How to Reduce Customer Churn (With Customer Data)

No business is churn-free. It’s an inevitable part of running a business. While you can’t stop every customer from leaving, you can understand how to reduce customer churn. 

So how do you prevent customer churn? You’ll need to first understand why customers leave, and your data tells a story. From these insights, you can build churn reduction strategies to keep your business healthy and growing. 

Why Customer Churn Matters 

Customer churn has an impact on business in several areas. As a result, the dynamic of churn is multidimensional. 

The Business Impact 

When customers leave, it creates a ripple, affecting your business’s foundation in three ways: 

• Retention: Lost customers decrease your retention rate. Retained clients provide recurring revenue that helps you forecast for the future. It’s also much more costly to lose a long-time customer than to acquire one. 
• Revenue: When customers end their relationship with you, of course, your revenue takes a hit. You no longer have that guaranteed income, which ultimately dilutes profits. 
• Customer lifetime value (CLV): The higher your customer churn rate, the lower your CLV will be. This may cause hiccups in planning for the future. It could also mean you never recoup the cost to acquire that customer. 

Types of Churn 

To truly understand how to prevent churn, you also need to know about each type: 

• Early: This churn occurs soon after the acquisition. It may happen for several reasons, depending on the product or service purchased. They could bail during onboarding or suddenly decide to cancel the deal. 
• Mid-term: This churn refers to customers leaving after they’ve been a customer for a few months. They may be struggling to find the value in a product or service. Doubts creep in, and they desert your company. 
• Long-term: This type of attrition is the most impactful to revenue. When a customer leaves after an extended period, you had come to expect that recurring charge. It could be because the customer’s experience was poor or there was a lack of engagement. 

9 Proven Strategies to Reduce Churn 

Reducing customer churn requires a variety of strategies. Each has its own approach to addressing the underlying problems with customer loyalty and retention. 

By integrating these churn reduction strategies into your business, you could see improvements in retention and revenue: 

1. Enhance the Onboarding Experience 

Onboarding is how you welcome customers. If it falls flat, you could see early churn. With data, you can identify gaps. 

For example, customers may begin to fall off at a certain time in the onboarding process. Investigate why that is. Is the material not relevant or engaging? Is there some obstacle that’s keeping them from adopting your solution?

Some ways to improve onboarding include: 

• Personalizing the experience based on the type of customer 
• Creating interactive tutorials so it’s easier for people to learn faster 
• Creating an onboarding email nurture that focuses on one or two things 
• Adding gamification to the experience 

2. Deliver Early Value & Minimize Time to Value (TTV) 

Early churn can also be the result of new customers not seeing the value of the product or service. Or maybe they feel like it will be months or even a year before they experience it. 

Those are not the feelings you want people to associate with your brand! 

Go back to your customer lifecycle journey. It doesn’t end once they convert. A completely new sequence begins. 

What kind of data do you have that gives you clarity around how long TTV is? Are there specific steps a customer needs to take to achieve this? Figure this out and improve what’s weak. 

3. Try Proactive Customer Success & Support 

What if customers heard from you before they even need you? That’s what proactive customer success and support can provide. 

New folks need to know how to get in touch with you for help, but that’s just the start. Looking back at data trends, you know the biggest challenges customers face. 

You can make a series of emails like these, highlighting these common questions and needs. They get the solution before they even know they have a problem. 

4. Use Predictive Analytics & Micro‑Segmentation 

Data is once again the key to mastering this churn reduction strategy. With predictive analytics, you can use machine learning algorithms to flag when a customer could be on the way out. It would be based on the patterns of behaviors that actual churned customers displayed. 

If you get this notification, it’s time for preemptive outreach to try to address the customer’s potential problems. Micro-segmenting these potential churn accounts allows you to make it more personal. 

For example, a customer hasn’t used your service for two weeks, which is highly unusual and could be an indicator of churn, so you receive an alert. Those folks could flow into an already-built email nurture that’s all about the value of using the solution, reminding them of all the reasons they became a customer in the first place. 

5. Personalize Multichannel Engagement 

Customers want to interact with businesses in many channels. This makes communication convenient, but you’ll need to tailor messaging so that it’s consistent and personal. 

