Written by Michael Keenan

January 16, 2020

Depending on the industry you’re in, acquiring a new customer can be up to 25 percent more expensive than keeping an existing one. 

Which makes sense: You can spend weeks working on ways to get new customers into your business and put tons of time and energy into creating the perfect lead generation strategy, but without retaining the right customers, your business will struggle. Future growth relies on one thing — reducing customer churn and the tactics you use. 

To help you understand and reduce customer turnover, we put together six of the best strategies to keep customers around to help generate more revenue for your business. 

What is a customer churn strategy? 

A customer churn strategy is a set of activities a business takes to retain existing customers. Successful strategies use an analytical and personalized approach that can change over time.

While it sounds easy, it can be challenging to get customers to stick with your company in an increasingly crowded market. A good customer churn strategy looks at how many customers leave and the underlying reasons why. If you see your turnover rate going up, it could be a sign that something isn’t working well. It could mean you need to adjust your customer service approach or how and when you interact with customers. 

How do you calculate churn?

Churn rate is the percentage of customers who cut ties with your company in a given period — may it be monthly, quarterly, yearly. You take the total number of customers who left your company in the given period and divide it by the total customers at the beginning. 

For example, say you have 200 customers at the beginning of Q1, and end with 190, you lost 10 of your customers — a 5% churn rate. If each customer is worth $100 bucks to your business, you lost $1,000.  

5 best customer churn strategies 

1. Make a good first impression.

A popular adage in the business world is that you never get a second chance to make a first impression, but companies don’t seem to be applying that to reducing customer churn. Even after someone signs up for your Messenger or SMS list, there are things they don’t know about your products or brand. 

To make a good first impression, Val Geisler, Founder of Fix My Churn, uses a strategy called “The Dinner Party Approach”. A summary of the strategy from her interview with the team over at Intercom is: 

“Think about onboarding like you’re hosting a dinner party. You don’t immediately shove the main course in your guests’ faces. Instead, you get them a drink, show them around, serve some appetizers, then the meal, followed by dessert — and you’re having a great conversation throughout.” 

After you get a new customer (or subscriber), show them the value of doing business with your brand. For example:

  • If you’re in e-commerce, you can send a newcomer’s guide that shows a first-time buyer how to use the product they bought. Over the course of a few days, you can show them creative ways to further use it and discover new value. 
  • If you’re an online coach or agency, you can invite new people to a webinar or view downloadable content based on relevant topics.

What you send will be different depending on each customer segment. The goal is to continue the conversation, even after someone converts, encouraging them to stick with your company in the long run. 

2. Talk with your customers more often.

In addition to great first customer experience, you want to talk more with your prospects and customers. Maybe some aren’t feeling a tie with your company, or they don’t feel that you care enough. Engaging frequently with them can help you build affinity and loyalty, and reduce your churn rate. 

Mention, a social listening tool, struggled with churn as their customer-base grew over 200,000 users. They were already successful with email automation for free trial users, so they decided to use the same approach for paid users. The following types of emails were sent out to this group: 

  • Pro tips that showcased popular features and how to use them.
  • Monthly success stories, which highlighted use cases to inspire and encourage product use.
  • Master class webinar invites where people could learn how to use the software’s features with real examples. 

By teaching people how to be successful with your product, you create customers that stick around. The increased communication was only successful because Mention continued to send helpful resources to customers. Customers won’t always understand your products or services right away, so show them with valuable content and give them a reason to stay.

3. Use omnichannel marketing to stay in touch.

For many companies, the path to reducing turnover requires continuous and real-time communication. These are high-impact actions, and can make a significant change in how and when you talk with your customers. 

To help reduce churn, find different channels to communicate with people where they are most comfortable. An effective way to achieve this is by giving the customer the option of how to receive communication: SMS, Messenger, email, or all. Whether you’re an e-commerce marketer or SaaS owner, you can use a mix of chat channels to:

  • Send back-in-stock alerts to remind people about sold out products they wanted to buy. 
  • Deliver survey follow-ups to collect feedback and better understand the customer’s purchase experience.
  • Promote products. SMS is brief and to the point. You can text customers a special offer and give them a reason to come back to your store or business. Or talk with them in an SMS Live Chat.
  • Re-open the 24-hour Messenger window.  With an email or SMS message, you can send promotions that can only be redeemed in your Messenger bot. 
  • Send purchase and delivery notifications. A simple post-purchase thank you over text can go a long way in creating a great customer experience. 

The channels you’ll use depends on your customers. Use surveys and analytics to identify the channels where customers are most active, and put together a plan for communicating in a genuine, human way. Offer resources, video, live chats, best practices, and blogs where they can always find support.

Go omnichannel with ManyChat today. It’s free to get started.

4. Reward loyalty.

Loyalty programs are one of the best ways to increase customer lifetime value. Which is why it’s helpful for companies to install one to reduce churn. With a loyalty program, you can encourage customers to spend more money with you in return for points, discounts, special offers, cashback, etc. 

One great example of loyalty rewards programs is from Blume, a direct-to-consumer (DTC) company specializing in self-care products for women. 

Blume Loyalty Reward Program
Image: Blume

Blume makes it easy for shoppers to earn Blume Bucks by doing more than just buying a product. You can earn BBs for following them on social media, telling friends about Blume, and sharing your birthday. Customers can also reach Blumetopia, or climb up membership levels where they can earn different perks and prizes. 

Think of ways you can build closer ties with customers and reward them for their loyalty. Even if you don’t have a specific type of customer persona, bring new customers into your brand by encouraging them to join your loyalty program. 

5. Identify when customers are about to churn.

Since churn is a lagging indicator, meaning it can only tell you what happened in the past, you want to learn what makes someone cut ties with your company. Look out for different engagement signals such as:

  • Customers who visit your site less. 
  • Taking actions in your Messenger bot that reduce lead score.
  • Stopping the use of your product or service, or using them less.
  • Leaving a common buying pattern.

If you see a decline in engagement in a customer or group, you can send an email or SMS with an offer. Make sure you send them something they can’t refuse to get them back into your atmosphere. 

Reducing customer churn in your business

Managing churn is critical to the success of your business. There are many ways to reduce this turnover, and many, if not all of them, revolve around talking with your customers. A small improvement in your churn rate can make a significant impact on your long-term growth. It may take some time to perfect, but be patient, and you’ll reap the benefits of keeping customers around longer.

Want to reduce customer churn in your business? With ManyChat, you can build closer ties with customers and extend lifetime value. Try it free today.