Be honest – How many times have you ‘aborted mission’ after subscribing to a service of any kind? And how many times was it within the first months?
A whooping 40% of subscribers to any type of services end up canceling at one point in time, with more than a third canceling within the first three months, according to a study done by McKinsey and Co. on e-commerce consumers.
How about your customers? Do you see a pattern when it comes to subscriptions and cancellations?
If the answer is ‘Yes, I can see a downward trend’, you’re probably thinking what I am thinking.
You can do better. You know you can.
‘If only I could pinpoint where the revenue “leakage” is and get rid of it.’
You can. With the right measuring system.
Customers come and go – how do I make them stay?
You need to understand one thing – why your customers leave. And to find out the ‘why’, you need to start with the ‘how’. How do they leave? After how long? Is it during a certain period/season? After free trials? Do they switch to other services?
Once you’ve measured the circumstantial ‘evidence’, you get a clearer picture and are on the right path to finding out who the ‘culprit’ is.
The first step to uncovering the ‘how’’ is to calculate customer and sales ratios. And the most important metric you need to focus on is the churn rate.
Focus on what now?
Using a churn rate or the most insightful tool for measuring customer satisfaction
Simply put, a churn rate is the number of customers (subscribed to your services) that leave during a certain period of time. While most subscriptions run on a monthly basis, the time frame can vary from weekly to monthly or even life-time.
How to determine Churn Rates
The standard formula for churn rates is the number of customers lost during the interval you’re interested in divided by the number of existing customers (including newly acquired ones). Let’s say, for instance, that you want to calculate the churn rate for the month of April. If you had 500 customers at the beginning of April and you get 50 new ones, while losing 20 existing ones, you will get the following churn rate:
Customers lost / (existing customers + customers gained)
In this case, we get:
20 / (500+50) = 20/550 = 3,6%
As first month cancellations are very frequent, you might want to omit first month subscribers when calculating churn.
What would a 3.6% churn rate mean though?
What is considered a good churn rate?
The best way to determine a good churn rate is to look at industry average and at your direct competitors. Since having a 0% churn rate is nearly impossible for longer periods of time, keeping it as low as possible should be your main goal, regardless of the numbers you’re already pulling.
Lower churn rates means increased profit and is actually less expensive than acquiring new customers.
However, even acquisition and churn management costs can be dealt with organically, through great customer service.
High Churn Rates vs Excellent Customer Service – a Battle Royale you want to take part in
Only one can survive. You either keep track of important sales metrics and invest time and resources in customer service or you most likely struggle with customer retention numbers.
How to fight High Churn Rates and win
- Analyze and understand.
Analyze your services and put yourself in your customers’ shoes to understand what you might be lacking and their motives for leaving. Implement and rely on feedback for the right sales approach.
Here’s a list of possible motives to put things into perspective:
- Product value assessment – the customer may not deem the product worthy of the money he is spending after trying it out.
- Change of priorities – they may have simply chosen to focus on something else. Even though it is something out of your reach, it is still an important factor to take note of.
- The product is no longer needed – the problem they were dealing with is gone.
- Dissatisfaction with the user experience – the product may be hard to use due to unnecessary complexity or to non-existent or unnecessary features.
- Finding a better product – the customer may have deemed a competitor’s product more valuable or more cost-efficient.
- Bad customer service – regardless of how good your product is, most customers will not put up with bad customer service.
- Find out ways to reduce churn by turning feedback into action.
- Optimize user experience – invest as much as possible into an easy to use product and into customizable features. Also, make sure customers have access to clear and precise instructions or to training opportunities.
- Make sure your advertisements are sincere and catered towards the right customers – your product needs to match your buyer’s intent in order to retain customers and gain brand trust.
- Invest in the best customer experience – always find ways to implement feedback and to make sure your customers’ needs are met by a timely and accessible support system.
- Keep your customers engaged – to keep them coming for more you need to constantly remind them of the value you bring into their lives, of how cherished your relationship is and of how great of a deal this is – by providing occasional discounts and renewal perks. Always repay loyalty to increase retention numbers and reduce customer churn.
How to help Excellent Customer Service win
Firstly, highlight free services and trials, perks and discounts to both attract and retain customers. This can go a long way in reducing risk when investing in your product and in making them feel that they are gaining a lot more by using your product instead of any other product.
Secondly, keep them informed about certain topics of interest, about new product features or about new launches. This way, you keep them updated about their desired or already owned product as well as keep their purchasing options open specifically to your products. You can do this by offering:
- Free webinars
- Tutorial videos
Thirdly, solve their issues promptly and efficiently.
A quality support system is essential for customer retention. Do not test their patience or keep them in the dark when it comes to addressing their concerns or fixing their issues as this can lead to immediate cancellation and to increasing damage to brand image.
Fourthly, always be prepared and informed when interacting with customers.
Keep your customers’ relevant information updated and use it to your advantage. Knowing their activity, interests, fears and goals and presenting your product and service accordingly can be a deal sealer. Moreover, knowledge is power and confidence. Knowing your buyers will give you the leverage you need to outsmart your competitors and make the customers understand why your product is a match made in heaven for their needs.
What do I need to make this happen?
You need three things.
- An understanding of the importance of sales metrics such as churn rates.
