How to effectively combat churn?
Posted: Thu Dec 05, 2024 6:00 am
A customer who unsubscribes from your services or who has not renewed their purchases for a long time: this is what churn is. We also talk about attrition or, quite simply…loss of customers.
Customer attrition is measured by the churn rate, which is the percentage of customers or subscribers lost over a given period.
Churn prevention is a strategic objective for all companies, especially those that rely on the subscription business model . For a simple and logical reason: a company cannot grow if it regularly loses a significant portion of its customers, even if it manages to acquire new ones (the leaky basket trap).
To reduce the churn rate of your customers or subscribers, you must list of australia whatsapp phone numbers both understand the causes of churn and implement strategies to limit customer loss as much as possible. Why do my customers “churn” (sorry for the neologism)? How can I prevent customer attrition and thus reduce the churn rate? These are the two questions that we will address in this article.
Article_Churn_Hero
Summary
Getting started: understanding the causes of churn
Implementing churn prevention strategies: 7 courses of action
What you need to remember
Getting started: understanding the causes of churn
Identify the different types of churn
A little clarification to start: churn is a concept widely used by companies whose business model is based on subscription (media, SaaS, etc.). Churn then refers to unsubscribing. Companies whose business model is not based on recurring revenue also monitor churn, but the latter takes on a slightly different meaning. In Retail, for example, a customer “churns” when they stop buying products for an extended period (quarter, half-year, year, etc.).
In both cases, churn means a loss of customers, and therefore revenue for the company. Our article addresses the issue of churn in general, but we will regularly talk about subscription businesses.
Churn is not a uniform phenomenon . It manifests itself in a variety of ways, each requiring a specific approach to address.
We traditionally distinguish:
Involuntary churn . This type of churn occurs when customers lose access to a service due to payment issues (credit card expiration, various administrative obstacles) without intending to unsubscribe.
Article_Churn_Involuntary
Voluntary churn (or active churn) . Voluntary churn occurs when customers actively decide to end their subscription or no longer use a service. This may be due to dissatisfaction, looking for a better deal elsewhere, or a change in their needs or financial situation.
Article_Churn_Voluntary
Passive churn . This type of churn occurs when customers gradually move away from a service, often due to a lack of engagement or interest, until they become inactive without having made an explicit decision to leave.
Voluntary churn and passive churn require different prevention techniques. Involuntary churn, on the other hand, is outside our scope. Reducing involuntary churn requires technical actions rather than marketing ones.
Identify the most common churn factors
We will now present the main reasons that can push a customer to stop buying or unsubscribe from a service. Understanding the reasons that push your customers to “churn” is an essential preliminary step to setting up an effective anti-churn strategy.
Here are the most common churn factors:
Poor user experience . Complex user interfaces, bugs, or slow loading times can frustrate your customers and cause them to look elsewhere for alternatives.
Unsatisfactory customer service . Lack of efficiency, responsiveness or reachability of customer support is a major cause of churn. We will come back to this.
High prices (or lack of perceived value) . Customers are likely to churn if they feel the service does not offer good value for money or if prices are perceived as too high compared to competitors.
Competition . The existence of dynamic and aggressive competition quite logically increases the risk that your customers will leave to look elsewhere.
A change in customer needs . A customer may decide to stop buying or unsubscribe when what you offer no longer meets their expectations or needs.
Poor communication . Irrelevant communications, poor management of marketing pressure or, on the contrary, a lack of communications can lead some customers to turn away. The opposite of what marketing communications are designed for: customer engagement!
Poor quality products or services . Defects in the products or services you sell, or a decline in quality over time, can reduce customer satisfaction and encourage churn.
An overall unsatisfactory experience . A disappointing customer or user experience leads to customer dissatisfaction. Customer dissatisfaction is the antechamber of churn.
Two churn factors are independent of your business: competition and changing customer needs. All others are based on elements that you have the power to optimize!
Analyzing customer behavior to spot warning signals
There is a form of churn called “silent churn”: this is when there are no warning signs that the customer will leave. This silent churn is in the minority. In most cases, there are signals that can be used to detect the risk of a customer churn.
Early detection of these warning signals is an integral part of a churn reduction strategy, as we will see a little further down.
These signals can be found in the analysis of customer behavior, engagement, usage and interaction data.
Here are the main signals that should alert you:
Decrease in activity or use of the service . A significant drop in the frequency of use or time spent on a platform or application may signal disengagement. This may be the result of dissatisfaction itself linked to a disappointing experience.
Negative reactions , such as customer service complaints or unfavorable reviews. An unhappy customer is a customer at high risk of churn.
Changes in purchasing behavior or cancellation of additional services. These actions may reflect a reassessment by the customer of the value of the services or products. Perhaps he finds that certain options no longer justify the additional cost, or he could test competing services offering similar benefits at a better price…
Implementing churn prevention strategies: 7 courses of action
We will now take a look at the main strategies for reducing customer churn.
