5 Expert Tips on How to Reduce Customer Churn

June 30, 2022

If you’re like most business owners, you want to do everything to learn how to reduce customer churn. After all, it’s much more expensive to acquire new customers than it is to keep the ones you have. So what can you do to reduce customer churn? Here are 5 things that will help:

How to Reduce Customer Churn

There are a few ways how to reduce customer churn:-

  • Improve customer service: Customers are less likely to churn if they feel valued and appreciated.-
  • Offer incentives, such as discounts or customer loyalty programs, give consumers a reason to stick around.-
  • Make it easy to use your product or service: if it’s easy to use, customers will be less likely to get frustrated and churn.-
  • Keep your pricing in line with your competitors: customers may churn to a cheaper option if you’re too expensive.

What is the customer churn rate?

Customer churn rate is the percentage of customers who stop doing business with a company or brand. A high churn rate means many customers are leaving, which can be bad for business.

A low customer turnover rate means more customers you retain on your roster.

The churn rate is the percentage of customers who stop doing business with a company over a given period. For example, if you have a client retention rate of 75%, then your churn is 25%. The opposite of client retention rate, churn rate is always considered the remainder.

Why does churn matter?

Churn is a headache for many businesses as it shows how well they can keep their customers by their sides.

There are two reasons why this is important:

The biggest concern with losing customers is the financial aspect.

Companies lose $1.6 trillion per year due to customer churn!

Churn is a serious problem because it costs much more money to get a new customer than to retain an existing one.

how to reduce customer churn (Source)

Still not convinced?

It will cost 16 times more money to get a customer up to the same level of profitability as one of your existing customers.

Retaining customers is more profitable than acquiring new ones.

The Harvard Business Review found that a 5% decrease in customer attrition can increase a company’s profitability by 25%-95%. Furthermore, 65% of a business’s revenue typically comes from repeat customers. Thus, businesses need to focus on preventing customers from churning.

KPMG’s findings reveal that client retention is the primary driver of a company’s revenue. This is an impressive finding, demonstrating the importance of keeping existing customers happy and engaged.

how to reduce customer churn (Source)

Wow, that’s impressive!

But there’s more.

80% of your company’s future growth will stem from just 20% of your current customers.

According to Marketing Metrics, the chances of closing a sale with an existing client is 60-70%, while only 5-20% of sales go to a new client.​​​​​​​

It makes sense that keeping existing customers is more profitable than acquiring new ones.

However, not many b2b companies have caught on to this fact and, therefore, continue to struggle with implementing an effective client-retention program. So, how do you prevent customers from leaving?

How to Calculate Your Customer Attrition Rate

The old adage “You can’t control what you don’t monitor” holds especially true., especially when measuring your customers’ lifetime.

Before implementing a retention plan, you need to be aware of who your customers are, what they want, and why they do business with you.

You can calculate your customer retention or turnover by determining how many customers or clients have discontinued your services over a specific period.

To figure out your retention rate, divide the customers you had during a certain period by the total number of clients you had at the beginning.

Then, divide the total revenue by the number of clients you had at the start of the period and times it by 100.

If you started with 225 clients and ended with 195, you had 13% customer turnover.

In a perfect world, your customer retention would be perfect. Unfortunately, such a number does not exist. Instead, the “ideal” retention rate varies by industry and company.

Every industry has different benchmarks for what constitutes a good or a bad customer retention rate.

According to data from Statista, 24% of customers in the retail sector, 25% of customers in the financial services industry, 21% of telecommunications companies, and so on left their companies in 2020.

Compared to business-to-business (B2B), business-to-consumer (B2C) companies have a 7.05% higher rate of customers leaving.

Main Causes of Client Churn

The importance of reducing customer turnover is a no-brainer, but how can you go about doing that?

A customer may decide to leave your product for various reasons, some of which you may not be able to control. However, some of the most common causes of churn include pricing, product-market fit, user experience, and customer service. To reduce the chances of churn, you should focus on ensuring that your product is being sold to the right people and that your customers know the unique offering they will get from your company.

To reduce the chances of price and product-market fit being reasons for client churn, you’ll need to ensure your service is being marketed to the right people. Your customers should also be aware that they won’t be able to find your unique offering anywhere else.

To maximize customer experience and satisfaction, you should optimize your relationship with your customers and product.

How to Anticipate Client Churn

There is no way to tell if a customer will churn. However, there are some indicators you can look out for.

Low usage and engagement

If a customer logs in less often than usual or has stopped logging in altogether, that is a sign they are at risk of churning. If an organization doesn’t monitor account usage, it could also indicate that they are likely to churn by having fewer interactions with customers — via phone calls, emails, etc.

Downgraded Subscription

This is similar to low engagement. If a customer downgrades to a lower level, it’s a sign that they are less likely to use your product or service and therefore are more likely to churn.

Account changes

Although minor account changes such as changes in billing information or address are not causes for concern, a change to the total number of end-users should prompt you to investigate.

Dissatisfaction with the price point

Customers will never be happy with price increases, no matter how much they love your product. You might offer your customers extras to increase the perceived value if you plan to raise prices in the future. This will help to soften the blow and keep customers from abandoning you.