- A good marketing and sales strategy. One that is customer and needs-driven and that is focused on optimizing customer experience. Such as a consultative sales strategy.
- A great Customer Relationships Management (CRM) Solution for your business.
How a good CRM System makes customers stay for good
Good customer relationship management means, first and foremost, the best solution for excellent customer service, which, as we know by now, is the best answer to high churn rates.
How, exactly, does a CRM System improve services?
It tackles three fundamental things essential to a good management –
- It facilitates information storage and flow.
A good, centralized database is probably one of the most important assets a company can have, regardless of activity or industry. It gives you the tools necessary to take the reins in your customer relationships and have ideal order and coordination, which ultimately leads to a better sales process and increased customer satisfaction.
- It keeps track of prospects, leads, customers and sales processes.
Tracking every transaction and sale made is most of the time eye-opening when it comes to understanding why customers do not go forward with a purchase and at what point in your interaction they give up on your product. This type of information can in turn be made into helpful reports for understanding churn rates better.
- It offers procedural solutions to solve customer issues
A CRM System can provide you with ways to deal with customer complaints or product issues. Having their problems tackled in a timely manner will definitely lead to good reviews and will strengthen brand image and social trust.
How can I tell which CRM Solution is the best one for me
You need, first and foremost, to look for a good, customizable database and for an efficient sales tracking option. Secondly, you need a problem solver. A fast and reliable one – such as Zimplu CRM.
If you want a software that helps you accomplish all of your customer related targets – you have the option to try Zimplu CRM for free by creating a Free Account, HERE.
4 ways in which Zimplu CRM can turn those churn rates on their heads
It all starts and ends with the quality of your customer service. A CRM and more specifically, Zimplu CRM, is set up to provide you with the best options for excellent management of all your customer interactions:
- Great database options – customizable filters and functions to have the best customer interactions and the most accurate customer targets.
With Zimplu, you will be able to filter sales based on products and assigned agents; time frames and other criteria for optimal understanding of a sale’s success or failure. You will also be able to filter types of customers for a better segmentation of your target audience. This will also increase your accuracy in product presentations. Getting an idea of what makes a sale’s momentum and of which segments your products should cater to will give you a better reach to your audience and higher retention numbers.
- Tracking sales opportunities, especially lost opportunities and identifying deal breakers.
You will definitely notice recurring reasons when comparing it to subscription cancellations. And based on these recurrences, you will be able to more accurately identify the changes that need to be done to seal more deals and retain more customers, as well as the most important things you need to focus on to develop a better sales strategy.
- E-mail, Calendar, Excel integration options for easy information flow and coordination.
Zimplu CRM is an easy to use software, starting from its implementation up to your first sale and beyond. The many integration options are one of the main reasons why it only takes a few clicks to import and synchronize data from Calendar, Excel and Email. Aside from always staying on top of things, E-mail integration is a wonderful tool for tracking feedback, customer interactions, campaigns and promotions and many other email related activities.
You thus centralize and manage everything from your Zimplu account. This will help you to not lose yourself in tons of email records or drafts. Moreover, you have both great internal organization and increased customer satisfaction by never having them miss out on any emails and by never forgetting to follow up on your services.
- Offering a ticketing solution for dealing with any customer issue.
You can deal with any issue in an orderly, fast and controlled manner through the Zimplu ticketing system. You can easily track the status of the situation, the steps taken, the person in charge and the resolution to ensure everything is handled in the most efficient way and that the customer is feeling prioritized and in good hands. Having a good ticketing system can greatly reduce response time to issues both internal and external and will most certainly lead to happy customers that will stay for a long, long time.
Don’t take my word for it and test Zimplu CRM for yourself, HERE.
All good things eventually come to an end
Yet your journey is only now taking off – Now that you know what it is you need to focus on and how to act moving forward.
Before you fly off towards new horizons and fantastic business ventures – here is a brief summary of what you should take with you:
- You need to understand why and how your customers leave.
- You need to keep track of churn rates to counteract future losses.
- Churn rate is the number of customers (subscriber to your services) that leave during a certain period of time.
- The standard formula for churn rates is the number of customers lost during the interval you’re interested in divided by the number of existing customers (including newly acquired ones).
- The best way to determine a good churn rate is to look at industry average and at your direct competitors
- Between high churn rates and excellent customer service, only one can survive.
- Fight high churn rates by analyzing and understanding your customers’ reasons for leaving and what your services might be lacking and by implementing feedback.
- Help customer service win by highlighting free offers and perks, by keeping them informed about your products and different subjects and by solving their queries promptly.
- Make customers stay for good with a CRM System that facilitates information storage and flow, that keeps track of prospects, leads, customers and sales processes and that offers procedural solutions to solve customer issues.
- Choose Zimplu CRM as your partner in fighting churn rates and you will:
- Have access to a great, customizable database;
- Track sales opportunities and especially, lost sales opportunities;
- Integrate Email, Calendar and Excel for easy data management;
- Solve customer issues efficiently through a ticketing system.
If you’re ready to pull the numbers your products and services deserve, start with the right software for your business. How can you tell you’ve found the one for you? Try it out and see for yourself.
Try Zimplu CRM for free, HERE