You can personalize communications based on the data you have about a customer—their preferences and patterns. The insights you have probably indicate what matters to that customer. 

Understanding their motivations is essential to reducing churn. And each interaction they have with you, whether via email, the phone, or chat, can reiterate those same things. It could be an offer, a tip, or anything else that will help them use your solution optimally. 

RELATED ARTICLE — How Personalized Customer Communication Helps Reduce Customer Churn 

6. Launch Loyalty Programs & Incentives 

Your brand is missing out on a chance to reduce customer churn if you don’t have a loyalty program. 

Consumers favor loyalty programs, with 83% saying that belonging to one influences their decision to stay brand loyal. 

They are a win-win. You will be more likely to retain customers with such incentives, and the customer gets something in return. 

If you’re constructing a loyalty program from scratch, it’s another chance to use customer data to identify what they value most. Then, think of how you can incorporate that into an incentive. 

It could be waived fees, a free month, or extra features, but they have to earn it. Determine what they’ll need to do to receive the benefits, like referring others, signing annual contracts, or being a customer for a certain amount of time. 

7. Collect Feedback & Close the Loop 

If you want to know why customers leave, ask them in an exit survey. Some may not take the time to complete it, but others will. 

Sometimes churn occurs, and there’s nothing you could have done. They may lose their budget or their business. Someone new may come into leadership and make the change, which has nothing to do with you. 

Other times, it will be directly because of your product, onboarding, support, or communication. Something went wrong, and you didn’t have the visibility to correct it. 

By analyzing customer feedback, you will have concrete points to assess in your business. Closing the loop means acting on it and making changes so you don’t see repeated churn. 

RELATED ARTICLE — Customer Feedback: The Growth Lever Franchisors Can’t Afford to Ignore 

8. Build Educational & Community Support 

Customers always have questions, and they’ll evolve. Many people would now rather have self-service options to find answers versus contacting support. 

These knowledge bases and community boards can be just what they’re hoping for. There are easy ways to create these. You can repurpose any support guides and onboarding training into a searchable database. There are lots of AI tools that could help with this. 

You can build out a community space for customers to log in to and ask each other questions. You’ll need to moderate this so it remains on topic. Users could share tricks they’ve learned over the years. 

9. Offer Flexible Pricing & Retention Deals 

Sometimes churn comes down to dollars. If that’s the cause, you can consider providing some different tiers so the pricing is still within budget. You could also offer a discount if they resubscribe early. 

Tools, Metrics & KPIs to Track Retention Efforts 

Reducing customer churn requires tools to measure and track how you’re doing. 

Engagement Metrics 

You’ll want to measure these things: 

• Net Promoter Score (NPS): It’s a one-question survey that measures customer loyalty. 
• Customer Satisfaction Score (CSAT): This score measures how satisfied customers are. 
• Churn rate: This metric tracks the number of customers who leave within a certain time period. The formula is: (Number of lost customers / Total number of customers at the start) × 100. 

Predictive Risk Scoring 

This technique allows you to assess the likelihood of potential churn outcomes based on historical data. You’ll use your customer engagement platform to review data that led to churn as a means to predict if it may happen again. 

Segmented Performance Dashboards 

These tools break down lots of metrics into specific customer groups. You can then assess the unique elements of these cohorts to personalize communications. 

Enterprise AI-Driven Churn Predictions

With AI analyzing data, you can gather even more information on the possibility of churn. AI supports predictive analytics, which can reveal patterns that are most likely to make customers leave.

RELATED ARTICLE — How AI Is Transforming Customer Feedback Analysis for Franchise Success 
 

FAQs 

What is an acceptable churn rate? 

Most range between 5-10%. Your industry and customer type factor into this. 

Can churn be eliminated? 

No, it’s impossible to never lose a customer, but you may employ these strategies to prevent churn. 

How early should interventions happen? 

It could happen as soon as onboarding if you see the customer is struggling. Work triggers for this into your workflows to be ready. 

Make a Plan to Reduce Customer Churn 

You have strategies and tips to get started. Here’s a quick checklist: 

• Audit onboarding. 
• Implement analytics. 
• Develop pilot campaigns. 
• Review technology solutions. 
• Provide more ways for customers to give feedback.