Low CSAT and NPS scores

Customer satisfaction (CSAT) or Net Promotor Scores (NPS) are two key KPIs that monitor and measure customer satisfaction. Low scores on either of these KPIs indicate that the customer is unhappy or could be churning.

A high volume of customer complaints

This could be the most obvious sign of churn. It’s safe to say that customers who have multiple complaints in their files are at risk of churning. A high volume of customer complaints is generally a sign of something wrong with your product, customer support, or overall customer experience. This should prompt serious reflection.

What Are Some Strategies for Reducing Customer Attrition?

For most b2b companies, some degree of client loss is inescapable. But, there are things you can do to lower your turnover rate.

Here are a few ways you can prevent your customers from leaving you.

Talk to your quitters.

When customers decide to end their relationship with your company, don’t simply let them walk away. Instead, ask them why they’re leaving. This is your chance to gather some valuable information; use it!

When customers quit, you must reach out to them and find out why. This can help you improve your business and better meet your customers’ needs.

Sometimes, a customer will give up on your product because it simply doesn’t meet their needs. In other cases, they may not have understood how to use it properly.

Keep a pulse on client engagement.

Keeping customers engaged can be extremely beneficial. Engaged customers are more satisfied with your company and product.

If your customers use your product or service regularly, they’re more likely to continue using it. This reduces your chances of losing them.

If you want your customers to stay, you must provide them with excellent customer service. If they’re still engaging with you, you have an opportunity to win back their business.

But how do you analyze such complicated customer data? The easiest way to do so is by implementing a customer success platform. This lets you see customer behavioral patterns and gives you all the information you need to keep customers happy.

Implementing a customer success solution is the most efficient way to keep tabs on your customers and ensure their continued loyalty. Customer success solutions can help you track customer engagement data and analyze it for potential churn risks. This way, you can take proactive steps to retain your customers before they even think about leaving.

Make it hard to leave.

The more obstacles that stand between your customer and their way out, the harder it is for them to leave. That’s why making your product or service so appealing that your customers keep coming back is important.

If customers can use your product or service in one month or even one year, what incentive do they have to keep paying you?

If your product is integral to your customers’ lives or workflow, it will be harder for them to quit.

It’s crucial to keep track of which features of your product or service are most popular with your customers and whether or not they are being used. If they aren’t using the most popular or “sticky” feature, it may be a good time to reach out to them and remind them of its existence.

Remember that it’s not over ’til it’s over.

When customers cancel, you have one last opportunity to save them from churning.

This is where your A-Listers come in—your best salespeople who know your products and are also good at providing good customer service and building relationships.

If your customer service team can successfully defuse customer frustrations, provide clear paths to resolution, and show how the product benefits customers, they may get a second chance.

Test out long-term contracts.

While contracts are a surefire way to prevent customers from leaving, some businesses may find it worth testing them out.

A long-term contract is a great way to give your customers the time they need to get comfortable with your product or service. By signing a longer contract, they can avoid the “rookie” stage and get the most out of their investment.

By the time your contract is up for renewal, your prospect should have used your product and worked out any bugs.

If you’ve implemented all these tactics, you will hopefully see some positive benefits.

If you’re in charge of growing your software as a service (SaaS) business, you’ve presumably had your fair share of nightmare scenarios involving customers leaving. But never fear. We’ve got you covered!

Not all customers who quit your business are necessarily bad for your business. Some may leave because they’re not a good fit for you, but it’s better to have unsatisfied clients than none at all.

But reducing your saas churn rate is vital to improve nearly every metric in your business—from your CAC to ARR, your Churn Rate, and LTV.

A 5% increase in retention can lead to a 25 to 95% boost in profits.

Reducing your customer attrition rate is critical to your long-term business growth. By understanding the reasons why your customers are leaving, you can work to improve your product or service.

While it’s important to focus on new customer acquisition, it’s equally important that you consider your existing customer base.

Should we consider improving our user onboarding process? Should we add the new feature that people have been asking for?

By offering discounts when a customer tries to cancel, you can help them stay.

When trying to hold onto your existing customers, it’s tough to tell which lever to pull to turn things around.

Knowing when to use certain customer success strategies is key to reducing churn.

Improve engagement: Reduce mid-term customer churn (weeks 2-4)

It’s important to keep your customers engaged after they’ve experienced the core value of your product. You can do this by building customer loyalty and continuing to provide an excellent user experience.

Just because customers have begun to use your product or service doesn’t mean they’ll continue to use it.

The key to reducing mid-term customer churn is getting customers into the habit of regularly using your product. This way, they will continue to experience the core value that your product provides.

Maintain value: Reduce long-term customer churn (week 5+)

Even after users have made your product a part of their daily routine, it’s important to keep demonstrating the product’s value. This will help reduce customer churn in the long term.


If you want to learn how to reduce customer churn, following these five pieces of advice is a great place to start. By keeping your promises, responding quickly to problems, and showing that you care about your customers, you can create a loyal base of repeat customers who are less likely to take their business elsewhere.

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