1. Personalize communications
The lack of personalization and relevance of communications is, as we have seen, a factor of churn. Optimizing communications (promotional and relational) is a first way to prevent customer attrition.
Our advice:
Leverage customer data to personalize the content, timing, and distribution channels of your communications.
Offer deals and promotions based on your customers' purchasing preferences and past behaviors.
Make your messages (especially your emails) more pleasant to read and more engaging by incorporating dynamic elements and taking care of the design.
Find out more about customization with our guide with 7 examples
2. Implement advanced customer segmentation
The more you segment your customers, the more you can target them and offer them relevant content or offers. The key: more engaging communications and interactions.
We therefore recommend that you divide your customer base by creating precise segments based on advanced segmentation rules and criteria:
Don't just segment your customers based on age and gender.
Use criteria related to purchasing behavior, interests, customer preferences.
Build segments combining several types of criteria: demographic, behavioral, “psychographic” (linked to interests)...For example: “customers aged 18 to 25 who have been subscribers to the so-and-so service for over a year”.
The idea is then to adapt the messages and offers to each segment for maximum relevance. The risk, as you can imagine, is to end up with too many segments making the personalization work too time-consuming. We advise you to adopt a progressive approach, by creating about fifteen segments to start with (for example).
Find out more about marketing segmentation with our guide with 20 examples
Article_Churn_Segmentation
3. Re-engage inactive customers
The approaches presented above are preventive approaches, but there is also a “curative” approach which consists of reactivating inactive customers . A customer who has churned is not a customer who is definitely lost. It is sometimes possible to recover them, to seduce them again, to win them back.
How? For example, by setting up an automated reactivation scenario . This is a message or several messages sent in sequence inviting inactive customers to come back. The message(s) are sent automatically after an extended period of inactivity. The messages sometimes include exclusive offers to encourage customers to become active again.
Article_Churn_Inactive
4. Use loyalty and rewards programs
Loyalty programs are designed to optimize customer retention rates by rewarding repeat customers and creating a sense of belonging. Retention rates are the inverse of churn rates. If you increase your customer retention rates, you will decrease your churn rates. It’s math!
Developing a loyalty program is an effective strategy to prevent customer attrition. It helps to encourage customers to stay engaged and repeat their purchases.
Tip: Offer rewards, discounts or exclusive benefits to loyal customers to increase the effectiveness of your loyalty program.
There are different types of loyalty programs. To learn more, check out our article 10 Customer Loyalty Programs with Examples .
Article_Churn_Loyalty
5. Create relevant and useful content
Content marketing is now experiencing a golden age, with the multiplication of formats and distribution channels. Delivering relevant and useful content to your customers, which responds to their concerns, challenges, needs and interests is a retention strategy that always pays off.
Blog articles, videos, case studies, newsletters: multiply the opportunities to educate, entertain or inspire your customers!
6. Implement proactive monitoring of customer churn risk
We saw earlier that there are several signals that can help you detect a risk of attrition. Listen for these signals by actively monitoring your customers’ behavior and put preventative measures in place to intervene before your customers become inactive or leave your brand altogether.
These measures may consist of automated scenarios aimed at revitalizing the engagement of customers at risk of churn .
Examples of relationship scenarios :
Send a personalized email to customers who have expressed dissatisfaction in a survey. This email can include an invitation to chat with a customer service representative.
Send an exclusive offer to customers with declining activity to renew their interest in your service.
Send a short satisfaction survey to customers who have decreased their purchase frequency or engagement, to understand the causes. You can offer them a discount or loyalty points in exchange for their participation.
Call back a customer who has expressed dissatisfaction to resolve the issue and demonstrate your commitment.
Article_Churn_Tracking
7. Provide exceptional customer service
Providing quality customer service is essential to retaining your customers and reducing customer churn. If you want to reduce churn, you need to ensure that you offer customer service that is easily accessible, responsive and efficient, meaning that it can quickly resolve customer issues.
The quality of customer service has a decisive impact on the overall quality of the customer experience. We will never tire of repeating it! Customer support, when it is of quality, allows you to transform negative experiences encountered by customers on their journey into positive ones. Telephone, email, live chat, social networks: diversify the support channels to make life easier for your customers who request contact.
What you need to remember
Combating churn involves combining several prevention (and curation) strategies, but also upstream understanding of the causes of churn and listening to the different signals that indicate a risk of churn. We have reviewed the main tools at your disposal.
Combating churn is inseparable from a customer retention optimization strategy . We strongly encourage you to make combating churn (and customer loyalty!) one of your top marketing goals. The goal is steady, sustainable growth for your business. You won’t achieve it if a significant portion of your customers regularly abandon ship.
