Webamp guide

Avoid churn - tips for customer retention

Few industries nowadays do not offer a competitive market where it is difficult to retain consumers. Customers' loyalty to companies depends much more on who can offer a solution to their problem and on who can create a memorable experience. If you can't do that, you face what we refer to in the trade as a high churn rate.

Webamp The team
- Specialist
Last updated: 12. dec. 2022

What is churn?

Churn is a technical term that means customer departure. It indicates the number of regular customers who leave your business over a certain period, giving you an indication of how good you are at retaining your customers.

Regardless of the size of your business or the industry you operate in, it is relevant to be aware of possible churns and to quantify your customer loyalty. This way, you have the opportunity to prevent and avoid potential churns - they are costly on the bottom line.

5 signs that a customer is leaving

Churns are impossible to avoid, but if you understand why customers leave, you have the opportunity to focus on how to retain them. To help you on your way, we've compiled five common reasons why your regular customers turn into churns:

  1. Keep an eye on your support
    If the same customer has been using customer support regularly, they are probably having problems with your service or products. It's therefore a good idea to follow up with this customer, as personal and effective may ultimately be enough to keep them coming back.
  2. Monitor your consumers' engagement online
    Social media has a treasure trove of useful comments, questions, reviews and feedback from current and potential consumers. Social media gives you the opportunity to create a community with your consumers, who can provide ongoing feedback and comments on your products or services.
  3. Poor Net Promoter Score (NPS)
    One of the clearest signs that you have unhappy customers is a poor NPS. NPS is a tool that measures how high your customer loyalty is. In addition, loyal customers are usually more likely to recommend your business to their network, making them extra important to retain.
  4. Fixed order adjustments
    Your consumers' activity patterns can tell you a lot about their engagement - or lack thereof. If regular customers scale back their order without notice or change it to cheaper products, they are probably already looking for alternatives.
  5. Unintelligible pricing
    When pricing a product, it is important to take into account trends, economics and the given market. These factors affect consumers' willingness to pay, so it's important to keep an eye on your pricing strategy and how it might affect your churn rate.

How do you calculate your churn rate?

To work with churns as a KPI, you can calculate your churn rate, which indicates the percentage of your customers who replace you as a supplier of a product or service in a given period. You can then compare the percentage with other periods to assess whether any actions have had an impact. Your churn rate will of course depend on the industry you operate in - for example, a general churn rate is higher in the clothing industry than in the banking sector, as people rarely change banks.

The formula to calculate a churn rate:

Number of customers lost over a given period / the total number of customers at the start of the period*100

For example, if you have 1,000 paying customers and 100 of those customers leave you during the period, the formula looks like this:

100 / 1.000*100 = 10%.
You will thus have a churn rate of 10%.

7 tips to reduce churn

As we've been through, it's most beneficial to have a low churn rate, as it indicates that you're good at retaining your customers. If you can already see that a number of customers are leaving you, we've put together seven tips that you can use to avoid churn:

  1. Know your customers
    To have a high customer loyalty, it is first of all important that you know who your customers are. What problems are they looking to solve and what needs or wants are they looking to have met
  2. Coherence
    Once you know your customers' issues and needs, you can determine if there is a connection between it and the solution or product you deliver. If there is no connection between the customer's need and the product you are delivering, you can be sure that they will end up as a churn.
  3. Prepared crisis management
    Mistakes are human and almost unavoidable. It is therefore a good idea to prepare yourself for how to deal with any damage. If you act quickly and effectively in such situations, the customer is likely to end up even more loyal than before!
  4. Give careful explanations and justifications if there are changes in purchase terms and subscription conditions
    This also includes price increases! Changes that are not announced in good time are rarely welcomed by users. However, if you warn of changes with a real explanation, most customers are likely to welcome them.
  5. Keep your customers up to date
    It's a good idea to keep your customers engaged and understanding of your products and services - it's important that they understand if they are to get the full value. You can continually educate your customers by offering free content online such as courses, webinars, e-books and blog posts.
  6. Create a content universe
    In addition to keeping your customers updated on your company and your products, it is a good idea to gather your offers in different places - both on your own website but also on social media, where users have the opportunity to interact with you and each other.
  7. Understand which customers are at risk of becoming churns
    To avoid your customers becoming churns, it is first and foremost essential that you understand which customers are at risk. Once you understand which customers are at risk, you can focus on preventing and stopping those customers from leaving you.

Boost customer loyalty in your business

It is, as I said, virtually impossible to avoid churns. However, if you can identify possible churns, you have the opportunity to reduce the number and still keep your churn rate low. If you're curious to learn more about how you can identify potential churns and avoid repeat customers leaving your business, don't hesitate to get in touch.

Webamp is a digital marketing agency - both a SEO agency, PPC agency and a social media marketing agency. Not only do we know how to work with customer loyalty and avoid churn - we are experts in targeting both through Google Advertising, Facebook Advertising, SEO and SoMe marketing.

Contact Webamp by phone at 70 60 50 28 or by email at info@webamp.dk.

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