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What is Customer Churn? – Why it happens and How to reduce it?

Akash Goyal · April 28, 2023 ·

Picture this: You spend a lot of time taking care of a fruit tree, waiting for the fruits to grow. But then, the fruits disappear! That’s sad, right? That’s how businesses feel when they lose customers. Every business, especially those that sell software online (called SaaS), wants to keep their customers happy. This is important because:
  • Turning a lead into a customer takes a lot of work.
  • It’s much easier and cheaper to keep a current customer than to find a new one.
For SaaS companies, “churn” means losing customers or the money they bring in. With 9 out of 10 SaaS businesses failing, it’s super important for them to keep their churn rate low. Churn is a big problem that needs to be fixed quickly. Even a small amount of churn can hurt a company’s value and how much money they make. Keeping customers satisfied is the key to a successful business.

Table of Contents

  • What is Customer Churn?
    • Why and How does customer churn happen?
    • How to reduce/prevent customer churn?
    • Understanding the Difference: Customer Churn vs. Lead Churn

What is Customer Churn?

Customer churn is the number of consumers who have ceased utilizing your products and services over a period of time. There are few companies that can bear this for a period of time, but most of them cannot stand this condition for long. They either shut down or make changes to their plan. For this reason, it becomes extremely necessary to calculate the churn rate. It’s both a scary and an important metric to note. The churn rate can be calculated by dividing the number of clients you lost over that period by the number of customers you had at the start.
Churn rate can be calculated by d by dividing the number of clients you lost over that period by the number of customers you had at the start.
Source: Kpimax

Why and How does customer churn happen?

Customers churn due to any of the following reasons:
  1. Customers have trouble using your product: Find difficulty understanding the technicalities of the product.
  2. Customer experience: This is one of the underrated but the most important reason for customers leaving your business. They don’t just leave out of the blue but might face issues that weren’t understood or answered in the required manner.
  3. They don’t feel the need for your product at that point in time.
Figure out a way to create a permanent recall, so that when need the product later, they have you at the back of their head. Using TeleCRM filters, one can easily segregate these leads and run a bulk message WhatsApp campaign.

How to reduce/prevent customer churn?

If you want your customers to stick around, it’s very important to understand how can you reduce the churn rate.
  1. Call your customers regularly-  Schedule time to talk to your customers in 1×1 conversations. Be keen on knowing what they love and what they ignore about your product.
  2. Send new customers a personal WhatsApp text/ video message- Once you onboard a set of new customers, send them a personalized video/ text message which will help the customer feel like more than just a number, and will help establish a personal connection.
  3. Focus on product stickiness- The more people rely on and depend on your product, the more they tend to stick with it.
For instance, TeleCRM is one such Sales CRM software that serves all the calling needs of businesses in one single place. That is one can place calls, and send SMS, WhatsApp, and Email, from one single place. telecrm lead page | Customer churn Can even receive leads directly into the system through various available integration. As a result of it what happens is, that users tend to spend their entire day at one single place, incorporating its use in almost all their activities.
  1. Increasing value over time- Continue giving your clients more than they expect.
  2. Keep educating your customers- Because it builds customer trust, reduces complaints, and enhances customer loyalty.

Understanding the Difference: Customer Churn vs. Lead Churn

Customer Churn

Lead Churn

Meaning

Customer churn is the number of consumers who have ceased utilizing your products and services over a period of time.

Lead churn is basically the number of leads that are leaked out from your system when the executives fail to nurture them.

Why does it happen?

1. Customers have trouble using your product.


2. Customer Experience.


3. Doesn’t fit in their use case.

1. Disconnect between marketing and sales.


2. They remain untouched for a longer time.


3. Found the product difficult to use.

Ways to Reduce

1. Call your customers regularly.
2. Send new customers a personal WhatsApp text/ video message.
3. Focus on product stickiness.

1. Through distributed calling campaigns.
2. Through WhatsApp/SMS campaigns for retargeting.
3. By taking care of the incoming queries through incoming calls and WhatsApp etc.

Tackling customer churn rate and lead churn rate can be a tough challenge. However, having a well-organized system to understand your customers’ needs can make a difference. With just a few easy questions and the right tools, you can quickly get a handle on the situation:
  • Which customers aren’t actively using our product or service?
  • Who has stopped reaching out for support?
  • What’s the overall pattern of support requests?
Using smart strategies, such as making targeted phone calls, sending bulk WhatsApp messages, and following up with customers can be a real game-changer.

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