Strategies For Product Managers to Reduce Churn
Strategies For Product Managers to Reduce Churn
Customers leave you for a variety of reasons, and sometimes you can’t do anything about it. It’s just time for them to move on. Their lives have changed, their needs have changed, and their circumstances have changed. However, there are times when you can do something to keep them on board. The question is what can you do?
Churn is nothing personal.
Customers leave you for various reasons, and sometimes you can’t do anything about it. It’s just time for them to move on. Their lives have changed, their needs have changed, and their circumstances have changed.
I’ve worked on products where we supplied credit scoring information to businesses on their clients and suppliers, and sometimes their businesses fail and they can’t be your customer any more.
I’ve worked on products where we provided appointment booking software to retailers, and a change in business operations resulted in their decision to not take bookings, so they have no need for your service any more.
However, there are times when you can do something to keep them on board. The question is what can you do?
In this post, I’m not going to look at quick and dirty ways to entice people to stay. There are no discounts or offers here. Just real ways to keep your product on the right side of your customers.
Understand why they want to leave
Without a doubt, the very first thing you need to do in order to reduce churn is to find out why customers are looking to cancel your services.
And the easiest way to find out? Ask!
Whatever your cancellation process is, you need a step in it where you ask people what’s behind their decision.
You’ll soon start to build up a picture of what the major drivers are behind your customer churn, which you can then prioritize based on which are causing you the most problems.
If you identify that people use your service for a short time, for a specific purpose, then maybe there’s an opportunity for you to introduce a new product or a new subscription tier for this market.
If you identify that customers are more financially sensitive, then maybe there’s a chance to have a reduced-priced tier with limited features.
Make sure they know how to use your product
For me, I’m not a huge fan of long onboarding processes. I like to be able to figure out the basics for myself and then dive into the supporting information as I get more familiar with things.
However, if you make it too hard for people to start getting initial value from your product, then many customers won’t hang around long enough to start seeing the benefits.
Ensure that your user experience is intuitive, and make sure that supporting information is readily available, at the point they might need it.
Your aim should be to make it easy for people to get the value they want, because if the scales tip too far the other way, then they won’t invest their time or their money.
Make your customers your loyal supporters
I’ve supported the same sports teams since I was a child and (virtually) nothing will make me change my allegiance.
It’s this loyalty that we should be seeking in our customers, however, that’s a little harder to do than simply being a sports team!
Loyalty comes due to a variety of factors, from value and results that people receive, through a feeling of positivity when using your product, to the desire for them to stand up and share with the world their love for your product (or brand).
Listen to your customers and act
It’s a pretty fundamental act of product management — listening to your customers — but just listening isn’t enough. You need to act on what you hear, else your customers think they’re just shouting into a void.
If they’ve taken the time to tell you something about your product, whether it’s what’s not working or what’s missing, this is an opportunity to a) avoid them looking for it elsewhere, and b) make them a loyalist by showing them how much you care.
Don’t let them disappear through apathy
I’ve covered the use of Dunning Emails in another post, but it is often the case that many customers who churn have simply let their payment methods expire and they haven’t got the motivation to take steps to rectify the situation.
I once worked in a business where a large proportion of the customers (and I’m talking north of 80% of our customers) paid their monthly subscription as a payment directly from their business bank account which THE BANK instigated on our behalf, rather than the customer managing their payment themselves.
This was because our service was packaged as part of the deal for having a business bank account with that particular bank. It was a great position to be as a service provider as revenues were virtually guaranteed.
That was until the day when the bank said, “We’re not able to do that anymore and you’ll need to get the customers to manage the payments themselves”.
Overnight, we were faced with the fact that the majority of our customer’s payment methods had expired and all of a sudden we needed to get them to provide new payment details, or else our business would fail.
This happens with the majority of subscription businesses, as payment card details expire, so you need a robust process in place to keep these customers on board.
Yes, those who are already committed and regular users will notice when their service stops, but those who aren’t quite in the regular and loyal user category might not immediately notice and it just lapses, and your churn rate goes up.
Take steps to keep on top of these people, ideally BEFORE their payments fail.
Of course, there are many details within each of these areas, so take a look at them one that a time and see where you can improve.
Further reading
6 Proven Strategies to Reduce Churn (With Real Examples) by Baremetrics