What We're Talking About...Identifying and Preventing Customer Churn

Within any business it's important to know when to fight to retain a client before they churn. Customer churn occurs when customers or subscribers stop doing business with a company or service. Luckily, there are ways to identify when a customer is about to drop your services, and preventative strategies that you can implement to impede this process all together.

If you're interested in how to identify and prevent customer churn, here's what we're talking about...

Articles

Leading Indicators of Customer Churn, And What to Do About It via ConversionXL 

“Every SaaS or subscription service, no matter how fast it’s growing, has to contend with customer attrition. Also known as “customer churn,” customer attrition is the loss of clients or customers using your service. This happens both voluntarily and involuntarily.”

Companies can boost profits by more than 100% from retaining just 5% more of their customers. However, by the time a customer churns it may already be too late. Check out ConversionXL's article that details what customer churn is and the actionable tips to identify leading indicators of when a customer is about to leave your service.

How to Calculate Customer churn and Revenue Churn Via Evergage

“To determine the percentage of customers that have churned, take all the customers you lose during a time frame, such as a month, and divide it by the total number of customers you had at the beginning of the month. Do not include any new sales from that month."

While math might not be everyone's favorite subject, using it to identify customer churn is both simple and easy. There are two different methods for calculating churn: customer churn and revenue churn. While these two concepts are similar, it is very important to know how to differentiate the two.

For example, revenue churn is a great way to report on performance and understand the financial health of your customer base. On the other hand, customer churn is more important for client facing employees because it allows them to estimate how many customers will need service down the road. Check out Evergage's article to learn more.

Customer Churn: 12 Ways to Stop Churn Immediately Via SuperOffice

“No matter how sophisticated all of your retention tricks are, they may all go down the drain if you are attracting the wrong audience. What I mean here is – if your first interaction with the customer is about “free” and “cheap”, then you risk to attract the people who are not looking for the value you provide. These “freebies” collectors are the most likely to leave.”

Targeting the right audience is just one of many tips to ensure your efforts to prevent customer churn are not going to waste. As with most businesses, selecting the right customers translates into a higher customer lifetime value.

Another tip is to offer longer-termed contracts. By doing so, your client may see their return on investment more clearly because the extended time period allows the results of your services to fully come to fruition. This may not work for every business model, but it's worth looking into. Check out Zarema Plaksij's article to learn more.

How to Avoid Churn and Identify Risk Via Chargebee Blog

“In the SaaS realm, as Gentle points out, the customer needs to realize value each month or quarter before renewal. The job of your account managers or support representatives is to promote a continual realization of value among your customer base.”

When trying to reduce customer churn, most of your efforts need to be focused on prevention. Often by the time you've realize a customer is leaving your services, it's too late. Identifying areas where user engagement is starting to decline and striving for meaningful engagement are two steps towards preventing customer churn. Take a look at John Solomon's article to learn even more ways to organize your efforts against customer churn.

PDF

A Simple Guide to Churn Analysis VIA Evergage

“The goal of this guide is to make analyzing churn easy, meaning you won't need a PhD in statistics or a complex statistical program. Instead all you'll need is a program like excel, the ability to perform some simple math and this guide.” 

If you're interested in how to analyze and best identify customer churn, look no further. Brian Roger's guide to churn analysis details everything you need to know, from the metrics you should be tracking to conducting a cohort analysis. If that gives you an unpleasant flash back to statistics class, don't worry, Brian does a great job breaking down the various analyses and delivers them in an easy to understand way. Definitely worth checking out!

VIDEO

Customer Churn Prediction in Telecommunication Industry Via ASE Stream Line

“A churn is any subscriber who is leaving your service and going elsewhere. We want to identify people are going to leave your network and then prevent them from going out.”

If video is more your style, check out ASE Stream Lines video that details everything we've discussed above, but in a presentation format. While it does focus on the telecom industry, most of the customer churn concepts discussed can be applied across the board. Give it a watch!

One of the best preventative strategies for reducing customer churn is to aim to do business with only high-quality clients. This selection process begins during your lead generation efforts. Get our Introduction to Lead Generation Guide to learn how to assess and improve the quality of leads coming into your business and much more!