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.
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:
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?