Churn is the most important word to your subscription business. A Gartner Group reports that 80 percent of your future revenue will come from 20 percent of your current customers. By investing directly in those relationships, you can ensure you are maximizing the lifetime value of each customer. A study conducted by Bain & Co. cited that increasing customer retention rates by 5 percent increases profits by 25 to 95 percent.
After years of dedication to reducing churn for our clients, we are ready to spill the 5 secrets to reducing customer churn!
Our secrets are based on the conversational marketing wheel. There are five different types of conversations you can have with your customers to strengthen the relationship in a way that adds value to both you and your customer. We use each of these conversations to increase value per transaction, customer lifetime value, and ultimately strengthen the relationships between our clients and their customers.
To reduce churn, we recommend that you use the same principles.
1) Acquisition
The most important factor to retaining your customers, is finding the right customers first.
Develop conversations that resonate with the RIGHT customers. This can be done through segmentation based on your buyer personas. By pre-qualifying your prospects and not casting too wide of a net you’'re ensuring people who really want your service are finding you.
2) Retention
It costs six to seven times more to acquire a new customer than retain a current one.
One of the simplest ways to reduce customer churn (and increase profits) is by evaluating customer health. Applications like Totango allow you to monitor customer behavior and usage, along with critical relationship data in order to offer your customers more value.
By being on the proactive side of customer success, you will find a significant increase in profits.
3) Appreciate
Engage with your customers often. When customers feel appreciated, they are much more likely to find value in your service.
The following are a few ways you can appreciate your customers:
Send a handwritten thank-you card to every new customer within 24 hours of their purchase.
Send a gift to recognize the anniversary of when you started doing business with your top 20 customers.
Have your CEO personally call and thank the buyer of each new customer you gain this year.
Send a thank-you gift to customers who provide you with complaints, allowing you to improve your product.
Provide a bonus for internal employees who receive customer compliments.
4) Convert
A fourth way to reduce churn is to be sure each client is using the full value proposition that your company offers. What percentage of your-high usage clients are you currently moving into your more advanced packages? Are you coaching them on the benefits of each module of your software?
If you find that you have customer that aren’t using the best product for their needs, develop an email or call campaign to help them find the correct service for them.
5) Reactivate
If you are capturing the reason why a customer leaves, it puts you in a great position to bring them back. Often times, each new product release will include enhancements that address a product gap that previously led to a customer cancelling. Reach back out to them and encourage them to try your service again.
How are you reducing churn in your business?