The Advanced Guide to Reducing Customer Churn

Nobody desires to have lost customers, lost revenue, and negative results for their business. However, customer churn is one of the most significant aspects of evaluating a growing business. No matter we can’t deny that it is impossible to retain 100% of the customers, we can undoubtedly analyze and reduce customer churn rate significantly.

As it’s easier to retain an existing customer than to make a new one - understanding, preventing, predicting, and reducing customer churn is vital for your business's long-term success.

Below is a practical, advanced guide to assist you with a smarter way to reduce customer churn and increase customer loyalty.

What is Customer Churn?

Customer churn, also known as customer attrition or logo churn, is a metric that defines how much business a company has lost during a given period (generally a month or a year). The loss can be in:

1) Customer Percentage

It’s called customer churn and evaluates the number of customers you’ve lost in a given period.

2) Revenue Percentage

It’s called revenue churn and evaluates the money you’ve lost in a given period. Along with measuring the funds lost due to customers leaving you, it also includes money lost due to customers who downgraded their subscription plans.

In accordance with these two types of losses, churn can be further classified in several ways:

1)Customer churn and revenue churn

2)Voluntary and involuntary churn

3)Negative churn.

Importance of Reducing Customer Churn

Wondering why it’s so important to calculate the customer churn rate? Well, it is because it costs so much more to procure new customers as compared to retaining the already existing ones. Therefore, it is inevitable not to have churn, although taking action is a must!

Factually, an increase in customer retention automatically boosts profit up to 25% because the customers who return are likely to spend 67% more on the products or services of the company. This helps the organization to spend less money on operational costs.

Causes of Customer Churn

Comprehending why your customers churn is essential to efficiently plan your strategies for reducing customer churn. There can be multiple reasons why your churn rate is high; however, a few leading causes are as follows:

1)Bad experience / Poor Onboarding

The onboarding process is crucial in using your product. Training materials, video tutorials, and documentation all play an integral role in helping new customers get used to what it takes to start having fun with the features offered by your company's products or services.

However, not giving enough importance to onboarding can result in customers abandoning the products/services, which in turn leads to churn.

2)Service is not up to the Scratch

High customer churn can also indicate poor customer service. In addition, unhappy customers can take their grudges to social media, spreading negative word of mouth for the business. Thus, good customer service shouldn’t be limited to new customers — the existing ones deserve excellent service too!

3)Inconsistent Value Proposition

Sometimes, customers do not get what they expected or were promised in the first place. Reassessing your messaging and packaging consistently is crucial so that the users don’t misinterpret your business’s value proposition.

4)Seasonal Market

There are several reasons why seasonal markets can affect your customer churn rate. For instance, if you own a Halloween store and see high volumes coming up to the holiday with low

5) Conversions Afterward

It might make sense for one year-over-year metric instead of monthly ones to find out what is going on? This way, you’ll know whether your efforts successfully combat clientele loss due to changing needs throughout.

6) Immense Competition

To stay ahead of the competition, you need a strategy that will provide features and functions your customers want. This means constantly evaluating what you are offering them compared to other companies on your level—not just at first but throughout all customer journey stages.

7) Involuntary Churn

There are several reasons why customers may cancel their subscriptions. One cause is an expired card, which can lead to the customer’s payment attempt failing and result in them being unable to pay money at the time of purchase; this would be called “involuntary churn."

Reasons for Involuntary Churn:

1)An expired card is used for payment

2)Hard declines occur when a card is reported lost or stolen

3)Soft declines happen when a credit card has maxed out its limit

4)Banks can also decline the card due to suspected fraudulent activity, frozen accounts, etc

Customer Churn Analysis and Measurement

Churn analysis can be a fantastic way to measure the success of your business. With each customer who churns, there are usually early indicators that can uncover with churn measurement, and there are several methods of analysis to choose from:

1)Cohort Analysis

One of the best ways to get a deep understanding of your customers is by grouping them based on their shared characteristics. You can use this insight for many different purposes to gain valuable insights like-

  • Age of the Customer

  • Month of Purchase

  • Acquisition Source such as affiliate, organic, paid, etc.

2)Customer Behavior Analysis

You can use different metrics to see how customers interact with your product or service. Some of the most common things SaaS businesses look into are:

  • Features being used

  • In-app actions

  • Engagement score

  • Patterns

How to Predict Customer Churn?

Once you have a holistic view of your customer's experience history with the brand, combine it with operational data such as repeat visits or credit card usage to identify key drivers that lead customers towards churn.

