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CRM and Sales

Customer churn: common causes and how to reduce it

Hibathu Naseer 9 min read
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Even if you’re a great salesperson with a flawless presentation, your company will lose customers — it’s inevitable.

Often, the blame falls on the product or service that’s being sold. But the truth is, customer churn is often within the control of other departments and individuals. In this blog, we’ll walk you through the main causes of voluntary customer churn and how you can prevent it.

You’ll also learn how to leverage a sales CRM to optimize customer engagement and reduce churn.

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What is customer churn?

Customers who cancel their subscriptions or stopped using the product are known as churned customers.

Customer churn rate is a valuable metric for the growth of your company. This report by Punchline shows how two companies with the same average revenue and acquired customers have a vast difference in valuation because of the difference in churn rate:

how customer churn impacts revenue

Source: Slideshare

B2B, eCommerce subscription, and consumer subscription businesses should track customer churn rate (CCR) to optimize their revenue generation strategies and retain more customers. As a sales leader, tracking CCR will help you predict company revenue and enable your team to maximize your sales effort.

How to calculate customer churn

Customer churn rate (CRR) can be calculated by estimating the percentage of customers that stopped using your product or service during a certain time frame. Here’s a formula you can use:

CRR = (number of customers at the beginning of the time frame – number of customers at the end) / number of customers at the beginning * 100

For example, if you start your year with 500 customers and 400 of them remain by the end of the year, your churn rate is 20% — as you lost 20% of your customers.

You can calculate churn rates annually or more frequently — quarterly or monthly.

The most common causes of customer churn

Here are four different causes of customer churn that your sales team can help prevent:

  • Wrong product-customer fit

  • Customers are not achieving desired results

  • Lack of engagement

  • No proactive support

Let’s look at each and how you can solve them.

Wrong product-customer fit

The possibility of churn begins before a person (or company) becomes your customer. It’s pretty simple: if your product doesn’t resonate with your customers, they will not stick around for long.

Wrong product-market fit can happen for two main reasons:

  • You’re not attracting the right customers because of incorrect messaging.

  • “Churn and burn” behavior among sales reps

The latter is a term used when sales professionals oversell the product or undersell themselves. They try to pitch features that are not present. Customers will eventually realize they received incorrect information and leave.

Fix: Actively vet leads and make sure to not over-promise

Make sure your messaging is clear from day one. Ensure that the marketing team clearly understands requirements. One way is to provide them with a checklist of criteria leads need to pass. You can also actively search for warm leads — leads who have shown interest in your offering and are more aware of it.

The next step is to ensure that your sales reps do a thorough sales evaluation process regularly and reject leads that are a poor fit for the product.

To prevent “churn and burn” behavior, clearly communicate that the goal is not too close as many deals as possible but to close customers who will genuinely benefit from the product. Encourage sales reps to learn more about the product features and use cases.

Customers are not achieving desired outcomes

How many times have you purchased something that turned out to be disappointing? People purchase your product hoping it will help them achieve a specific outcome. If it doesn’t, they’ll simply leave.

Sometimes, new users may quit even before they get a chance to know about your product.

Fix: Prioritize onboarding

Your aim should be to guide new customers to the outcome they expected to gain by using your product. However, this doesn’t mean you should bombard them with information right after they convert — that would be counter-effective.

customer onboarding

Source: Ebq

Your onboarding flow should be a series of emails that address the key functionality of the product. Here are typical email series you can send out:

  • Welcome email

  • Activation

  • Product setup/walkthrough

  • Integrations/data transfer

  • Regular check-in

Pro tip: Segment your email list based on use cases and personalize onboarding emails. Send follow-ups according to how they have engaged with your previous materials.

A lot of these are manual repetitive processes. With monday sales CRM, you can manage the entire process of your customers’s onboarding, track progress, and align everyone internally. This will help customers get acquainted with using your product faster and thus reduce the chances to churn.

customer onboarding on monda crm

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Lack of engagement

A disengaged user is one who is using your product but uses it less frequently than they once did or than the average customer.

