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5 reasons customers churn, and what to do about it

Published 12 Nov 2018 by Tom Fletcher, CANDDi
Read this in about 3 minutes

If your business is based around recurring payments from customers, ‘churn’ is your biggest enemy. Churn is when a customer cancels their subscription and moves to a competitor, or just stops using your type of product altogether.

But churn isn’t beyond your control. You don’t have to just sit back and hope it doesn’t happen. If you’re proactive, you can keep more of your customers on board for longer.

Here are five common reasons customers churn, and how to minimize the impact of that churn.

1. They’re the wrong customer

Unless you sell oxygen and water, your product isn’t going to be perfect for everyone on the planet. If your main focus is on getting your raw number of new customers as high as possible, you’re likely to sign up a bunch of people who really shouldn’t be using your product in the first place.

To tackle this, you need to be as clear as possible about your target market. For example, at CANDDi, an ideal customer for us has the potential to generate lots of sales leads, actively markets their product rather than waiting for inbound queries, and has a reasonably long sales cycle that benefits from nurturing relationships with potential customers.

If we just target these kinds of companies, we know they’ll be a good fit before they sign up.

2. They don’t understand your product

The other kind of wrong customer is one who misunderstands what your product does. If they have a false impression of the value you can provide, they’re likely to churn very quickly.

To counter this, make sure you’re incredibly clear about what you do and how it matches with the potential customer’s needs. If it’s a poor match, be honest with them – not every relationship is meant to be.

3. Your onboarding is poor

Onboarding is the process of getting your customer started with your product. This can be quick and simple or a long, involved process, depending on what it is you sell.

At CANDDi, we make sure new clients get started as soon as possible after they’ve signed up. Any delay in getting our software running delays how soon it is until they see results that prove we’re worth our monthly fee.

You’ve probably experienced this yourself. When you sign up for something new, there’s a sense of novelty and excitement around your new toy for a week or two, before it settles into being something you either use regularly, or something you keep forgetting to cancel. By emphasizing prompt setup, you can make sure your new customers quickly see real benefits as early as possible.

4. You ignore your existing customers

If you don’t talk to your customers regularly, and just rely on their subscription payment rolling in every month, you won’t get any warning signs that they might soon churn. Devote resources to getting in touch with each of your customers every six-to-eight weeks. Take the opportunity to ask how they’re getting on with the product, tell them about new features and gather feedback to share with your product development team.

Depending on how many customers you have, how much they pay you, how complicated your product is, and how big your company is, it may or may not be possible to book a phone call with each customer. An email can be just as effective in certain cases. The important thing is keeping up a dialog that shows you value their custom and want to help them keep succeeding.

Sometimes companies review their spending and cut things that don’t seem to be having an effect on their bottom line. Make sure that they understand the extra revenue you’re generating for them. No-one wants to stop paying for something that directly results in greater revenue.

5. Your client relationship is with the wrong person

Sometimes your primary relationship with a client might be through someone who is excited about your product, but lacks the clout within their company to turn your product into something the whole company relies on.

By becoming an essential part of your customer’s workflow, you’ll become invaluable – something they wouldn’t think of canceling. You just need to make sure your primary relationship is with the person who has the influence to make that happen.

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