Business

How to reduce churn to zero

Want to know how to reduce your churn? This is a list of methods that have worked for more than 100 companies to reduce churn to zero.
Filippo Burattini
6 minutes

Table of contents

  1. Find out why your users are churning
  2. Act on the main reason why your users are churning
  3. Win-back lost customers
  4. “Cheat” your churn rate
  5. Address your involuntary churn
  6. Prevent churn from happening
  7. Adding targeted offers to your flow

Find out why your users are churning

How do you fix a problem without knowing what the problem is? You don't, it's impossible... You know that you have churn problem, but what kind of churn? WHY are your users churning? What type of churn is it? Active? Involuntary? Maybe it's an issue with your activation or your value proposition?

For starters, you have to identify the type of churn is affecting your business. In all likelihood, it will probably be a combination of various types, but we need to find out for certain.

Fortunately, it's rather easy to do. When a customer is going to cancel their subscription, instead of only asking for the confirmation or redirecting them to your payment provider page, gather some feedback with for their reason.

Something along the line of:

We are sorry to see you go, can you please tell us the reason why you are leaving?

The options should be related to your specific product and should be around areas that you think might be pain points for the user or where you think you might be losing them. You don't want to burden them or over complicate things, it's important to remember...they're churning, let's not push too many buttons!

Try to keep the potential reasons to 5-7 options. Here are some examples:

  • Couldn't figure out how to use the product
  • Poor customer support experience
  • Missing features
💡 DON’T put “Too expensive” as an option. First of all, they have already paid for it so it wasn’t expensive in the first place, but if they are churning, "Too expensive can be an easy cop out. Adding “Too expensive” as an option gives you zero insight.
Example of cancellation flow asking the reason why a user is churning

Act on the main reason why your users are churning

Now that you are collecting feedback on why your users are churning, we can start analyzing those insights and act upon them. This is when the options that you made available to your users will matter, since each answer will need to be linked to an area where we can act on (this is another reason why we didn’t put “Too expensive” on the possible answers).

From our example, this is how we would tie the responses to an area where we can act on:

  • Don’t know how to use it → Onboarding
  • Poor customer support → Customer support/Documentation
  • Missing features → Product

Now rank the areas based on the one that received the most responses and let’s see how we can act on them.

Don’t know how to use it

This is clearly a problem with the onboarding. If your users don’t know how to use your product or find it confusing or the time-to-value is too long, then you need to make a better job at onboarding them and showcasing your best features. The trick to good onboarding is to minimize the time it takes to get your user to that "ah-ha moment"...that magic moment where your tool actually solves the problem your user has.

Add a nice step-based onboarding flow, add some tooltips that guide the user or even just adding some documentation and blog articles might help your users (but remember that people don’t like to read 😉).

Poor customer support

There isn’t a lot to say here. We all know as consumers what good and poor customer support looks and feels like...You need to check in on your customers and answer them fast when they reach out to you. I know it is annoying and I know that some people are dumb, but you still have to do it. Without happy customers, you don't have a business!

One thing that might help is installing a live chat widget on your website, if you don’t want to be fancy with Intercom, then a free alternative like Tawk.to will get the job done as well. People are much more prone to give feedback and point out flaws or bugs in your app if there is a quick chat bubble handy.

One last bonus tip here - if you're a young startup, solo-entrepreneur, or indiehacker, you don't have to offer 24/7 live support...in fact, don't! Set realistic expectations around when you're available for support and then do your best to exceed those expectations.

Missing features

This is could be an issue with your product OR an issue with your messaging... if someone signs up for your service and expects A but in reality you do B, your messaging and marketing probably needs some work.

Regardless, you're going to need more context from these churned users...you need to know which feature or integration the user was expecting that you didn't deliver. You're likely going to want to follow up with these customers manually or better yet try to get them on a 10 minute Zoom call to tease out what might have been missing.

Building every feature requested under the sun is a cardinal sin tech founders too often commit. I know it may be tempting...if you're a technical founder like me, building features is what we do best, but it can often be a time-suck.

Play it safe here, gather more context from these users and wait until you hear and see multiple requests from users BEFORE building that new integration 😉.

Win-back lost customers

Now that we know why the users are churning and we are fixing those issues, we can start to win-back lost customers that have churned in the past. This is as easy as sending them a nice personalized email mentioning the reason why they left and how you have addressed it.

I'd recommend sending them a personalized email and then a follow-up with a discount code just for them (20-30% should be the right amount). Thank them and make them feel special!

“Cheat” your churn rate

Another amazing way of improving your churn-rate without directly addressing it (like we did before and how you are still doing to this point) is to upgrade monthly plans to annual plans.

Besides the nice cash injection upfront, annual users are much more less likely to churn. This is due to an higher investment in the product and also to the fact that as a minimum, they will stay for 12 months.

I know this isn’t exactly reducing churn how you were imagining it, but it is actually very effective and used widely as a strategy to reduce churn and boost customer lifetime value (LTV).

Example of an offer to upgrade a monthly user to an annual plan

Address your involuntary churn

And now the scary part... Did you know that on average, 40% of your churn is involuntary? What we have tackled until now is voluntary churn, which means a user logs into your app and decides to cancel their subscription WILLINGLY. Involuntary churn is all the churn that happens off-platform like credit-card failures.

Luckily payment providers like Stripe are getting better and better at handling these issues (although by default they are not enabled?!?!), but you still have to address them in your app. If a user doesn't know their credit card is expired, how can you expect them to renew it?

Showing a simple banner when the last payment of a user has failed with a link to change their billing info is more than enough in most cases and if that doesn’t work, locking them out of the app is a must! There's no such thing as free lunch...or free SaaS!

Example of a banner to remind the user to update his billing information
Example of locking out a user that isn’t paying (delinquent churn)

Prevent churn from happening

"Prevention is better than cure" and this applies to your churn rate too. If your clients are happy and engaged with the product then they will not churn. Having churn indicators that flag customers that are likely to churn (maybe by looking at their engagement history or by looking at the number of recent sign-ins) will give you an handy list of people that need to be contacted. You can then ask those people how they need help and how you can help them get the most value out of your product.

Adding targeted offers to your cancelation flow

Once you have done all the previous steps and you have enough data, you can start automating the salvage process of a user that is actively churning. This means that after you ask for the reason why they're churning, you also make an offer based on their answer to try to persuade them to stay. With the proper data at your disposal, this will greatly improve churn rates!

Example of an offer to keep the user

Wrapping it up

I truly hope this is going to help you reduce your churn and improve your business and if this sounds like a lot, it is!

My team and I had to build something like this for our first business and we spent a lot of time on it, especially in making it useful and not just throwing something together. We found it so useful that we decided to extract the functionality that we had built into a standalone product that everyone can use for FREE.

If you want to reduce your churn today, save time and improve your MRR 👉 check it out.

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