To continue reading, we invite you to discover how the media Libération successfully deployed its multi-channel anti-churn strategy using the solutions offered by Actito.
Customer attrition is measured by the churn rate, which is the percentage of customers or subscribers lost over a given period.
Churn prevention is a strategic objective for all companies, especially those that rely on the subscription business model . For a simple and logical reason: a company cannot grow if it regularly loses a significant portion of its customers, even if it manages to acquire new ones (the leaky basket trap).
To reduce the churn rate of your customers or subscribers, you must list of australia whatsapp phone numbers both understand the causes of churn and implement strategies to limit customer loss as much as possible. Why do my customers “churn” (sorry for the neologism)? How can I prevent customer attrition and thus reduce the churn rate? These are the two questions that we will address in this article.
Article_Churn_Hero
Summary
Getting started: understanding the causes of churn
Implementing churn prevention strategies: 7 courses of action
What you need to remember
Getting started: understanding the causes of churn
Identify the different types of churn
A little clarification to start: churn is a concept widely used by companies whose business model is based on subscription (media, SaaS, etc.). Churn then refers to unsubscribing. Companies whose business model is not based on recurring revenue also monitor churn, but the latter takes on a slightly different meaning. In Retail, for example, a customer “churns” when they stop buying products for an extended period (quarter, half-year, year, etc.).
In both cases, churn means a loss of customers, and therefore revenue for the company. Our article addresses the issue of churn in general, but we will regularly talk about subscription businesses.
Churn is not a uniform phenomenon . It manifests itself in a variety of ways, each requiring a specific approach to address.
We traditionally distinguish:
Involuntary churn . This type of churn occurs when customers lose access to a service due to payment issues (credit card expiration, various administrative obstacles) without intending to unsubscribe.
Article_Churn_Involuntary
Voluntary churn (or active churn) . Voluntary churn occurs when customers actively decide to end their subscription or no longer use a service. This may be due to dissatisfaction, looking for a better deal elsewhere, or a change in their needs or financial situation.
Article_Churn_Voluntary
Passive churn . This type of churn occurs when customers gradually move away from a service, often due to a lack of engagement or interest, until they become inactive without having made an explicit decision to leave.
Voluntary churn and passive churn require different prevention techniques. Involuntary churn, on the other hand, is outside our scope. Reducing involuntary churn requires technical actions rather than marketing ones.
Identify the most common churn factors
We will now present the main reasons that can push a customer to stop buying or unsubscribe from a service. Understanding the reasons that push your customers to “churn” is an essential preliminary step to setting up an effective anti-churn strategy.
Here are the most common churn factors:
Poor user experience . Complex user interfaces, bugs, or slow loading times can frustrate your customers and cause them to look elsewhere for alternatives.
Unsatisfactory customer service . Lack of efficiency, responsiveness or reachability of customer support is a major cause of churn. We will come back to this.
High prices (or lack of perceived value) . Customers are likely to churn if they feel the service does not offer good value for money or if prices are perceived as too high compared to competitors.
Competition . The existence of dynamic and aggressive competition quite logically increases the risk that your customers will leave to look elsewhere.
A change in customer needs . A customer may decide to stop buying or unsubscribe when what you offer no longer meets their expectations or needs.
Poor communication . Irrelevant communications, poor management of marketing pressure or, on the contrary, a lack of communications can lead some customers to turn away. The opposite of what marketing communications are designed for: customer engagement!
Poor quality products or services . Defects in the products or services you sell, or a decline in quality over time, can reduce customer satisfaction and encourage churn.
An overall unsatisfactory experience . A disappointing customer or user experience leads to customer dissatisfaction. Customer dissatisfaction is the antechamber of churn.
Two churn factors are independent of your business: competition and changing customer needs. All others are based on elements that you have the power to optimize!
Analyzing customer behavior to spot warning signals
There is a form of churn called “silent churn”: this is when there are no warning signs that the customer will leave. This silent churn is in the minority. In most cases, there are signals that can be used to detect the risk of a customer churn.
Early detection of these warning signals is an integral part of a churn reduction strategy, as we will see a little further down.
These signals can be found in the analysis of customer behavior, engagement, usage and interaction data.
Here are the main signals that should alert you:
Decrease in activity or use of the service . A significant drop in the frequency of use or time spent on a platform or application may signal disengagement. This may be the result of dissatisfaction itself linked to a disappointing experience.
Negative reactions , such as customer service complaints or unfavorable reviews. An unhappy customer is a customer at high risk of churn.
Changes in purchasing behavior or cancellation of additional services. These actions may reflect a reassessment by the customer of the value of the services or products. Perhaps he finds that certain options no longer justify the additional cost, or he could test competing services offering similar benefits at a better price…
Implementing churn prevention strategies: 7 courses of action
We will now take a look at the main strategies for reducing customer churn.