To calculate your monthly customer churn rate, divide the number of customers lost during a given time interval by active users at the beginning. For example, if you got 1000 new clients and 50 disappeared last month, then it would be 5%.

Effective Strategies to Reduce Customer Churn

Churn reduction is an elaborated process that requires a deep understanding of your customer base and their changing needs. With an established analysis process, you’ve already learned half of what knowledge is required; next up are a few practical strategies that will help you alleviate churn:

1) Focus on Customer Engagement

Engaging customers is one of the critical steps to retaining them. You can create value for them through features or functionality that will make it difficult for them not to use what you offer.

2) Establish an Excellent Onboarding Experience

If you want to retain users, they must know how to use the product. That's where onboarding comes in - provide them with all of their training material and tutorials so that more people can find value from using your app or website and retain it for an extended period of time.

3) Proactive Approach

Shortlist high-risk customers that are likely to churn by tracking the principal indicators(as discussed above) for leaving.

You can provide them with special discounts or fascinating coupons so they can continue with your services. In addition, try proactive measures like flexible payment terms. It's important because it prevents future clients from becoming unhappy.

4)Focus on High-Value Customers

High-value customers are the backbone of your business. They represent a significant portion, if not all, revenue in your business, and it's essential to hold on as long term as possible.

A good CRM tool can give insights into what’s happening at each stage with these important clients. There isn't anything left unanswered; using this information can help eventually turn those profit centers into loyal patrons who keep coming back again without hesitation.

5)Strengthen Customer Support

This is a no-brainer, right? Invest in quality customer support and focus on delivering great experiences for your customers. There are many ways to increase customer satisfaction and loyalty.

One of the best methods is investing in a world-class support team that can provide outstanding service, which makes customers feel valued as well which helps to reduce customer churn rates as well as the likelihood that they will recommend this product or service to one another – meaning lower acquisition costs across all levels. Neat idea indeed!

6)Improve Consistency

Making it hard for your customers to leave is a surefire way of retaining more users. One good example would be developing new features that keep people around and answering their evolving needs with constant updates on the product, which will increase retention rates in due course!

7) Acknowledge Complaints and Feedback

Listening to your customers’ complaints or feedback is one of the best ways to reduce customer churn.

Ultimately, your customers are the best resource you have to create a product that will satisfy them—listening closely and helping out when necessary is one way of showing gratitude for their loyalty while also reducing customer churn rate.

8)Nail the Subscription Analysis

This is an essential aspect as investing in subscription analytics is like having an inside edge on how your customers are feeling, what they want from you and when to course-correct.

9) Provide Annual Contracts

Your customers are more likely to stay with you if they only have one bill each year, not monthly. With annual subscriptions, there is no need for them to worry about canceling at the wrong time of their choice since it's already pre-paid and charged off when necessary!

A great way in reducing customer churn rate within your company would be by adopting an installment plan instead; this ensures payment failures occur less, simply because we're making sure users know exactly how much everything costs before getting started, which also helps build trust among those who might churn.

10)Execute Smart Dunning Workflow

Dunning workflows are crucial for reducing the amount of lost revenue, but they need to be innovative. For example, you don't want your emails being blocked by a customer who is irritated enough that he's going straight into blocking mode! Thus, a proactive approach is a must!

What Can You Learn from Customer Churn?

Sometimes, no matter how good your product or service is for customers- they still choose to leave you. That’s out of your control but what you can do is find what went wrong so that others don't have this same experience as well!

There are two ways you can do this

1) Exit interviews

You can use exit interviews to potentially reduce customer churn or to find out why your customers are leaving. For example, you might hold the interview over the phone or via online questionnaires.

2) Feedback loops

You can use feedback loops to reduce churn rates surveying your customers. This is because you’re asking for their opinion on what needs improvement and then making changes based on this information, which will make them love the product even more!

What Billsby can Help you Achieve

1)Get customers signed up

Our drop-in checkout enables customers to sign up for your product easily & quickly, with a low development effort.

2) Self-service account management

Users can manage their own account with our drop-in account management tools — efficiently reducing service costs.

3) Keep customers from leaving

When your users think about leaving, our retention and promotion tools can stop them and help reduce customer churn.


Interested in reducing customer churn? You're not alone. This is a significant metric to track for small and large companies alike - it's the difference between success and failure! The first step towards a successful strategy for reducing your company’s rate of turnover comes from slicing up our information on who was leaving as well as how their exit occurred.

Thus, having a customer-centric and powerful analytical tool like Billsby makes churn reduction easier and more effective!