Recognizing you have churn issues is the perfect first step to combat it.

Preventing customer churn is not easy and sometimes is simply unavoidable. But with new agencies popping up day by day, the market becomes more competitive. And agencies with churn issues have become just careless.

Nowadays, customers have a lot of options, they know that, and that is precisely why they want to find the best one for their needs. Remember, it is all about them. In their mind, you are there to provide aid, and if they see you lose interest in assisting them with their problems, they lose interest in paying you.

In this extensive guide, you will learn how to keep your customers engaged with your services using strategies on how to reduce customer churn and the benefits of customer retention for your agency.

So, let’s start with the basics.

What Is Customer Churn?

Customer churn refers to a metric in customer retention. This metric measures the number of customers you have lost in a certain period, and it is often calculated as a percentage. The customer churn rate. But there are different ways of measuring customer churn according to what you intend to know.

How to define customer churn might be up to you and what you intend to measure according to your goals. Here are some ways you can calculate customer churn so you have an idea of what you want to know:

    • The number of customers lost:
      (customers at the beginning of the period – customers at the end of the period)
    • The recurring value lost for a year:
      (money from one customer*12*customers at the beginning of the period) – (money from one customer*12*customers at the end of the period)
    • Percentage of customers lost:
      (customers at the end of the period / customers at the beginning of the period)
    • Percentage of recurring value lost for a year:
      [(money from one customer*12*customers at the end of the period) / (money from one customer*12*customers at the beginning of the period)]*100

You can choose any churn indicator that gives you more insight.

To be blunt, churn means your agency is losing money, and probably credibility as well as positioning. So you want to keep this rate as low as possible, but to do this, you have to understand why it happens.

Why Do Customers Churn?

Right now, you are bursting with excitement to know how to prevent customer churn, or maybe even bring it to zero. But before you set high expectations, there is a harsh truth you have to know. Your churn rate will never be 0%.

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Some reasons you have customer churn have to do with how you do things in your agency. But some others are just about the customer and you not fitting.

The first step to prevent customer churn with future customers is to understand why it is happening now. So, take note of the issues you can relate to from the following.

Not a Good Customer Fit

This is the most basic issue, and ironically, lots of companies still make this mistake.

You must be clear about who your ideal persona is, who is the audience you are selling to, and why. Otherwise, how are you going to sell your services to someone who is not looking for them or does not even need them?

If you know your ideal persona, then you know what they are trying to achieve and what stands between them and their goal. Your services should help them reach those goals. So, if the problem is about fit and you do not worry about it, you might have lots of clients at the beginning, but they will just leave with time.

Customers Go to Your Competition

Remember what we talked about earlier?

Customers have a lot of options nowadays. If you don’t convince them about your services, they will go to your competition for a promise of more value.

This is where you have to differentiate from your competition by offering something that only you can do better and that is, obviously, beneficial and high valued by your clients

Ineffective Onboarding Process

Customers want to feel safe about making business with you. They want to know you want to help them and you will be through the entire process with them. Most agencies lose customers because of this. They close the sale and go to work, but they don’t check on the client again until it is time to pay.

Many customers will never admit this, but all of them have unique requirements, especially when it is about closing big contracts. That is why you have to ease their doubts from the beginning and guide them through an effective onboarding process.

As much as you want the money, think about making your customers stick around.

Lack in Personalization

As the business of your customers grows, so do their needs. Companies will not keep using the same services that met their demands five years ago because their needs might not be the same. And as the needs of businesses keep evolving, service providers have to improve in meeting these.

Bad Customer Service

This is very similar to the one about the onboarding process, but is more about how you solve your customer’s inquiries.

If it is super difficult for your clients to reach somebody in your agency, to solve a question or a problem they may have, your processes are wrong. According to Genesys, three out of ten consumers ranked first contact resolution as what is most valued in customer service.

When you don’t solve your customer’s inquiry in the first interaction, and it goes days and even weeks with no apparent resolution, it leaves an unpleasant aftertaste. And your clients will not go through the hustle again.

