Every time I see my customer churn rate rising, and my users disappearing into the primordial obscurity from whence they came from, I’m reminded of a story I heard when I last visited England.
It’s a story about a knight who wanted to build a castle on the cliffs.
Once upon a time
There lived a good knight. The villagers liked him. He was fair, generous, and looked after them. They wanted to help him build his own castle.
The knight picked the perfect spot – it was high overlooking the crashing Atlantic waves. He had a team of skilled masons and artisans to help him. He poured all of his considerable resources into building his castle.
And things went well – at first. The castle grew strong and sturdy. Everyone who passed said that it would be the grandest castle in all the kingdom when it was finished.
But ‘finished’ never came. Every Sunday night, one of the towers would crumble into the sea.
The workers could build another, of course, and they did. Work progressed. But things were a lot slower because every Sunday night, another piece of the castle would fall into the sea.
Then one day, a fairy whispered in the knight’s ear that a wicked dragon was living in a cave deep beneath the castle, and it gnawed at the roots of the cliff.
She also told him that he must hurry because the dragon would continue to eat away at the heart of the cliff until the castle, the village, and eventually, the entire island crashed into the sea.
Of course, you can guess what happened next. The knight strapped on his armor and went into the cave. He slew the wicked dragon, and everybody lived happily ever after.
Castles are like businesses, they need maintenance
We focus a lot of resources into our marketing and sales departments, hoping to capture as many quality leads (towers, walls…) as possible.
But, while new leads and clients are pouring in, some are dropping away. This slows and weakens your `castle’ building project.
This lead-in/lead-out process is called ‘churn’. It’s often calculated as a percentage – you take the total number of customers who left your company during a given period and divide by the total number of customers at the beginning of that period.
Frederick Reichheld of Bain & Company, the inventor of the net promoter score – a metric that is used to gauge the loyalty of a firm’s customer relationships, conducted a research in which he found that Improving your customer churn rates by as little as 5% can increase your profitability by up to 95%.
It’s quite the dragon, and fighting it sometimes feels like an uphill battle.
In this post, we’ll help you to get that customer churn rate dragon on a leash!
Let’s take an in-depth look into how and where churn happens, and how you can slay it!
#1 Why focus on customer churn rates?
There are lots of metrics marketers can focus on. Some of them include revenue, margins, growth, etc.
Churn is a unique metric because it provides insights about your company’s health, and its ability to grow.
If there’s one thing I could say about customer churn rate is that: paying attention to it – pays off.
For instance, you can boost sales efforts with a 60%-70% success rate when selling to existing customers. That drops to 20% in the case of new customers. Clearly, saving your existing customers from churn is a winning strategy.
Overall, working with churn can help you reduce risks, and to grow stronger, faster. This is particularly important as we head into our current brave new world.
Email marketing is one of the best tools at your disposal when it comes to getting the Churn Dragon under control.
#2 Where to start with churn rate reduction?
There are many ways to tackle the this dragon, but all of them boil down to two of marketing’s major pillars:
First Pillar: Providing value to your email list recipients
To be successful in email marketing, it’s important to provide value for an audience.
That can be by simply explaining how your product or service can work for them – but the principle trickles down to every email communication.
You can, and you should provide value with every email.
Whether you’re entertaining your audience, offering them something, or giving them vital information, the value can be woven into everything you do.
Second Pillar: Building emotional connections
Email marketers who weave personalization into their brand communications, can get their clients’ attention and through it, they can create emotional attachments that will last.
In the same way that the masons in the story were invested in helping the knight build his castle, forming connections with our customers builds the kind of loyalty that puts modern brands ahead.
Why does this work? Because people get attached to other humans (and pets, and concepts, and brands…) through interactions.
They don’t get attached to deals just because they’re deals, and they don’t want to communicate with your brand unless they were motivated to do so via a sense of relationship.
Let’s take a closer look at how holding true to these pillars of email marketing stops the customer churn dragon from gnawing away at your business foundations.
