October 12th, 2022

When there's so much focus on attracting new users, it can be easy to neglect retaining them. And this kind of neglect can be detrimental.
Losing users is known as churn. It can affect every facet of your business, as reduced customers translates to reduced profits. This can lead to a downward spiral where you're actively losing customers and elevating advertising costs to acquire new ones.

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We're going to discuss how you can keep churn to a minimum, what kind of influence churn has and how you can retain an efficient business model with churn in mind, increasing profits.
Defining User Churn Rate:
The percentage of a business's total subscribers/customers/users that elect not to return to your platform or product within a specific time period is what's known as user churn rate (Source). This could be in the form of a streaming service subscriber canceling their service or an online gamer choosing to leave a game with a monthly fee. Keeping tabs on your churn rate is a metric that requires regular monitoring as it has a direct impact on your organization, how well it performs and the amount of revenue you're able to secure.
Churn rate can help identify what's working in your business and what's not and even drill down further to identify why your users choose to leave and what tactics you can employ to keep them coming back instead.
What can you learn from churn?
Churn data is crucial in clarifying:

• How satisfied your customer base is and how you can improve it further.
      
• What is causing your users to leave your platform for good.
      
• The number of regularly acquired users compared to the number of regularly lost subscribers, highlighting your business's level of success.
      
• Whether your efforts to retain customers have been successful (Source).
  
  
  

What churn rate should you aim for?
Ideally, you should aim for a churn rate of around 3.5% each month and 6% each year. Your users may choose to quit at any time, but if you're noticing a rapid loss of subscribers, you'll need to make some significant changes if you hope to keep those who remain.
What makes your subscribers want to quit for good?
This is a complex question and there is no single reason why your users might leave, but here are some common reasons:
    
Strained customer relations: This can occur if you're failing to foster strong relationships with     your customer base. A weak connection can lead to a user severing ties with you swiftly.     
    
Unresponsive/weak customer service: This is a big one... On average, 4 out of 5 users churn as a result of substandard customer service (Source).     Ignoring feedback from customers is statistically detrimental to any business.     
    
Bad first impressions: If a user finds their needs are not met after sign-up or if they find your product difficult to navigate due to poor instructions or tool tips, they're likely to look for other solutions from your competitors.


So what can you do to keep churn to a minimum?

• Make an FAQ available: An FAQ is one of the simplest ways customers can learn about the ins     and outs of your service. Make sure it stays up to date! A good FAQ page should be updated and improved often as your service changes.     
      
• Recognize and offer incentives to active users: Focusing on the users most susceptible to churn is not always the best route. If you can offer enviable rewards to those who love your service, they're more likely to elevate to the next paid tier of your service (if available) or make additional purchases from your platform.     
      
• Give your users a voice: As mentioned above, a lack of user satisfaction is one of the most common reasons for users churning. Provide a way for users to leave     feedback on your product... and pay attention to what they have to say! A feedback option helps users feel like they're working with you and are part of the solution, garnering valuable trust and loyalty.     
      
• Offer annual subscription options and rewards: Some users are confident they're going to be using their service for a while.  Although it's most common for users to renew subscriptions each month, consider providing an option for them to subscribe for a year at a discount. When available, users who opt for annual subscriptions are typically more familiar and capable with your product and spend more on your services on average. Businesses without an annual subscription option typically suffer triple the churn rate of businesses that do provide one (Source).

Get in touch with us to discover how Predikat can make all this easier, minimizing your churn while maximizing growth.

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