Marketing brought you leads, your funnel converted them to customers. So why are they leaving?
Over the past 5 years, I’ve worked on ways to reduce customer churn in several high profile SaaS companies. I’ve learned that this is a battle that never ends, and there are different strategies to combat it.
Customer churn is the number of customers who decided to leave your product. There are different types of churn but in this post, I will address only active churn, which is when a customer actively cancels a subscription, as opposed to passive churn, which is when the customer doesn’t want to leave or hasn’t actively canceled his subscription but the subscription was canceled due to a renewal failure (the credit card on file expired for example).
Why Should You Care About Churn?
Given the fact that acquiring new customers can cost you up to five times more than retaining an existing customer, it’s crazy not to put effort into saving customers who are already engaged with your product. If you care about your business growth and your customers, you should prioritize reducing customer churn.
Easy to Subscribe, Hard to Cancel
A couple of months ago, I decided to subscribe to an online financial magazine due to the stock market opportunities that the Covid-19 pandemic created. I thought it was a good opportunity to learn more about the stock market and how to invest correctly. Plus, the price for the first month of the subscription was simply ridiculous, which made it an easy call.
The sign-up and payment were super easy and I got access to all of the articles and insights in no time. However, after a week or so, I decided that I wasn’t really using it. I mostly read articles on other channels that didn’t require any monthly fee, so I went to my account area on the site to cancel. To my surprise, the only way to cancel my subscription was to call customer service by phone. There was no option to cancel online or by email. I know, you may be thinking, “Just pick up the phone. What’s the big deal?” Well, it is a big deal (especially when it’s a US number and you aren’t a US resident). My experience with signing up and paying was easy, fast, and fun; and I expected to have the same experience when I wanted to cancel and leave. I didn’t want to make a phone call and wait for more than 10 minutes just to cancel my subscription, which I paid for online.
At Google we have a team whose job it is to make it as easy as possible for users to leave us. We want to compete on a level playing field and win users’ loyalty based on merit. When customers have low barriers to exit, you have to work to keep them.
How Google Works by Eric Schmidt and Jonathan Rosenberg
As product managers, we focus a lot on the user experience and creating valuable and innovative products; but sometimes our customers leave. If your customers are churning, you should focus on why they are doing so and what you can do to make them stay. Is your product giving them enough value? Do they understand the value? Is your product too expensive for them? These are only some of the questions you should ask yourself when you want to reduce customer churn.
12 Ways to Reduce Customer Churn
- Drink your own champagne – If you don’t experience your product as your customers do, you’ll never understand how they truly feel about it. This goes without saying, regardless of customer churn. Every product manager should know his product as his customers do.
- Conduct weekly customer interviews – Talk with your customers as much as you can. Don’t wait for them to churn before you pick up the phone. By then, it’s probably too late. Read this blog post if you want to learn more on how to conduct effective user interviews.
- Churn as a KPI – Make customers churn as one the main KPIs you are monitoring on a daily basis and on every product you release. Use the data you collect to understand why customers are churning and what you can do to solve it. Start with the quick-wins and do your best to deliver them.
- Offer incentives, reward loyalty – Companies often focus only on bringing in new customers, and neglect existing customers. Why not give a renewal discount to existing customers to show your appreciation for their loyalty to your product?
- Look at your competitors – Your customers do, and so should you. Learn what your competitors are doing and what your advantage is over them. Sometimes a simple feature your competitors are offering can lead to the churn of a loyal customer you’ve had for years.
- Product engagement and features adoption – If your customers are engaged with your product and have invested time and resources in using it, they probably won’t leave you easily. Are you improving an existing feature or releasing a new one? Be sure to communicate it to your customers.
- Make it easy for customers to reach out to you – Don’t hide your contact page, your support email, or your phone number. If your customers find it easy to approach you when they have a problem, you can easily identify customers who are likely to churn.
- Talk with your colleagues – Talk with the support team, account managers, or any other person in your company who interacts with your customers. They hear the customer pains first and can constantly provide you with valuable feedback.
- Product value and constant improvement – Make sure your product provides the value your customers expect and that it really solves a problem for them. You should challenge this over time. If your customers don’t understand the value in your product, or if the value decreases over time, they’ll churn.
- Be honest and fair – Don’t use dark UX patterns to trick your customer to go in a certain direction in the flow they didn’t mean to follow. Don’t hide important information in your checkout page using small fonts or in a terms and conditions page no one reads. If your customers feel like you screwed them, they’ll leave.
- Talk with churned customers – It’s always best to ask about the reasons for customer churn when you talk with your customers. Listen to what they’re saying and how they say it. Do they sound frustrated? Did they leave on a good note? These conversations can sometimes save churned customers; but even if they don’t, they’ll give your customer the feeling that you care about them and are listening to them, even when they’re no longer your customers.
- Share – As most of my tips generally end, share your insight about customer churn with your team. Reducing churn should be a company effort, not a one-person job.
The most important thing I’ve learned when dealing with customer churn is not how to make it hard for your customers to churn but how to make it easy for them to decide to stay. Making it hard for your customers to leave may reduce churn in the short term, but in the long run, you’ll increase churn and increase customer frustration. Eventually, it can even cost you in the form of refunds and chargebacks.