Churn…

Customer Merge With Another Company

Your client is bought by another company and merging into one business does not happen a lot, but is still a possibility. This is out of your hands.

Strategies to Reduce Customer Churn

Now that you have a wider view of what customer churn looks like, here are some strategies to help you reduce customer churn and embrace the customer retention approach.

Understand Your Persona and the Problem You Can Help Solve

Think about the problem you are trying to solve for your customers. Once you have this clear, don’t exaggerate the capabilities of your services. Be honest about what you can achieve.

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If you don’t set expectations from the beginning, and have a clear approach to your process, most clients will get discouraged when you send them your deliverables. And this may be because the value you are providing is not the one they are looking for, or simply they expected more and ended up being disappointed.

To avoid this, make yourself these questions:

  • What am I solving?
  • What am I going to deliver?
  • How much time is it going to take me?
  • What features am I offering and what do they mean to my client?

Knowing the answer to these questions will make it easier for you to set expectations early on.

Offer More Value Than Your Competition

Now, let’s say things are running smoothly. You have all your stuff together, and the days seem peaceful and are brimming with hope. Sorry to disappoint, but you can’t let your guard down.

Competition makes things harder for you, but it sure helps you improve way faster than comfort. Differentiate yourself from your competition by improving your services over time, adding new features, boosting your processes… anything, but stay competitive.

Look at the example of Toast.

This POS system stays competitive by adding a list in their website of all the features they have to offer and how these compare to those of its competition. By doing this, Toast shows value and differentiation by staying relevant even when the Covid-19 hit.

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If your company doesn’t constantly embrace change, new needs, or market trends, it will not last.

Fix Your Onboarding Process

  • There are a lot of ways to do that, so to guide you through all the onboarding process, it would be something like this:
    Make sure your customer has access to a list of all the features your agency offers, and that they know what the deliverables are. This sets expectations from the beginning about what you can achieve.
  • Check on your clients through all the processes. Not every day (don’t be clingy), but maybe once or twice a week. This also depends on the relationship you already have with them. If they are completely new to your agency, check on them as much as is comfortable for them. For your most seasoned customers, communication can be just standard.
  • If you are offering software, for example, make sure you educate your clients on how to use it. The faster they can use it, the better they can enjoy it. You can use video tutorials, a frequently asked questions section, or even a little interactive tutorial on the platform step by step.

Look at the example below on how Quetext makes sure their clients can use their product ASAP with a little tour:

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Keep Improving Yourself

Making yourself more valuable over time is going to keep your current customers or attract new ones. We all want the best. But how do you achieve this?

FEEDBACK

The ones who know how you can win them, or make them even happier, are your customers. Successful agencies always ask for feedback.

Don’t wait for clients to leave so you can attack customer churn actively. After all, US companies spent 240 billion dollars in advertising to get new customers in 2019, but the cost of customers feeling like nobody is listening to them is a 75 billion dollar problem today. And that means US companies are losing 31.25% of the money invested in customer acquisition.

The lesson here is to listen to what your customers want. And actively incorporating these suggestions.

Have Outstanding Customer Service

Help your customers reach you and make these processes as simple as possible. And when I say to make it easy for them, I mean you have to make sure there are a lot of communication channels open. Let them reach you by phone, chat, email, or even give them the option to book a zoom call.

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Also, educate your staff, so they show they’re happy to help your customers. Of course, this goes all the way down to having a pleasant work environment and treating your staff with respect.

Create a Community

We all want to be part of something. When you create a community where your customers can interact with people with the same goals and problems, they don’t feel alone. As they network with other people, your clients realize they can always count on your support and of those new friends.

You can achieve this with discussion forums, webinars, events, or even a Facebook group.

Track Your Churn Rate

Realize instantly if something is going wrong. As much as your processes are flawless and you follow all the instructions on reducing customer churn, there is always going to be something you can’t easily see.

Give yourself goals to keep churn on the line. For example, keep your customer churn at 5% or less, if it goes up, show up and realize why. If it stays the same, don’t relax and keep looking for ways to make it lower.

