avoid churn

Churn Prevention: How to Identify & Avoid Churn

Churn is one of the biggest problems facing today’s SaaS companies. In this article, you will learn what the main causes are and how to avoid churn from happening.

Churn prevention is a proactive method for retaining customers. It implies analyzing the underlying causes of churn and then implementing a strategy to address issues that may contribute to churn before they occur. We’ll go through how to create your churn-prevention plan in this post.

You’ll be able to retain your current customers satisfied and engaged with your product if you use this approach.

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Churn Prevention: What is it? How to Avoid Churn?

Churn prevention is designed to help you maintain the customers that you already have. The best way to avoid churn is making sure that your existing customers are delighted and have everything they need from your business to succeed.

Churn prevention refers to the techniques used by businesses to reduce churn. The more you think about churn prevention in advance, the more probable it is that you will reduce attrition rates while maintaining good revenue levels.

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Why is Important to Avoid Churn?

As we already explained in the Churn Analysis blog: There is no more important metric for a SaaS business to monitor than churn… but, why is it that important to prevent from happening?

Why is churn prevention important? Churn can be the downfall of a business when it comes to subscription-based businesses or even eCommerce sites. Churn means people are leaving your subscription service or not purchasing enough over a specific period of time. This leads to cost you money.

Every customer that leaves reduces your MRR, making it more difficult to maintain a solid growth.

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Churn Reduction vs Churn Prevention

While churn reduction is a reactive tactic, churn prevention entails proactively addressing the underlying reasons for lost users. These two tactics, when combined, help you avoid churn at every stage of the customer journey.

Why Customers Churn?

Understanding churn analysis is critical. Understanding the many causes of customer churn is a critical first step in addressing and preventing from happening.

Here are some of the most common causes of churn:

  • Poor Customer Fit

Selling your product to the incorrect kind of customer might result in them churning soon after signing up, therefore invalidating the cost of the resources spent to acquire them.

  • Lacking Functionalities

Customers may request additional features for your product as their needs change.

  • Poor Onboarding

Customers that do not obtain what they need from your product will almost surely churn. If the client could have obtained what they wanted from your offering but didn’t, this type of churn reflects a particularly awful loss of opportunity. Poor onboarding or a poorly designed setup procedure is often to cause.

  • Your competitor makes a superior offer

When it comes to selecting a service, customers have a variety of alternatives. This battle is at the heart of every market. Customers will churn if they see greater value in the service provided by your rivals. It’s crucial to understand your company’s place in the larger market environment.

  • Delinquent Churn

Customers whose credit cards were canceled because they were maxed out, canceled because they were no longer valid (probably because they were stolen), or frozen when used overseas.

  • Your recurring subscription was not successful

Subscription fees are the lifeblood of any business. To avoid problems, double-check the connection points between your merchant provider, bank, and payment processor. This type of churn is caused by a purely mechanical failure of your tools, which should be easy to avoid.

6 Tips to Avoid Churn

1) Speak With Your Customers

Everyone who leaves your service will have a legitimate reason. Sending an exit survey to churned clients is an excellent approach to get information. This is critical information to record for your churn analysis, whether it’s anonymous or personalized to particular customers.

It’s also a good idea to conduct a survey of your current customers to see why they continue to use your business. Consider this survey to be an extension of your NPS, and use it to get extra information on whatever aspects of the customer experience are functioning effectively.

2) Use All Available Ways To Communicate to Avoid Churn

The more you interact with customers, the better your connections will become. You’ll be able to evaluate their feelings about the customer experience and then give advice on how to solve their problems with your product. Being able to foresee and manage these issues will help you in preventing these clients from leaving.

To connect with customers, set up numerous communication channels such as in-app notifications, email, and phone calls. Having more than one channel provides users alternatives and allows you to customize your message to their preferred communication method.

3) Review Your Buyer Personas

After working with your customers, you’ve probably learned a lot about them. Things like their name, where they work, and how many kids they have. You might even know what their favorite food is. Whatever you do know about them, it’s important to review this regularly. This way you can avoid customer churn by figuring out why people are leaving your platform.

Your target customer will change as your company grows. Review and update your  buyer personas on a regular basis to communicate with users who are unlikely to churn.

4) Offer Annual Plans to Avoid Churn

Customers who pay yearly tend to stay longer than those who pay monthly. They tend to establish stronger ties with businesses when they have an annual plan. Customers are more likely to remain around if they have more time to realize the value your service gives.

5) Provide Incentives For Renewing Early

Incentivising customers to renew early can help you avoid churn. The theory behind this is that if you give customers an incentive for renewing before the renewal date, they’re likely to hold off on canceling/suspending their service until after the incentive expires.

This means you can avoid the cancellation fees that normally occur and also maintain a good working relationship with the customer through the regular support process (which allows you to upsell additional products or services).

Existing customers are more likely to renew if they are provided a discount, whether it is lower available payments when paid in advance or a cheaper price for the yearly package.

6) Send Recovery Emails

A recovery email is a communication sent to clients after they’ve canceled in an attempt to re-engage them. These emails are a great way to remind clients of the value your product delivers so they can realize what they’re missing out on.

Use these tips to keep more customers and grow your revenue over time. Combine them and test strategies, and you will be well on your way to lowering churn in your SaaS company.

Use Radix to Avoid Churn

Hundreds of SaaS companies have recovered thousands of customers thanks to our churn-prevention software.

We hope that with these tips, you can prevent churn and watch your customer retention soar! And remember—all of us here at Radix are always happy to help when we can. If you want to know more about what we can do for you, head over to our website, or feel free to contact us directly. Thanks for reading!

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Read More:

15 Ways to Reduce Churn: Radix Edition

Types of Churn: Delinquent vs Proactive

Revenue Churn: Definition, How to Calculate, Ways to Track & Improve

Churn Analysis in SaaS Business

Luis Cordero Schiffmann
Luis Cordero Schiffmann
Digital Marketing Strategist & Web3 Passionate MBA with expertise in Science, Technology, and Innovation. I'm a big fan of the crypto revolution, the internet and business.