How to Reduce Customer Churn Rate: 5 Proven Strategies

How to Reduce Customer Churn Rate: 5 Proven Strategies

A churn is a user or revenue loss in a given period. Customer churn is determined by the number of customers that end to use the product and service during a given period.

In a more refined way, the number of customers you lost in the quarter in comparison to the number of customers you started with the sales quarter. Customer retention is the major factor in a company's success. If you have a customer retention rate is 75%, it means you have a low churn rate of 25%.

Most often SaaS companies face a high churn rate due to the falling demand for existing products and services. The SaaS business evolves constantly so they need to constantly upgrade their products and introduce new services to sustain old customers and engage new customers. If the product is not fulfilling customers' expectations and marketing demand, the churn rate will increase. Losing customers means losing revenue. So, if you want to reduce customer churn rate follow these best strategies.

How Customer Churning is Affecting Businesses?
Customer Churn Vs Revenue Churn
How to Reduce Customer Churn?

How Customer Churning is Affecting Businesses?

Customer churning is greatly affecting the business and if above than 10% of customers are cancelling the product, it is difficult for long-term growth. It also means that you are losing more customers than acquiring them and which is seriously impacting your revenue.

According to a survey, companies lose $1.6 trillion per year due to customer churn. You need to permanently fix the root cause of churning to run your business for the long term. Every customer is different, you need to make strategies to make existing customers stay content and happy with the products and services.

According to the Forrester analysis, acquiring new customers is 5 times cost more than maintaining the existing customers.

Customer Churn Rate in United States in 2020
Customer Churn Rate in United States in 2020

Customer Churn Vs Revenue Churn

Customer churn is the number of customers you are losing in a given time frame. Revenue churn is slightly different from customer churn. Revenue churn is the loss of revenue that is not necessarily happening because of customer churning.

Revenue churning means that you are not making enough money from your existing customer base than you were making before. There could be several reasons for this such as, your customers might have shifted to lower subscriptions, declined a few paid features, got discounted features, and so on.

Analyze all the business metrics, competitors’ graphs, target customers, and long-term customers and determine the most useful customers that stay long with you. Retain your loyal customers and try to compensate for your revenue loss with flexible customers.

If you have a diverse customer base, most likely you cannot satisfy all customers. Hit the majority of your target customers and meet their requirements and expectations, instead.

How to Reduce Customer Churn Rate?

According to Gartner's survey report, approximately 80% of a company's future revenue come from just 20% of its existing customers. So, 60-70% of the marketing focus remains on selling products to old customers.

Many companies are understanding the importance of low churn and proactively implementing reduce churn strategy. They emphasize improving customer relationships and communications and removing all bottlenecks that come in between product and customer experience.

According to HubSpot's 2021 State of Inbound report, over 50% of companies are giving top priority to increasing customer satisfaction and generating leads. They are incorporating occasional rewards, free offers, and promotions to retain customers for a long time with the product.

Implement a systematic retention process that brings you the actionable insights to generate new ideas to reduce churn. Break down your churn into its component parts (pricing, types of users, product features, support, etc) and experiment with different parts and resolve all aspects of churn.

Here a few strategies are given to maximize customer satisfaction and reduce churn:

Analyse the Cause

Analyze why customers are leaving? There could be lots of reasons for customer churn such as pricing, product quality, customer experience, etc. To track the problem in the right direction, collect customers' insights and their issues through email, feedback, and surveys, and build strategies proactively to prevent churn.

The survey is useful and easy. You can get the survey through email, SMS, live chat, social media, etc. Analyze their response and work on the points which are causing you more revenue loss.

Moreover, find out the specific reason for leaving the product after 30 or 60 days of using it. Talk to your customers and offer a discount or incentive to engage them with the product.

If there is any technical issue regarding the improper functionality or lack of understanding about the product, communicate with them and provide all technical support to reduce customers’ dissatisfaction with the product. Ask cancellation reasons in the form of a survey to get valuable product insights.

Spot the customers who have not been contacted for a while. They might be in the risk group and can impact the churn badly. Take preventive measures to include them in regular conversation. Start email conversations, feedback, and survey to foresee the problems.

Engage with Customers

Ensure quality customer service for successful onboarding and implementation. Guide them in every step so they get familiar with the product features. Provide a guided tour for all functionalities, and give value-added support and FAQs so they don’t feel clueless on handling basic issues.

Offer free training, webinars, video tutorials, and product demos to make them comfortable with the product. Demonstrate the full potential of the product so customers can see the value of using the product.

When customers feel the product/solution is helping them to achieve target expectations in business they are less likely to leave the product/solution. You need to constantly keep monitoring and communicating with them. Constant feedback keeps you aware of customers' inclinations and expectations. Amazon has excellent customer service that gives it leverage over its competitors.

Proactive Customer Services

Sometimes customers struggle to navigate the website and didn't get exactly what they are looking for. Confusion around a product or service and a lack of effective and timely support around for a particular issue increase their disappointments.

Use Live chat to engage with them throughout their product journey and have your customer support system ready to address product-related issues. When customers get an immediate solution and it enhances their overall user experiences.

Very likely, customers may overlook small glitches if they get timely support and stay with the product. You also get time to improve on technical things without losing your customer base.

According to a Harvard Business School report, 65% of the company's business comes from existing customers.

Build a personalized relationship after onboarding the products and maintain a friendly rapport with your customers. The Starter Story and Pigeon had reduced their churn rate with personalized emails and customer support, only.

Build Customer Loyalty

Make your customers feel that they are a part of a brand community. Invite guest posts, question-answer discussions, and community forums where they can share their views and suggestions. It keeps them engaged with the product and if there is any issue or dissatisfaction, it can be solved within the community.

You can also get insights into customers' perspectives and get time to resolve them early. Offer discounts, promos, and loyalty programs to keep them stuck with the product. Occasional discounts and incentives are offered to show how much you value your customers for the business. If the customer is approaching to end of their subscription, you can offer discounts to elaborate the subscription and retain your customer.

Be honest and transparent with your customers and share your revenue report and business metrics openly.

Reeboks and Nike have huge customer loyalty bases. Smaller SaaS brands like Ahrefs and e-commerce software Shopify also have a big loyal customer base that contributes to their growth.

According to research from Bain & Company, a 5% increase in customer retention can increase profits margin by 25% to 95%.

Improve Customer Experience

According to Forum Corporation's research, 70% of churning is happening because of slow services and uncooperative support staff. Delight your customers with Thank You or Welcome Note after their subscriptions or purchasing the product. A Reddit uses a handwritten thank you message for its subscribed customers to give them value and importance.

If your customers are happy, they may refer you to others and help your business to expand. Celebrate your long-time customers by rewarding them with badges or highlighting their success on social media and your website. For example, freelance marketplace Fiverr highlights its customers' stories on its blog.

Good customer service can reduce churn for a long time. Improve customer services to hook the customers with your brand. Attend every complaint seriously so the customers stay with the brand.


Nothing is going to change overnight! Follow the process and observe closely what areas in the company are causing churn problems. Retention is cheaper than customer acquisition. The KPMG survey revealed that customer retention drives 52% of the company's revenue. You already have customers, engage with them and make sure they too stay with you.


What is the churn rate?

A churn rate is when your customers stop using your services within a certain period of time.

Why is the churn rate important?

Calculating the churn rate is important, as it shows how many customers you have lost and lost customers mean less revenue.

What is a good average churn rate?

A 5% - 7% churn rate annually is considered an acceptable churn rate.

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