How to Improve Customer Retention

If success teaches you one thing, then failure makes you learn 10 things.

In the subscription business market, losing a recurring customer is no less than a failure, yet it is an experience. And in this blog, we are going to enlist all reasons why customers churn. What does this failure teach? And what are the best churn reduction strategies?

You will find answers to these important questions here, but first, you need to have a cursory glance at the importance of customer churn for subscription businesses.

Importance of Customer Churn

Customer: “I think we should end this relationship.”

Subscription Business: “We can figure things out, let us compensate with something amazing.”

Customer: “No! this is it”

Subscription Business: “But…”

Customer: “Let’s just part our ways!”

It sounds like a usual conversation when people break up. In the subscription business market, when a customer cancels the subscription, it feels exactly the same as when someone breaks up with you. Customer retention management is the most important factor for the success of a subscription business because recurring revenue retention is directly proportional to customer retention.

The point is subscription businesses work on the principle that rather than wasting resources to find a new targeted market, it is better to retain the existing customer base.

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Statistics show that it costs 5-25% more for acquiring more customers than for retaining the existing customers. So, it is evidently clear why SaaS companies and subscription businesses are so obsessed with the customer retention rate.

It is time to see what are the reasons for customer churn.

Also Read: Important SaaS Customer Retention Metrics for Subscription Businesses

Why Customers Churn?

Now that we are determined to nip the evil of customer churn in the bud, it is crucial to know the reasons that cause the customer churn. And here are the factors that cause customers to cancel subscriptions:

Product Value

The product value means the advantages that a product offers to the customers. And the most important factor that makes or damages the value of the product is the product lifecycle. In the product lifecycle, there is a time when the product is at its phase of maturity. However, after maturity, Decline starts.

What has to be done is to prolong the product lifecycle. SaaS companies offering SaaS products and services can feasibly do that by improvising their SaaS product over time as per the new trends in the market. Add-ons and integrations can be offered to maximise the product value for customers.

Other than product lifecycle, the price of the product is also important when it comes to the value of the product for end customers.

Price of the Product

As the SaaS product is improvised to prolong the lifecycle of this product, the price and pricing plans also need to be changed with time to retain customers. If prices are not kept as per the affordability of the customers, you cannot retain your customers.

It is important to keep your marketing and sales teams active to decide the right price of the product that you sell. They need to monitor your pricing plans in comparison with the pricing plans of your competitors.

Also, when customers are offered add-ons the pricing is adjusted in the invoices accordingly. Still, pricing plans need to change with time so as to retain the customers. Sometimes, new entrants in the subscription business market offer cheaper prices to attract customers. So, you also need to keep an eye on these people, and if required, make required adjustments in your pricing plans.

Market Competition

You would have heard from many people that the subscription business market is highly competitive. It is becoming more and more difficult for new people to find entry points in this competitive market.

Thereby, sometimes this competition becomes a reason for the churn. Today, the customers are very educated and they have many sources of information that keep educating them. Your competitor might have a better plan to lure the customer base that you are serving. That’s how it becomes a reason for the churn.

Poor User Experience

Sometimes, customers onboard, and they leave as soon as they onboard. It is because the experience that the customer was expecting is not being provided to him. Though it can also happen with your old customers, usually it is experienced in the case of new customers.

From all these reasons, you need to learn a lesson and come up with a strategy that can help you beat the increasing churn rate.

Also Read: 10 Most Important Customer Success Metrics for SaaS Subscription Businesses

Customer Retention Strategy

To fix customer leaks, all strategies focus on Customer Experience. Customers leave only when you are not offering them the experience that they expected, and they have already found someone who is willing to offer them whatever satisfies them. So, when you are working on customer retention for SaaS or any other subscription business, just focus on the customer experience. Communicate with the leaving customer. If subscription cancellation is the only option, and you fail to make him agree to stay on board, then at least, make him fill out the feedback form for you so that you will have a list of things where you lack and need to work. A better customer experience can be offered to retain the existing customer base.

Every subscription business wants customers who are not only happy with what they offer but also give a loud shout-out about how good they are so that more customers also attract to their business. But it is not easy to onboard such customers. You need to work on customer advocacy to bring such customers who retain as well as bring more customers to your business. Customer advocacy is to make your product flawless to the level that the customer base starts discussing the product with others and recommending it where ever they go. So, other than customer experience, also work on customer advocacy when you create customer retention and growth strategies.

And the last resort for customer retention is to offer them new yet cheaper pricing plans, discounts, and coupons so that they stay on board. However, let the effect of these benefits not wither away with time. The customer will stay on board because of these benefits, but you need to work on a strategy to make him stay in the long run.

At this point, you know the reasons behind the churn and solutions that can be helpful in curbing this problem. The SubscriptionFlow team has spent days and nights to come up with RetentionFlow. This application is the outcome of the efforts of our team that can help you avoid customer churn.

Also Read: Why & How After sale Services Can Enhance Customer Retention For Subscription Business

RetentionFlow—An Ultimate Solution to Your Churn-Related Worries

The principle of RetentionFlow is to opt for a proactive approach. It means don’t act when the customer notifies you that he is leaving rather be vigilant and pinpoint all such customers based on their behaviour who can leave in the future. RetentionFlow is developed on such algorithms that enable users to track the customer journey.

And based on this tracking, certain factors are set, and these factors define a grading in percentage. This grading helps in reading the churn score whether it is good, moderate, or at risk. The churn score is shown based on these factors. This churn score is easy to read and easy to comprehend with RetentionFlow.

Churn score is used to know in advance which customers are likely to cancel the subscriptions. And you can immediately communicate with them.

So, if you are convinced that RetentionFlow application can help you improve your customer retention techniques, then schedule a demo with SubscriptionFlow or contact our experts now.