If you’re like most business owners, you know that customer churn is a major problem. It’s estimated that the average company loses 20% of its customers each year. That number can be even higher for startups and small businesses.
What do you think is the biggest problem with subscribers not renewing their subscriptions? What can be done to reduce customer churn? Let’s find out!
What is churn?
Churn, also known as customer attrition, is the percentage of customers who stop doing business with a company over a given period of time. It’s a key metric for companies to track because it directly impacts revenue.
There are two types of churn: voluntary and involuntary. Voluntary churn is when a customer cancels their subscription or service on their own accord. Involuntary churn is when a subscription is terminated typically due to non-payment.
There are a number of reasons why customers may choose to voluntarily churn. They may be unhappy with the product or service, they may have found a better option elsewhere, or they may simply no longer need the product or service.
Regardless of the reason for churn, it’s important for companies to take steps to reduce it. Churn hurts revenue growth and can damage customer relationships.
What is churn costing you?
The direct costs of churn are easy to calculate. You know how much it costs to acquire a customer, so you can simply measure the difference in acquisition costs between customers who stay and those who leave. But the indirect cost of churn is often harder to quantify.
Customer churn can have a ripple effect that impacts your business in ways you may not have considered. For example, if you have a high churn rate, you’ll likely need to spend more on marketing and advertising to maintain your customer base. Churn can also impact your company’s reputation—if customers are constantly leaving, word will spread and it will be harder to attract new customers.
And then there are the opportunity costs of churn—the things your business could have achieved if you weren’t losing customers left and right. When you’re focused on fixing your churn problem, you may not be as innovative or agile as you could be. You might also miss out on opportunities to upsell or cross-sell existing customers because they leave before you have a chance.
All of these factors can add up to significant indirect costs that can be difficult to quantify but that nonetheless have a real impact on your bottom line. So when you’re thinking about the cost of customer churn, don’t forget to factor in these indirect costs as well.
There are many different factors that can contribute to high churn rates. In the case of voluntary churn, it may be due to poor customer service, growing competitive landscape or a lack of features that customers want. For involuntary churn, it could be expiring credit cards, insufficient funds, or a lack of fail-safe processes for payments. Whatever the reason, high churn rates can be very problematic for companies.
So how can you fight against churn? The first step is to identify the root cause of the problem. Once you know why customers are leaving, you can take steps to fix the issue. There are many different ways to reduce churn rates, so it’s important to find the right solution for your specific situation.
If you’re struggling with high churn rates, don’t despair – there are things you can do to turn things around. With a little effort and some smart strategies, you can win the battle against churn and keep your business growing strong.
Fixing the Predicament
There are a number of ways to combat the two types of customer churn. Let’s break it down below.
- Reduce onboarding friction. If you are a SaaS-business, your customers might sign up for your product only to find some difficulty using or understanding the product. Prepare a lot of guides, video tutorials and tips to help them get the best experience.
- Improve your customer service. This is one of the most important things you can do to reduce churn. Make sure your customers feel valued and appreciated, and take care of their needs promptly and efficiently.
- Address customer pain points. Listen and collect customer’s feedback, and clearly communicate the steps and actions you will take to make product improvements. Be transparent about upcoming features and keep them engaged.
- Be realistic in your marketing and sales efforts. Don’t make promises you can’t keep or set expectations that are too high. Be honest with your customers about what they can expect from your product or service.
- Stay ahead of competition. Some customers unsubscribe because they might discover more and improved features that they like. Take time to conduct competitor and customer research to improve and innovate on your products.
For credit card payments, you can set up processes to collect data on the expiry dates of credit cards. Be proactive to alert your customers and remind them to update their credit card information. It might not be a good idea to lock your customers out of their account the moment payment fails. Consider offering grace periods to allow them to continue using your product while giving them some time to sort out the financial issues.
If you are considering offering crypto payments, Suberra is able to offer the same level of convenience similar to Stripe. By default, we configure a 7-day grace period for each monthly subscription.
During this period, your customers will still be able to access your products while we attempt to retry the charges. Suberra’s smart payment retries will check the user’s token balance on-chain before attempting a charge. The charges will be reattempted frequently over the grace period.
During each charge’s failure attempt, we can execute custom actions such as sending them a reminder email to fund their wallets or send custom webhooks so you can follow up directly. Never worry about insufficient token balance in customers’ wallets again!
Say goodbye to churn
We hope this article has given you better insights on customer churn and how you can reduce it and improve your revenue growth! Churn can be a threat to your subscription business if you don’t identify them early and take corrective measures. Build the right strategies and you’ll be on track to growing a loyal customer base!
If you would like to offer crypto payments for your subscription products, sign up here: https://merchant.suberra.com/