#3 How to increase value and keep your subscribers coming for more
Send blogs, case studies, webinars – the list of talking points you could use with your clients is endless.
What rings true for your nurture list will usually also interest your active subscribers.
That being said, don’t send out emails just for the sake of it. The customer churn rate dragon thrives on spam. Don’t feed it irrelevant content.
This email from charity:water is a fantastic example of a communication that is both relevant and valuable for users:
It shows the reader exactly where their donation is in the process chain (relevant and personal) and at the same time provides interesting and valuable information that will bring the brand and user closer together. Features to note include:
- The header – use of the word ‘update immediately lets the reader know that this is a communication about their particular donation.
- The flow – information is placed in easy-to-see chunks, broken up by informative graphics.
- The charts – things like the timeline and the chart here tell the hurried reader about their particular donation at a glance.
- The language – the use of questions (‘Remind me…?’), and personal pronouns (‘…you helped fund’) help to keep the conversation personal and relevant. The donors will be keen to receive updates on the progress in Rwanda.
Keep your subscribers up to date. Let them know what’s new.
One of the main ways in which any relationship falls apart is when parties lose sight of how the other part is faring, and fail to establish communication.
By involving them in your progress, you keep customers engaged, which will stop them from falling off that castle of yours, it has a high cliff after all.
Let them know what’s new with you. Tell them about what you’re working on.
Use email win-back promos
`Unchurn’ subscribers with engaging email automation
Set up email automation that will ‘notice’ when a user becomes disengaged. Then add funnels aimed at grabbing these users’ attention.
Check out this example from Netflix. It’s sent automatically to users whose engagement metrics drop, and you can definitely see how it prompts users to interact with their service.
Features to note here include:
- Personalized language – ‘You’ve finished Stranger Things…’. Personal, direct, and to the point highlighting the next show to watch.
- The prominent CTA – ‘Find something new’ and highlighting what’s available below.
Pull your disengaged subscribers away from the dragon by making them an offer they can’t resist. This example from Ticketfly shows how it’s done.
Features to note include:
- The wording – ‘We miss you’, combined with the sad graphic is personal and emotive. It’s possible to get it very wrong when trying for this kind of effect. Ticketfly gets the balance right by keeping it short and by offsetting the graphic with a tongue-in-cheek intro.
- The CTA – That ‘Baby come back’ button is prominent, and its wording is very on-brand.
- The incentives – The ways Ticketfly have improved their service are displayed in easy, bullet-proof format, and the incentive to come back (the 60-day Pandora One trial) is picked out in bold type right above that enticing CTA button.
(Try to) predict the future
You (probably) don’t have a fairy at hand to tell you what’s going on with your customer churn rate but you do have data.
Check for yourself and see which users are leaving, cross-reference with past campaigns, segments, and so on. Investigate until you get a fuller picture that will allow you to connect the dots and make better decisions.
Analyzing data like this will enable you to predict at-risk clients, which you can then target with the kind of win-back promo we’ve just mentioned.
Tell users about their own activity
Everybody loves to hear stories about what they did in the past, and how awesome it was.
In this example, Fitbit gives users a roundup of their weekly activity in a highly motivating, engaging way.
Features to note include:
- Use of data – the way the data is broken down into easily accessible chunks.
- The design – the use of graphics, contrasting colors, and bold numbers help to guide the reader easily through the relevant information.
- The language – it’s personalized and addresses the customer directly.
- The CTA – ‘View dashboard’ is displayed prominently, and its wording makes it clear that users who click will get a more in-depth look at their own stats.
It’s a great way to both help customers to use the service effectively and to make the point that the brand is engaged with their users’ persona goals.
Think about emailing users regarding features they don’t use but could benefit from. This will highlight just how much value they could be gaining from you.
#4 The tome of building emotional connections that last
Personalize thy sheet
We all know about personalization and how important it is. For the purposes of slaying the customer churn rate dragon, personalization works in two ways:
First, it makes your message relevant and valuable (we’ve covered this and why it’s important above).
