Do you ever wonder why some customers stop using your brand without any apparent reason? The answer may lie in your churn rate. This metric measures the percentage of consumers or subscribers who end their relationship with your company. A high churn rate can negatively impact your revenue growth, making it essential to keep it under control. In this article, we will define churn rate and provide effective ways to reduce it.
Calculating Churn Rate
There are two ways to calculate churn rate. The first method is to divide the number of customers lost in a given period by the number of clients you had at the beginning. For example, if you started the month with 100 customers and ended the month with 97, your churn rate would be 3%. This method is simple but does not consider any new customers acquired during that period.
The second method is more complex but provides a more accurate picture of your churn rate. It involves dividing the number of customers lost by the number of clients you had at the beginning, minus any new patrons you acquired. For instance, if you started the month with 100 customers, gained three new patrons, and ended the month with 97, your churn rate would be 2%.
Effective Techniques to Reduce Churn Rate
Collect Feedback from Churned Clients
Collecting feedback from churned clients is crucial in understanding why people are leaving. By conducting exit interviews or surveying former purchasers, you can identify what factors led to their decision to churn. You can leverage this data to change your product or service offerings, improve the customer experience, or make other necessary changes to keep future clients from leaving.
Improve Customer and Sales Experience
Improving the customer and sales experience is another effective way to reduce churn rate. Businesses can do a few things to improve the customer experience, such as making sure their websites are easy to navigate, training their sales teams to be knowledgeable and helpful, and offering a great product or service at a fair price.
Offer Commitment-Free Versions
Offering commitment-free versions is an excellent way to reduce the number of people who unsubscribe from or cancel their subscription to your product or service. It could be a free trial or a pay-as-you-go option. If you offer a free trial, ensure that it is long enough for people to get a feel for your product and its value. If you offer a pay-as-you-go option, make sure it is priced competitively.
Include NPS Surveys
Including NPS surveys as part of your customer retention strategy can help reduce churn rate by identifying areas where your products or services need improvement. Net Promoter Score surveys measure customer satisfaction and willingness to recommend your business to others on a scale of 0 to 10. You can use NPS surveys to collect feedback and use that information to make changes that will reduce churn rate.
Conclusion
In conclusion, having a high churn rate is common, but it’s more important to know the root cause of such a high level and proceed with lowering it efficiently. By collecting feedback from churned clients, improving the customer and sales experience, offering commitment-free versions, and including NPS surveys, you can reduce your churn rate and increase revenue growth. Start implementing these techniques today to have a low churn rate tomorrow!