How to Reduce Customer Churn and Prevent It From Happening

by Kim Garmon Hummel

I know you want to keep your customers, especially the ones that are a great fit for your business. If you're reading this, you either want to be proactive about keeping them, or you're already experiencing losses and looking for a way to make it stop. In both cases, this starts with understanding your customer churn rate.

Just in case your brain is weird like mine and the word "churn" just makes you want some buttered toast, let's start with a definition straight from our friends at HubSpot:

Customer churn is the percentage of customers that stopped using your company's product or service during a certain time frame.

How to Calculate Your Customer Churn Rate

Already know your churn rate? Click here to lear how to fix it!

Calculate your customer churn rate by dividing the number of customers you lost in a given timeframe by the number of customers you started with. Then, multiply it by 100.

How to calculate customer churn

Why You Need To Know Your Churn Rate

The closer your churn rate is to 0%, the better. That means you avoid spending more time and money bringing new customers in, only to make up for the revenue you lost due to churn.

This is an expensive way to do business, and it won’t serve you well in the long run.

Instead, focus on spending more time nurturing and building lasting business relationships with your community and ideal customer.

Think how challenging it can be to sell a product or close a deal. If a customer or client is weighing their options, that can affect your mood, performance, revenue, and success. Reducing churn means you do that way less and your existing customers will be happier because you’re spending time with them and their work more. And since they already made the decision to do business, it is much easier to retain and sell more goods and services.

2 Ways to Reduce Customer Churn and Prevent It in the Future

1. Treat all of your customers like your best customers

It doesn’t matter if they’re the most profitable or the smallest customer. Treat them with the same respect, give them your time, and make sure they know that you understand how to solve their problems. Businesses can fall into a nasty habit of prioritizing customers that generate more revenue. That is okay to a point. Just be careful not to reduce service quality if you’re spending less time engaging with smaller customers. Remember, customers are people too. It might be simple, but treating them the way you’d like to be treated goes a long way. That’s how you delight!

2. Understand why customers leave and don’t come back

If you're feeling a little uneasy about asking because you know it isn't going to be good news, just remember you're looking into this because you want to grow your business. So, the sooner you ask and understand, the sooner you can do something to change it. The sooner you change it, the faster you can delight customers and achieve your revenue goals. So, eye on the prize!

When you take the time to ask why, you gain valuable information for your business and the former customer knows you care. That means the likelihood they'll come back goes up as well– especially if the leaving had nothing to do with your business, which is often the case.

But—

It's not just about waiting until a customer leaves to ask why, it's about asking how you can improve while they're still a customer. When you do that, the likelihood they'll leave at all goes down significantly.

Here are a few ways you can understand how customers feel and think about their relationship with your company:

Ratings and reviews: Ask for them when a customer is happy. And when a customer leaves, check in for feedback then too!
Surveys: You can build these and send them out or if you're using a tool like HubSpot, you can even make the on-page for only your customers to see. Tip- If you build surveys, you must develop clear, closed questions instead of open-ended prompts. Closed questions are simple, direct, and seek to ask a hypothesized question: why did you leave? When you answer that, you reduce churn.
Zoom: Call them up! Set a meeting and time to ask. If it's a customer you've already lost, make it clear you’re not going to try and win them back. If it's an existing customer, just that you want to learn how to be better is often enough to garner their grace as you go through the process of growing your business. Here's the most important part of asking this way– you must keep your defenses in check and prioritize listening.

Reduce Customer Churn with a Rock-Solid Strategy from Sauce Agency

When you build a strategy that works, you experience less churn. Instead of starting a business or trying to fix one without a plan in place, work with our team here at Sauce Agency to boost customer retention and reduce your churn rate.

Click here to schedule a free call with one of our Growth Guides. We’ll align on the approach that’s right for you, ask you all the right questions to understand your core problems, and work together to create lasting, productive solutions.