Second, it humanizes your company. There’s nothing that dragon hates more than a relatable, human presence.
Personalizing communications makes you relatable – especially if you take it a step further by delivering these communications via human names and faces.
Customers who feel they can relate to you will stick around.
How to use goal-based personalization to reduce customer churn rate?
Everyone loves to fulfill a goal. It’s very rewarding. And, having people along the way to track and support you can build some long-lasting relationships.
Set up goals that are relevant to your services. Tailor them to your subscribers’ needs and desires. Once your subscribers fulfill these goals, you can reward them with things like discounts.
Acknowledging milestones is an excellent way to form an emotional connection with your subscribers. In this example, Skimm sends an email to mark the anniversary of a user’s subscription.
Features to note here include:
- The milestone – Skimm has chosen the customer’s subscription anniversary, but there are plenty of milestones to choose from. Birthdays, holidays, brand-specific things (trophies they’ve earned in games, for example).
- The positive language – There’s a lot of gratitude and celebration in the way that this is written. ‘Thanks for sticking by us!’, ‘We think we have something special here’. It’s the language of close connection – and close connections build brands and close connections build brands.
- The push – Skimm are using the good feeling generated by this email to bring their subscribers further into the brand.
Asking them to become ‘Skimm’bassadors’ will make them feel valued by the brand – which will both promote loyalty and inspire them to invite others. Double win!
Focus on acquisition efforts
It may be that your customer churn rate is higher than it should be because you’re attracting the wrong users.
Your ‘castle’ will crumble faster than ever if you build it with the wrong kind of stone!
Work on optimizing your subscriber base so that it matches your target persona. To do this, consider changing your strategy.
Changing your strategy may, in the short term, lead to fewer leads. Don’t worry about this.
It’s better to slow down for a bit than than to see all your hard work washed into the ocean.
#5 Nip that customer churn rate dragon in the bud!
You have to build your castle out of bricks. Not straw. It won’t hold.
Focusing your resources on bringing in the right type of customers, and investing in their loyalty results in lower customer churn rates and higher returns.
This is a make-or-break rule, and here’s why:
Bringing the wrong customers ruins everything!
According to Jill Avery, a senior lecturer at Harvard Business School and an author of HBR’s Go To Market Tools.
“Many firms are attracting the wrong kinds of customers. We see this in industries that promote price heavily upfront. They attract deal seekers who then leave quickly when they find a better deal with another company.”
Sure, it’s more difficult to bring in the right customers because it requires maintaining a lot of focus over a long period of time.
You’ll be tested, you’ll be tempted to. But it’s important to keep your focus because you owe it to your business, and to your existing customers.
Wait, what does this have to do with my existing clients?
Great question, glad you asked it.
When you’re not bringing in the right clients you:
- Lose your focus – providing less to your existing clients, at the expense of appeasing your new-soon-to-be-churned-clients.
- Lose resources – all the marketing money you invested in bringing in the wrong kind of clients could? It’s gone now.
- Lose your clients – with less focus and fewer resources, you risk losing your hard-earned client base.
Bringing great customers and investing in their loyalty, fixes everything!
Getting the right kind of clients and making them stick pays off big time.
Loyal customers spend 67% more than new ones through repeat purchases, larger cart sizes, and frequent upsells.
They know you, they trust you, they’re invested in your sometimes, and they are willing to invest more in order to get more of that great stuff.
That’s a treasure trove you can’t access when you bring in the wrong customers, and it’s only available for those who understand how to bring and to develop the right customers in a way that positively impacts churn rate and growth in the long-term.
Congratulations, you’ve slain the dragon!
Unlike the knight in our story, it’s not possible to slay this dragon once and for all.
However, you can keep the dragon calm. Make it docile. Stop it from wanting to chew your castle (and kingdom) to bits.
Focus on the most basic of marketing rules – providing human connection, and giving value – you can deal with stunning blows to the dragon. You can seal it in its cave, and ensure that it’s not making any problems.
Keep your content valuable, personal, and relevant, and your castle will rise big, strong, and stable.