If you’re like most people, the thought of involuntary Churn probably doesn’t fill you with excitement. It’s likely something that you dread. After all, who wants to deal with the hassle and headache of losing customers? But what if I told you there was a way to reduce involuntary Churn? This blog post will give you some tips on how to reduce involuntary churn.
How to Reduce Involuntary Churn
While reducing voluntary customer attrition is fairly straightforward, avoiding involuntary (or forced) churn can be much more difficult. This is because it is often caused by a technical glitch, which the marketer may not have even thought of.
Involuntary customer churn is a major problem for many businesses, but there are ways to prevent it. You can reduce this rate by 20% with relatively little effort. This guide will teach you how to reduce involuntary Churn. Continue reading and get some tips!
The causes for customer attrition are mostly payment related—which can be addressed by the standard methods.
Soft declined payments can be retried, but failed payments are harder to fix.
There are several reasons for this, such as not having enough money, exceeding your credit limit, or experiencing other technical issues. These rejections cannot be reversed, so it’s best to avoid retrying. We estimate that 10 to 20% of credit card transactions are unsuccessful.
There are a few reasons why your card might stop working. The most common reason is that the card data on file is no longer valid, which can happen if you’ve recently gotten a new card. Other reasons include if your card is reported as lost or stolen or your account is closed.
Converting leads into customers is only half the battle. Once a customer has bought from you, you must continue to engage with them to turn them into loyal advocates.
Once you’ve acquired a customer, your focus should turn to retaining them. This means minimizing both their voluntary and involuntary attrition.
Customer-centric strategies are important to reduce both voluntary and involuntary customer attrition, but the latter is often ignored and is caused by not using the tools that can prevent it.
Involuntary Churn Benchmarks
The industry standard for voluntary and involuntary customer turnover varies by, you guessed it, the industry.
The rate at which customers leave a business is called customer attrition. The industry standard for start-up businesses is 6.73%. This number will vary based on the type of business.
For instance, C2B businesses have higher customer churn rates than B2G. This is likely because consumer solutions are less critical to customers and buying processes for consumers tend to be less involved. The average for B2G is 6.22%.
For the average business, about 6.22% of customers will cancel their yearly subscription. For B2C businesses, that number jumps to 8.11%.
Customer churn rate is one important factor, but the value of your customers should also be considered. If customers are worth more, you should take more measures to keep them.
When measuring your customer retention, it’s essential to consider other critical factors, such as your revenue and ARPU, CLTV, number of new customers, and CAC. By looking at all of these elements together, you can better understand your company’s health and where you can improve your customer retention strategy.
Just as there are many causes of payment processing issues, there are many ways that you can recover or prevent them.
Payment solutions like advanced payment options and recurring billing can help you improve your business in numerous ways. Not only can they increase your conversion rate, but they will also reduce your customer’s likelihood of churning.
There are tools that can help you improve your bottom line by 20%. This is a fantastic way to boost revenue and keep things running as smoothly as possible.
Strategies to Reduce Involuntary Churn
To deal with hard and soft rejections, you should implement some intelligent payment options. As a software as a service, you shouldn’t be worried about this or start implementing it.
You’ll want to pay special attention to the subscriptions option when setting up your payment settings.
2checkout’s comprehensive eCommerce solution can help you increase your monthly recurring revenue or annual recurring revenue and reduce your rate of customer churning.
Use intelligent payment routing to prevent payment failures.
An intelligent payment routing system ensures that your transactions are sent to the optimal gateway. Also, having a fallback or secondary method for authorizing credit cards can increase your transaction success rate.
Combining these techniques can significantly increase your overall credit card approval rate.
As more payments move online, businesses must use local processors. Doing so can dramatically increase your transaction approval rate.
Simply put, it’s one technique that your payment processor cannot afford to ignore.
Using Account Updaters
From large enterprises to small-to-medium businesses, automatic account information updates ensure that customers do not drop your products because their credit cards have expired.
By updating your outdated credit card information, account updates can help you ensure customers keep receiving their subscription payments.
Keeping your services up to date is one of the best ways to keep existing customers happy. You can retain up to 40% of your customers by keeping everything running smoothly.
While most major credit card companies provide subscription services, they do not service every country.
Use a smart retry logic technique
The recurring billing is a common problem, but it’s probably fixable with retries. What’s the best way to reestablish the subscription?
If reducing customer churn is your goal, set up an automated system that reprocesses transactions that failed because of technical issues. This will allow customers to choose if they want to finish their purchases.
Common reasons for a soft decline are that the customer doesn’t have enough credit, their card has been maxed out, or their bank is having technical issues.
Our customizable retries let you configure how many times to retry a failed transaction, so you can minimize the chance of failure and increase your completion rate by up to 20%.
Consider using pre-expiration billing to avoid lost revenue.
Some eCommerce systems let you define when and how many times an authorization attempt is made before your subscription ends. They also let your customers know beforehand about failed payments. That way, if a payment is declined, the customer is notified and can update the payment information and renew the subscription to a new period.
If you offer subscriptions, you can protect your business from losing revenue due to unsuccessful payments. By implementing this feature, you can ensure that if a customer’s card declines, they will be notified and allowed to correct their payment details.
Consider using dunning tactics for rejected cards.
The process of systematically contacting your customers to ensure timely payment of invoices is known as dunning. It’s an effective means of reducing customer turnover.
Dunning is a basic service for subscription businesses that helps prevent customers from churning.
This customer-first mentality ensures that we notify our customers about failed payments, ask for updated information, offer alternate payment options, and provide temporary downgrade options when a card fails. Doing so can reduce the likelihood of a customer churning due to a hard decline.
If a customer’s credit card fails, they will receive an automated notification via email and in their account. This message will let them know that the payment failed and provide them with options to update their credit card details, choose an alternative payment method, or downgrade their subscription. By sending them this message, you have the chance to strengthen their satisfaction and your relationship with them.
Your dunning emails for customers who cancel their service can be used as an opportunity to improve customer experience and strengthen your customer relationships.
How Revenue Recovery Systems Help Businesses Stop Involuntary Churn
By implementing 2checkout’s Revenue Recovery Tools, we recovered 35% of lost revenue from our recurring billings and 5% of lost revenue from new customer acquisitions.
The 35% recovery rate of lost recurring revenue from customers using Revenue Recovery Tools has helped companies reduce involuntary churn. With 5% of additional revenues being recovered on new customers, this has led to a 5% increase in business.
Like CallRail, the A/B testing tool, Visual Website Optimizer, increased overall company revenues by 8% or more by implementing tools to recover both new business and existing clients.
Businesses can combat the issue of involuntary customer churn by implementing tools like those offered by VWO. By recovering 8% of its revenue from auto-renewals and 9% from new customers, the company could boost its bottom line by 5%.
Create a Customer Service Mentality
The best way to reduce customer turnover is to provide excellent customer service.
Great companies have a systematic approach to reducing customer turnover. They do this by always trying to improve the user experience and proactively preventing customers from churning.
At my company, we ensure that all our customers can purchase the products they want and need. That’s why we provide the tools, resources, and information they need to ensure that their payments go through, regardless of the situation.
My company utilizes several tried and true strategies to improve customer loyalty, reduce customer turnover, and increase satisfaction. By implementing these strategies, we can give our customers the products they expect, no matter what may happen with their payments.
Conclusion
Now you have ideas on how to reduce involuntary churn. Remember, developing a customer-service mindset is key. You’ll make a lasting impression by providing excellent customer service that will lead to repeat business and referrals.
