a high churn rate can suggest there is a deeper problem with a business — particularly when it’s a market such as software-as-a-service (SaaS) or manufacturing-as-a-service (MaaS) that’s designed to be an ongoing subscription.

If customers are dropping out at a high rate, you may want to make some changes to ensure they stick around for longer. From improving the way you interact with customers to customer churn prediction, here are five methods you can employ to reducing churn in SaaS or MaaS enterprises.

#1. Improve the onboarding process

The majority of your dropouts in terms of retention will happen in the first few weeks. This is the point at which your customers have yet to develop an affinity for your service, making it easy to ditch. There’s a chance that it’s simply a bad fit for them, in which case it could prove an uphill struggle to keep them for the long ride.

But more likely is that they have had difficulty maximizing the benefits of your product or service up front. Improving your user onboarding, making it easier for them to experience the core value of whatever it is that you are offering, can drastically reduce dropouts. Identify the workflow that shows off your product’s core value, and create an onboarding process that effectively guides users along this path. Don’t overwhelm them with details, but be sure to test different formats — from video to product tours — that will prove most effective.

#2. Personalize the service

Emails welcoming customers to a service have among the best open rates of any message you’ll send. A personalized email as part of the onboarding process is a great means by which to establish a relationship with your customer. It’s an opportunity to not just thank them for choosing to do business with you, but to introduce yourself and your enterprise, explain how your service will help them, ask if they have any questions, and help guide the onboarding process. Like a good check-in at a hotel, a welcoming personalized email (don’t send it from a no-reply email address) will set the tenure for what you hope will be a long and successful partnership.

#3. Give them the opportunity to provide feedback — and listen

A business relationship between buyer and seller doesn’t have to be unidirectional. Customers wanting to get the most out of a particular service will often be happy to provide feedback on their experience and the ease with which they are able to get what they want. Metrics like Customer Effort Score (CES) — which measures customer satisfaction by asking customers to rate their product or service experience on a scale from “very easy” to “very difficult” — is one way of gathering this information. Gathering this information not only makes customers feel valued and listened to, but also provides valued data that can be used by enterprises to improve their services.

#4. Work to bring back lapsed customers

Returning lapsed customers to the fold is not entirely avoiding customer churn, since it does involve them leaving at some point. But if you’re able to get customers who leave to come back this solves the problem of having to find completely new customers to replace them. There are multiple ways you might try to re-engage lapsed customers. Incentives in the form of discounts can help, as can attempts to “surprise and delight” by reaching out to them unexpectedly in ways they might appreciate such as a snail mail letter, or alerts about new features you’ve added since they left.

This may also be an opportunity to solicit feedback, which could be used to learn from mistakes or, at best, may convince them to give you another go. Of course, the ideal situation is not to have your customers leave at all…

#5. Identify those customers who are at-risk

How much would it take to reverse a negative customer’s journey and give them a reason to stick with you? In a world in which unsubscribing from a service is as simple as clicking a button, it’s easy to think that it’s very difficult to reverse this course. Sure, you can offer a few confirmation checks, asking if they’re sure they want to cancel as part of the unsubscription process, but it’s not typically a process that takes a whole lot of time.

Predict churn and adapt

However, using customer churn prediction tools you can identify at-risk customers and make proactive preventive measures to avoid them churning. Churn prediction modelling can use machine learning and artificial intelligence to uncover patterns in user behavior that can predict churn. This allows you to learn from previous customer journeys and, potentially, be able to make the interventions that could stop future customers leaving.