Lower Your Churn in 7 Easy Steps

If you're losing more customers than you're gaining, you're on a self-destructive treadmill. Research has shown that even a measly 5% increase in customer churn can lead to a 25-95% decrease in profits.

But what exactly is churn and if it's too high, how can you decrease it??

Churn is simply measuring the percentage of customers that cancel or stop coming back to your store.?

As an example, for subscription-based companies, like Netflix, every single month they measure the number of people that cancel in relation to the number of people who stayed—whether from a particular cohort or as an average.?

So if you have 100 people buy your product in January, and you have 5% monthly churn, then you go from 95 customers in February to just over 90 in March, to 86 in April, and so on... It's an asymptotic curve where eventually you plateau. And at the base of the curve—the number of customers that stay—that's your "fat tail" percentage. Those are the people that will never unsubscribe... like the regulars who come to your cafe every single morning; the lifetimers.

And here's the most important part: churn is your safety net. If it's so high, you have to spend on marketing to get new customers.?

So how do you fix churn and retain your customers?

Step 1: Improve Your Product

Your biggest enemy, when it comes to churning, is your competitors. No matter how good your product is, if a competitor has a better option, you're in trouble. So, you have to be one step ahead…always. But how can you do that?

1. Make sure you're better than they are. This doesn't mean matching them feature for feature but finding your own unique edge.
2. Don't obsess over them, but stay aware of what they’re doing and how they’re improving.?
3. Make sure your product deserves to exist in the world. If it doesn't, then it won't survive in the market.

Step 2: Simplify Your Onboarding

Make your onboarding process as seamless as possible. Eliminate all friction, pain, frustration, and doubt immediately. If customers are lost or unable to use your product efficiently, they're gone for good.

For example, my wife and I recently moved to Cairo and were looking for the best pizza in town. We tried all the pizza places we could find, but eventually chose one that wasn't the best option simply because they delivered over WhatsApp. If I had to go online and click on a thousand buttons to get the best pizza in town, I wouldn't bother—I'd choose convenience over quality. And this happens all the time in business.

Step 3: Give Your Customers a Quick Win??

If you’re dating someone new, you’ll naturally highlight your best qualities rather than focus on your flaws. You want to impress that person so there will be second and third dates. The same goes for selling a product or a service. Give your customers what they want—immediately—whether it is emails, social media posts, or videos. Give them a quick win.?

Facebook understood this when it first started out. They made it their goal to connect users with seven friends in ten days. The users saw an immediate win after joining Facebook, so they stayed. Apply this concept to your business and you’ll dramatically reduce churn.?

Step 4: Build a Loyal Community?

We're pack animals, and pack animals die without the support of a group. This is why public speaking is so nerve-wracking for many—the fear of being judged and kicked out of the tribe is very real.

Creating a community around your product or service will reduce churn. When customers feel like they're a part of something, they're more likely to be loyal to your brand.

Create social media pages or groups and respond to customer feedback or comments promptly. Use message boards or YouTube channels to foster a sense of community.

Remember, it's not just about the product. It's about creating a connection with customers. Go above and beyond to humanize your brand. When customers feel like they have a personal connection to your company, they're not going to switch.

Step 5: Arm Your Customer Support Team with Answers

Never let your customers boil in anger. When they have a question, don’t ask them to read the FAQ or click around your website searching forever. Instead, give them a fast response from an empathetic, well-trained customer support specialist who knows their shit! I’m talking about a 30-second response time for a chat and a two-minute response time for emails. Prepare your customer support team with answers so they can turn every customer objection into a positive experience.

Make a list of all of the things that can possibly upset your customers, and give your customer support team READY ANSWERS they can use as templates.

Have an army of reciprocity tools ready and waiting: For example, “Sorry you found a problem with our product. We’re going to fix it right away, and here's a 20% discount code for you.” Always keep lifetime value in mind. If the customer’s complaint is legitimate, do whatever it takes to reverse their anger.?

Step 6: Constantly Upgrade Your Product

In 2019, Netflix lost subscribers for the first time due to the ever-growing competition from other streaming services, such as Disney+, Hulu, and HBO Max.?

What can Netflix do to stay ahead? Constant upgrading. Even if you’re the top dog in your industry, you can't rest on your laurels or your competitors will catch up. Keep innovating and improving your product, and do whatever it takes to stay on edge.

Step 7: Increase Lifetime Value

Imagine you have 100 customers paying $10 a month for your product. So, you make $1,000 a month. But with 20% churn, you lose 20 of your customer base. The next month, you only make $800.

But what if you have two products? The core product and an upgraded version that’s $20 instead of $10. So, even if 20% of your customers churn, if 20% also upgrade, you end up maintaining your revenue.

This is the VirtualWorkerNow model. We have around 1 to 2% churn per month, but every month, we have customers adding additional services to their contracts. Our increase in LTV counterbalances our churn. We call ourselves a full-stack agency because we do everything—funnels, copywriting, email marketing, social media, etc. This means we have a ton of upgrade options for our customers.

Adding upgrades to your product is a practical application of The Pareto Principle: 80% of your revenue comes from 20% of your customers. But how does that happen? That 20% buys EVERYTHING and they do it over and over and over again because they like your products, and they are not going anywhere.?

What Now?

There are seven steps you can take to decrease churn: Create a product that is better than the competition. Build a seamless onboarding process. Give customers a fast win, and build relationships so your company will be more than a dehumanized tool. Prepare your customer support team for all possible situations and constantly upgrade your product, increasing the lifetime value of the customers that love you. Do all that, and you’ll decrease churn and build customer loyalty.

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