Benefits of Customer Retention

Reducing your customer churn by using these strategies comes with its compensation. If the customer churn goes down, customer retention goes up. The first part was about how you can make your customers happy. Now this section is how they return the favor to you.

Loyal Customers Will Recommend Your Brand

Word of mouth is powerful in marketing. From there the usual question on surveys that says “How much would you be willing to recommend this brand to friends and family?”. We all know that one.

Most businesses in their early stage have survived with word of mouth. When you gain the trust of your customers, they talk on your behalf and even send referrals your way. Studies show 83% of customers will provide referrals after a positive brand experience.

Loyal customers are the best customers.

You Can Earn More From Loyal Customers

The probability of selling something to an existing customer is 60% to 70%. This means that once you have gone through all the initial process of building trust and retaining your customers, it is easier upselling or cross-selling to them.

Here is how:

  • Upselling is about giving your customers a version of your product that is higher in price, but offers better quality. Offer your customers an upgrade to the services or software they already use.
  • Cross-selling is about selling a product that can meet possible unfulfilled needs of your product. Offer your customers complementary services with the plan they already paid you for. This can be more features or audits.

Upselling and cross-selling are key strategies to help you grow your business and your customers’ business. But remember, you should only offer these upgrades or complementary services if you think it would be beneficial to your customers. They don’t need this if the service you provide to them already covers all their needs.

Retaining Existing Customers Is Cheaper

Companies spend thousands of dollars reaching out to new customers, they advertise, send emails, do marketing campaigns, reach out on social media, use content to drive traffic, and these are just a few strategies. Besides being expensive, it is a lot of work.

But when you already have a customer, things like keeping your blog up to date, sending emails with newsletters, and providing excellent customer service will do the trick. And it comes with higher profits when you upsell or cross-sell.

Loyal Customers Will Help You

You read right!

Happy customers are your best allies, not just because they keep paying you. But because they are the ones that fill your surveys and answer your questions with insightful data. They want you to improve, so you can serve them better, and they want to approach you simply because they love your brand.

But there is more. Some customers will do free advertising for you when they are happy with your brand. Nowadays there are a lot of opinions of companies or brands on social media. Look at this satisfied customer advocating for Hubspot:

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This sole post can generate a lot of revenue for Hubspot.

Loyal Customers Are Forgiving

Even after they have a bad experience in customer service, or there is some problem they need to be solved, but it takes more than expected, they will let it slide because they love your services. But keep in mind, this is not a lifesaver, this is just a little advantage, so don’t repeat it.

Loyal customers are forgiving, but they have their limits. Don’t even try to reach that limit.

A Zendesk Success Story

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When it is about making their customers happy Zendek is on another level. Look at this case study on how they reduced churn by being proactive.

Zendesk’s Challenge

Zendesk didn’t want to be the kind of company that only checked on their customers when it was time to renew their subscription. And also, they wanted to solve their customer’s problems before these escalated to customer churn.

Zendesk’s Approach

This resilient company implemented a Customer Account Management team (CAM). The team was in charge of checking on Zendesk’s customers during a year with scheduled phone calls and emails. These check-ins were purposely to solve any issues customers had with the platform, and provide information and resources so they could get the most out of Zendesk.

Zendesk’s onboarding process was long, but it was flawless and hit all the spots when it came to trust. They really showed interest in helping their customers.

Results

Not only did Zendesk lower their churn rate, but they also gained more customers through referrals. And their existing customers wanted to upgrade their subscription.

This just shows that retention is a much better approach than acquisition.

To Wrap Things Up

We all have companies we love to buy from and make us feel understood. Now, your job is to identify those companies, and start thinking about how you are going to make your customers feel the way those brands make you feel.

After all, just the best brands are the ones that keep that little spot in your brain. A spot that activates whenever you hear a problem related to the solutions they offer. And as you are so satisfied with them, and think they can help solve this problem, you go to the problem bearer and make a referral.

What are the brands that popped up in your mind while reading this post?

Comment below and let me know.

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