5 Actionable Tips to Reduce Customer Churn

Every business wants to keep its customers happy and retain them. After all, it's been well repeated that it is cheaper to hold on to your existing customers and extend their lifetime value than to acquire new ones. In fact, retailers are losing $29 on average for every new customer acquired, a 222% jump in the last 8 years!

Customer turnover is a threat to any business's bottom line, so it is important to pay attention to your customers' needs and make sure that you are doing everything possible to keep them happy. Here, we'll share some tips that should help you reduce customer churn and improve your relationships with existing customers.

What is customer churn?

Customer churn is known by many names: customer attrition, customer turnover or customer defection. No matter what you call it, it strikes fear into the heart of any marketer or business owner. It describes the percentage of customers that stop using your products or services, in other words, the loss of customers or subscribers.

For example, if you started with 100 customers but 20 left at the end of the year, your customer churn rate is 20/100 or, expressed as a percentage, 20%. It's important to compare the same periods for consistent and meaningful comparisons. In this case, you're comparing your customer turnover between different years.

So, what is a good or bad customer churn rate? It depends on your industry. Financial and credit, for example, see a 25% rate because of competition between incumbents and startups. Travel, on the other hand, earns an 18% rate due to a hotel, airline or travel provider's brand; or the use of loyalty cards and points.

How do you reduce customer churn?

It would be unrealistic to expect zero customer churn. It might be possible if you have a niche product or service that customers love, you have no viable competitors, or you provide such outstanding service that people see no reason to leave! In reality, some consumers leave because of changes in their goals, for example.

So, if customer attrition is here to stay, how do you go about reducing it? There is no magic formula or word, but in essence, it's all about paying attention to customers and listening to what they say. Think about it: if you had addressed a bug in your past software release, for example, a customer would have one less reason to leave and try a competitor.

Here are some tips and strategies to reduce customer churn.

1. Greet your customers like you mean it

When your customers feel like they are being taken care of, they are more likely to stay. And the best way to do this is to have your agents treat them with respect and courtesy—the tone should be warm, not dismissive or disinterested. One way to show that you care is by using a friendly greeting in calls, live chat or email:

✅ "Hi, my name is Tod. How can I help?"

❌ "Hey there, what's your issue?"

When you start a conversation on the right foot, you're showing that you will listen to them, understand their needs and, more importantly, want to help them achieve success. Using the customer's name and personalising the interaction also helps build rapport because it shows that your agents remember who they are:

✅ "Hi Jane, did you enjoy the reservation I booked for you last time?"

❌ "Hello, how should I address you?"

2. Make it easy for customers to find answers

You may have heard of the term "friction" used in customer interactions. The more you make it difficult for customers to get what they want, they're more likely to get frustrated, dismiss your product or service as hard to work with, and find an easier alternative. In addition to not returning, they may share their negative experience!

This situation can be avoided if you make it easy for customers to self-service and find help themselves by interacting with a smart chatbot or IVR menu. When people find a solution on their own, they feel a sense of accomplishment and this positive momentum carries on into greater use and engagement with your product or service.

Social media is another way of engaging with your customers and keeping them informed about any issues that may arise with your product or service. In addition to tweeting about service downtime on Twitter, for example, you can also integrate customer enquiries from social media like Facebook Messenger and WhatsApp.

3. Make it easy for customers to reach the right agent

Not everything can be resolved through AI and robots. At times, the assistance of a live agent is needed because customers are not finding the answers they want or they're wasting time and going around needlessly in your self-service loop. If a customer reaches out for help, do you make it easy for them to speak with a human?

When designing an IVR menu and workflow, customers should always have an option to speak with a customer service representative (typically by pressing "0"). While conversing with a chatbot, you should always present a menu option to speak with a live agent and seamlessly transfer the chat session to a human operator.

Once transferred, use relationship mapping technology to ensure immediate response and fast resolution. You can set rules to route customer enquiries by sticky routing, for example, so returning customers are always served by the agent who helped them before—building a rewarding, long-term relationship between the pair.

4. Give customers a way to share feedback

Like finding answers, customers should also have a convenient way of giving feedback. Instead of sending surveys, which often arrive at the wrong time and are time-consuming to fill in, let consumers send quick responses using text or photos via social apps like WeChat and LINE. Or use QR codes to set up a call or chat.

When you collect feedback and listen to customers, you are also performing root cause analysis of customer churn. What is the real reason for people leaving and jumping to a competitor? Identifying high prices, poor quality or the need to transform your customer experience can help you quickly plug the customer attrition rate.

While AI audio transcription is here today, in the near future advanced tools can analyse audio calls and text chats in real-time, alerting agents about the customer's sentiment. An angry voice, for example, can lead your CX platform to automatically create a label to follow up as well as suggest possible service recovery solutions!

5. Look out for signs that a customer is leaving

Instead of waiting for a customer to stop using your product or service, reach out proactively to them before they do so. Some warning signs that a consumer is disengaged or not interested include not logging into their account for a month, public shaming on social media, or asking about refund and return policies.

Onboarding emails, as well as outbound chats and calls, all work together to keep customers using your solution. Check in with new users at least once a week but do give them time to evaluate your offering. Lightweight CRM features, enquiry labelling and a holistic view of your customer can help you time your outreach efforts.

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