6 Proven Strategies to Reduce Churn - Deepstash

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The Definition Of Churn

Churn can most basically be defined as resources lost in a given period of time. Typically it’s referring to users or revenue lost and is usually represented with either a percentage or dollar amount.

For example, if you had a 5% monthly user churn rate, that means each month 5% of your customer base is cancelling.

Or if you said you had $2,000 in monthly revenue churn, that means you lost $2,000 in monthly recurring revenue from either customer cancellations or downgrades.


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Calculating Customer Churn: The Formula

Calculating Customer Churn: The Formula

[Leaving Customers/ Total customers]×100


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Users And Revenue

  • User churn is the number of customers you’re losing in a given timeframe (typically per month or year).
  • Revenue churn, which is arguably even more important, is the amount of revenue you’re losing in a given time frame due to downgrades or cancellations.


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Signs Your Company Has A Churn Problem

Here are a few signs/red flags that you might have a churn problem:

  • Your churn is outpacing new customers.
  • LTV is shrinking: The longer your customers stay with you, the higher the lifetime value (LTV) of your average customer should be.
  • Your churn rate is above 10%: 5-7% is considered an average churn rate. But when you start getting into double digits, it’s usually a sign that something in your process isn’t working. 
  • More downgrades than upgrades: If you offer different plans or add-ons for your product, you want to have more customers upgrading than downgrading.


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6 Churn Reduction Strategies: Find Out Why Customers Are Cancelling

Ask your customers why they are cancelling. Make sure you customize the cancellation reasons in your survey based on your product.

After having a cancellation reasons form, you can break down the reasons and segregate the customer feedback.

If trying to find out why they are cancelling is the first time you interact with your customer, that’s probably part of the problem. The best time to establish a strong relationship with your customers is during the onboarding/free trial process.


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6 Churn Reduction Strategies: Create A Magnetic Onboarding Process

A great onboarding process helps companies:

  • Give customers the best first experience of the product possible, by guiding them through it.
  • Keep customers informed throughout the process with a clear line of communication.
  • Enable customers to learn more about how to use the product.
  • Find out what works and doesn’t for their customers.

Many companies use the tried and tested method of well-timed emails to ensure the onboarding process is smooth.


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6 Churn Reduction Strategies: Build Customer Loyalty

You can build Customer(or Brand) Loyalty by:

  • Being honest and transparent
  • Celebrating your customers, starting with the high-value segment.

Someone who just enjoys your product might leave if another company releases a similar product at a lower price. Their main concern is the utility of the product.

A brand loyalist, on the other hand, likes your product AND your company. They consume your content, attend your events, brag about you on social media and send referrals.


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6 Churn Reduction Strategies: Analyze Churn By Customer Segments

To get more clarity, look at your churn by customer segments or cohorts.

Customer segments are the different ways you group customers together. It could be by their plan level, location, coupon vs. full price, or any other category.


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6 Churn Reduction Strategies: Listen to your customers

Listening to your customers (and acting on their feedback) directly impacts churn.

The problem some companies run into is feedback can come in from all over the place (social media, support desk, personal conversations, etc.) That makes it tough to keep track of.

Brands are viewed more favourably by 77% of consumers if they proactively invite and accept feedback. So being intentional about getting feedback and putting it to use can help you retain customers and reduce churn.


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6 Churn Reduction Strategies: Recover Failed Payments

Typically, one of two things happens when your customer’s payment fails:

  • They eventually realize it and make their payment
  • They go ghost and you lose out on the money.

Even if the customer does update their payment info later, you’re still missing out on revenue.

Instant email communication helps, where the goal is to let customers know their payment failed, and get them to update the information.


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Life is like facebook. People will like your problems & comment, but no one will solve them because everyone`s busy updating theirs.

In this guide, we’re going to go over six strategies to reduce churn, with real-life examples from SaaS companies that have successfully done it.

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