How to reduce customer churn rate

Joel Passen
November 8, 2022
8 Min Read
Customer Churn

In any business, customer churn—or the percentage of customers who stop using your product or service—is inevitable. Cancellations happen. But that doesn't mean you should just roll over and accept it. There are things you can do to decrease customer churn and protect what is arguably the most important aspect of revenue — the longtail subscription revenue of your customer accounts. Let's take a look at the seven most effective strategies for decreasing customer churn.

1. Understand the most common reasons for customer churn.

The first step in dealing with customer churn is to diagnose why the customer is canceling in the first place. There could be any number of reasons, but consistent themes and topics will emerge with the analysis. Churn doesn't happen in a vacuum. It's a culmination of bug reports, feature requests, executive changes, response lags, unhappy sentiment, contract requests, renewal inquiries, and more.

If your team receives one or two pieces of feedback from a customer expressing frustration, it might not be the beginning of the end of the relationship. But, what about 10 times in 30 days? What if that customer is still in the onboarding phase of their journey? You'd want to know. And, more importantly, you’d want to take action to repair that relationship. 

2. Elevate customer engagement early on. 

Speaking of the onboarding phase, the first few weeks and months after a customer signs up for your product or service are crucial. This is when they get to know your product and develop a relationship with your team. Most importantly, this is when customers determine whether your service is really going to drive the value outlined in the sales process. If you can increase engagement during this period—through things like work sessions, listening workshops, self-service content, regular check-ins, etc.—you can set your customers up for success and decrease the likelihood that they'll churn later on.

3. Listen deeply to what customers are saying.

As previously mentioned, certain insights can be indicative of future churn—things like executive changes, contract requests, questions about the contract terms, unhappy sentiment, etc. By listening for these insights, you can proactively identify opportunities to guide the relationship early on and take steps to prevent them from turning into bigger issues down the road. Traditionally, for most B2B SaaS enterprises, this process hasn’t been scalable. Listening to your customers at scale is nearly impossible. Luckily, new developments in AI and machine learning have enabled customer intelligence platforms (CIPs) to analyze every email, support ticket, chat, and more for specific insights that empower your teams to focus on relationships that drive revenue. 

4. Take action on customer feedback quickly. 

If customers feel like their voices are being heard and that their feedback is being acted on, they're much more likely to stick around. As a baseline, make sure you have a system in place for collecting customer feedback (surveys, Net Promoter Score® emails, etc.) and that you're regularly reviewing that feedback to see what changes you can make to improve the customer experience. Additionally, take a step beyond soliciting feedback to ensure you’re capturing customer sentiment at scale. Nothing is more powerful than the unabridged, unbiased voice of the customer. As we mentioned earlier, that can only be accomplished at scale through a customer intelligence platform.  

5. Understand what features and services your customers want most. 

Find ways to add value for your customers—through things like upselling, cross-selling, or simply offering new features or services—you can reduce the likelihood of them canceling their subscription. At the end of the day, customers are either growing with you or away from you. Identifying trends in what your collective customer base asks for the most is a surefire way to keep your customers growing with you. Customers who feel like they're getting more bang for their buck are less likely to look elsewhere for a similar product or service staving off painful losses to competition.  

6. Provide the level of service you’d expect as a customer.

One of the best ways to prevent customers from churning is to provide them with the level of customer service you’d expect as a customer. If your customers feel like you're listening to their concerns, issues, and suggestions and that there is some actionable output, they’ll be less likely to look to a competing product that can provide them with what they need. The root of excellent customer service starts with simply listening and taking the next best action. Adopt the mantra of listening, acting, and improving. 

7. Seek to develop advocates, not just keep customers. 

Customer-obsessed companies don’t just service customers, their goal is to create advocates. Customer advocates are the ultimate customers. They serve as references and speak at industry events and webinars. They provide success stories, product reviews, and quotes for your marketing team. Developing advocates is about putting your customer first, and putting your customer first starts with listening at scale. It’s high time to start using all the feedback your customers give you daily to better understand their wants, needs, and issues so you and your teams can take the necessary action.  

For most B2B SaaS companies, customer churn is what we call the CODB — the cost of doing business. But the fact of the matter is that churn is a “rearview mirror” metric. Traditional telemetry-based reports and customer health scorecards capture what’s happened in the past, and most of the time, if you’re dealing with churn, you’re already too late. With CIPs, like Sturdy, you have valuable insights at your fingertips to look forward through the “windshield” and to see around the corners along the way. This allows you to detect and combat churn before it happens. It’s like a lead-gen for building more durable, profitable relationships. 

Similar Articles

The Scary Six: Executive Change

At the end of last year, I shared a regular expression (regex) that identifies "contract requests." That's a scary signal for people who like to keep customers.Today, I want to discuss the scariest of the Scary Six, "Executive Change."

Steve Hazelton
6 Minutes
January 26, 2024
Customer Churn
Lose your executive sponsor, save your customer

The loss of an executive sponsor is a red-level risk event but it doesn’t need to be fatal. Detecting signals that indicate an executive change / loss of sponsor is one of the first steps to future-proofing your client accounts and increasing your customer retention rates.

Joel Passen
15 Min Read
September 9, 2021
Customer Churn
The Scary Six: Contract Request

Once we identified Contract Request as a revenue impact, our incredible CS team trained everyone to identify “Contract Request” language. We then built a process for addressing them. The before/after impact of identification and triage was remarkable and resulted in doubling the retention rate for this signal.

Steve Hazelton
2 Minutes
January 15, 2024
Customer Churn