1. Personalize communications
The lack of personalization and relevance of communications is, as we have seen, a factor of churn. Optimizing communications (promotional and relational) is a first way to prevent customer attrition.
Our advice:
Leverage customer data to personalize the content, timing, and distribution channels of your communications.
Offer deals and promotions based on your customers' purchasing preferences and past behaviors.
Make your messages (especially your emails) more pleasant to read and more engaging by incorporating dynamic elements and taking care of the design.
Find out more about customization with our guide with 7 examples
2. Implement advanced customer segmentation
The more you segment your customers, the more you can target them and offer them relevant content or offers. The key: more engaging communications and interactions.
We therefore recommend that you divide your customer base by creating precise segments based on advanced segmentation rules and criteria:
Don't just segment your customers based on age and gender.
Use criteria related to purchasing behavior, interests, customer preferences.
Build segments combining several types of criteria: demographic, behavioral, “psychographic” (linked to interests)...For example: “customers aged 18 to 25 who have been subscribers to the so-and-so service for over a year”.
The idea is then to adapt the messages and offers to each segment for maximum relevance. The risk, as you can imagine, is to end up with too many segments making the personalization work too time-consuming. We advise you to adopt a progressive approach, by creating about fifteen segments to start with (for example).
Find out more about marketing segmentation with our guide with 20 examples
Article_Churn_Segmentation
3. Re-engage inactive customers
The approaches presented above are preventive approaches, but there is also a “curative” approach which consists of reactivating inactive customers . A customer who has churned is not a customer who is definitely lost. It is sometimes possible to recover them, to seduce them again, to win them back.
How? For example, by setting up an automated reactivation scenario . This is a message or several messages sent in sequence inviting inactive customers to come back. The message(s) are sent automatically after an extended period of inactivity. The messages sometimes include exclusive offers to encourage customers to become active again.
Article_Churn_Inactive
4. Use loyalty and rewards programs
Loyalty programs are designed to optimize customer retention rates by rewarding repeat customers and creating a sense of belonging. Retention rates are the inverse of churn rates. If you increase your customer retention rates, you will decrease your churn rates. It’s math!
Developing a loyalty program is an effective strategy to prevent customer attrition. It helps to encourage customers to stay engaged and repeat their purchases.
Tip: Offer rewards, discounts or exclusive benefits to loyal customers to increase the effectiveness of your loyalty program.
There are different types of loyalty programs. To learn more, check out our article 10 Customer Loyalty Programs with Examples .
Article_Churn_Loyalty
5. Create relevant and useful content
Content marketing is now experiencing a golden age, with the multiplication of formats and distribution channels. Delivering relevant and useful content to your customers, which responds to their concerns, challenges, needs and interests is a retention strategy that always pays off.
Blog articles, videos, case studies, newsletters: multiply the opportunities to educate, entertain or inspire your customers!
6. Implement proactive monitoring of customer churn risk
We saw earlier that there are several signals that can help you detect a risk of attrition. Listen for these signals by actively monitoring your customers’ behavior and put preventative measures in place to intervene before your customers become inactive or leave your brand altogether.
These measures may consist of automated scenarios aimed at revitalizing the engagement of customers at risk of churn .
Examples of relationship scenarios :
Send a personalized email to customers who have expressed dissatisfaction in a survey. This email can include an invitation to chat with a customer service representative.
Send an exclusive offer to customers with declining activity to renew their interest in your service.
Send a short satisfaction survey to customers who have decreased their purchase frequency or engagement, to understand the causes. You can offer them a discount or loyalty points in exchange for their participation.
Call back a customer who has expressed dissatisfaction to resolve the issue and demonstrate your commitment.
Article_Churn_Tracking
7. Provide exceptional customer service
Providing quality customer service is essential to retaining your customers and reducing customer churn. If you want to reduce churn, you need to ensure that you offer customer service that is easily accessible, responsive and efficient, meaning that it can quickly resolve customer issues.
The quality of customer service has a decisive impact on the overall quality of the customer experience. We will never tire of repeating it! Customer support, when it is of quality, allows you to transform negative experiences encountered by customers on their journey into positive ones. Telephone, email, live chat, social networks: diversify the support channels to make life easier for your customers who request contact.
What you need to remember
Combating churn involves combining several prevention (and curation) strategies, but also upstream understanding of the causes of churn and listening to the different signals that indicate a risk of churn. We have reviewed the main tools at your disposal.
Combating churn is inseparable from a customer retention optimization strategy . We strongly encourage you to make combating churn (and customer loyalty!) one of your top marketing goals. The goal is steady, sustainable growth for your business. You won’t achieve it if a significant portion of your customers regularly abandon ship.
To continue reading, we invite you to discover how the media Libération successfully deployed its multi-channel anti-churn strategy using the solutions offered by Actito.