If you see a significant drop-off in product engagement metrics, it’s likely they will churn. The reasons can range from lack of activation, getting stuck in the user journey, not onboarding invited users, and so on.

Fix: Find potential churners and run re-engagement/re-activation campaigns

According to Profitwell, re-activation campaigns can bring back 20% or more of churned B2B customers.

You can find disengaged users with the help of a user analytics tool like Heap or Mixpanel. The next step is to identify distinct reasons of why they’re disengaged. Then, create re-engagement campaigns that address their specific problems.

For example, Kommunicate, a chatbot tool noticed that users didn’t realize the full potential of their app and were becoming disengaged. They sent out this re-engagement email to remind these customers of the product’s top use cases:

re-engagement email

Source: Userpilot

Then, the email suggested new features that could help the users so they could get  more value out of the product and reduce churn possibility.

With monday sales CRM, you can custom integrate Mixpanel and get the details of dormant users. Then, set up systems to re-activate these sources on monday CRM to reduce the chances of churn.

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No proactive support

Your customer service team knows they should always be ready to solve any issues customers face. However, not all customers reach out as soon as a problem arises. In fact, only one out of 26 dissatisfied customers will actually voice their concerns — the rest will simply churn.

Fix: Be proactive rather than reactive

Don’t leave customers on their own after the initial onboarding process.

Instead of waiting for a problem to arise, you need to actively check-in if customers are encountering any friction and attempt to solve it. Two ways to do this is by conducting customer interviews and sending out survey forms like NPS. Here are a few things you should address :

  • What problems do they solve with the product?

  • What features are we currently lacking?

  • How would they rate the purchase and onboarding experience?

NPS survey

Source: Airtable

Pro tip: To get the most out of your survey results, integrate your survey platform (SurveyMonkey or Typeform) into monday CRM. You’ll be able to derive actionable feedback and use it to provide good customer support.

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How helps reduce customer churn

Let’s face it: retention strategies require a wide range of data and proper systems in place to engage customers. For this, you’ll need a CRM system.

With monday sales CRM, you get the right CRM features that help you manage the activities around customer engagement to reduce churn rate. You can easily keep track of customer experience with an ordered customer database and a centralized data source.

Centralize your customer contacts

You can easily keep track of customer experience with an ordered customer database and a centralized data source. Communicate with your customers efficiently by integrating your email.

centralize customer contacts

Create personalized onboarding emails

Automate your onboarding workflow by setting up a sequence of action. You can segment new customers based on their use cases and send them tailored onboarding messages to meet their needs to help standardize communication.

create personalized onboarding experience

Re-engage potential churners

With monday’s intuitive interface and integrations, gather data of potential churners and create re-engagement campaigns effectively.

In short, it’s all about managing a relationship with your customers and helping them achieve their desired results faster.

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Frequently asked questions

What is a good customer churn rate?

A study found that the average customer churn rate is 32% globally. However, the best SaaS companies have a churn rate between 5 to 7% monthly. A good churn rate to aim for would be 2 to 7%. As for enterprise-level companies, this number would reduce to <1% monthly.

What is customer churn analysis?

Churn analysis refers to the evaluation of a company’s churn rate to find out the causes and how to reduce it. This process involves collecting feedback from churned customers and tracking engagement metrics amongst others.

How to predict customer churn?

For SaaS products, you can predict customer churn using a product analytics tool to find disengaged customers — users who use your product less frequently over time. These are customers who are likely to churn. After identifying them, get their contact details into your CRM, create a separate segment, and run re-engagement campaigns.

Minimize customer churn

Reducing churn rates requires solid systems and a deep knowledge of customer journeys. With monday sales CRM, you get the tools and insights necessary to customize churn management strategies and increase company revenue.

Hibathu is a content marketer for B2B SaaS brands (marketing and eCommerce niches). When not writing, you can find her with her cats or working in her garden.
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