How to Reduce Churn Rate

Laughing Samurai - How to Reduce Churn Rate

In business, attrition rate commonly refers to employee or staff turnover. Generally, it’s a percentage that compares how many people are leaving against how many new people are coming in. However, when looking at this calculation in terms of your customers, customer attrition rate is known as churn.

The new Google Analytics 4 focuses on customer-centric metrics, and one thing the new dashboard includes is a predictive tool that measures future customer churn. So, we decided to take a deep-dive into churn to explain how great CX and UX can improve your business and bottom line.

What Is Churn Rate?

Your churn rate, also known as customer attrition, measures the number of customers you have lost against how many customers you have acquired during a given time period. This is presented as the following percentage:

Churn Rate = (lost customers / new customers) x 100

How to Reduce Customer Churn

The first thing you need to do is pay attention to your customer churn rate. As a business, you should express your target numbers: what level of churn could kill your business; set goals for an adequate level of churn; and have a baseline for your historical churn rate. Now stay on top of your churn rate and make adjustments when it gets too high.

If you have a high churn rate, don’t get hung up on acquiring new customers, which is usually the more expensive option. Focus first on remedying what is turning customers away from your product or service, and improve your retention rate by fixing the following issues:

Onboarding

Make sure people get to know your brand during the initial acquisition phase. You want them to value who you are, understand what differentiates you from the market, and know what to expect from you in the future. Then make sure to stick to this expectation, be consistent in your positioning and content, and exceed the promises you made.

Support

Are you fulfilling the needs of your customer base? Are they receiving support from your sales reps and customer service representatives? Are they seeing the value in your product and service, and are they satisfied by how they are treated as a client? If clients are struggling with your service and they’re not being supported by your representatives to resolve their issues, you can be sure they’ll take their business elsewhere.

Feedback

Ask your customers for feedback with questionnaires after key interactions with your website or business. This information will give you insight into what is working well. Also, be proactive and reach out to customers that have been idle for a significant amount of time. Ask them what issues they’re experiencing or what needs they have that haven’t been addressed. This re-engages users that might be about to churn and flags problems with your business that you can then address.

Engagement

Communication shouldn’t just be left to moments of success or failure but should be consistent with your clients. Creating a relationship with your customers allows you to promote tools and features that are under-utilized, and prompt users to take action without any direct nudging. It also proactively addresses issues before they become a problem.

CX: More Than Just Good Business

CX (customer experience) is the practice of managing your customers’ relationship with your brand holistically, addressing everything between the digital and physical. And although we consider CX to be doing good business, it can be worth outsourcing the research of customer interactions with your brand. Knowing your customers’ expectations for your business and understanding their experiences with your brands will help retain customers by unveiling their negative interactions.

Sometimes we can’t see the forest for the trees. Using an external agency, you benefit from a professional and impartial perspective. They will be able to reveal how people interact with your business and unveil customer-specific problems. It’s not just digital-first enterprises that benefit from addressing the user experience on their website; all businesses benefit from improving their UX with research, good design, and intentional functionality.

How to Reduce Churn With UX Research

Your website is your biggest selling tool. Whether you’re a B2C e-commerce site or a B2B site that has a network of referrals, your website says more about your business than you might imagine. If you have an older website with slow elements, difficult navigation, and offset images, your business will fail to present itself as an industry leader – and it will turn customers off.

Audit your website for its design and usability using different devices and browsers, and check the touchpoints that your customers will go through. A slow website can be enough to damage both your churn rate and conversion rate. Here are some UX elements that you should consider when going through your website.

UI Design

The user interface design of your website should be invisible yet satisfying to the end-user. Interaction designers focus on making your website’s architecture sensible for your users’ needs: buttons should be predictable; elements that look clickable should be clickable; important pathways for your business objectives should be obvious to the end user. Actions that the user has to take to move towards an end goal should be encouraged and highlighted, and elements that distract or take a user away from that path should be reduced. Make user interactions easy for your customers and avoid dark patterns.

Usability

You should review your website for user-centered design. Imagine interacting with your website as a new customer: What’s difficult or confusing? Run scenarios where you go through the site as an existing customer: Where are there issues? You can use Google Analytics’ Cohort Analysis to understand the behaviors of subsets of your user groups, or work with a UX consultant that will conduct thorough user research. UX consultants can interview users to uncover what problems they have experienced on your website. They can even create a usability lab where, in real-time, they study how people use your website and what issues they face.

Visual Design

How does your website look on a desktop? How about on a smartphone? A website with responsive design should adhere to sound design principles that don’t complicate the navigation of your website. The appearance of visual elements or the use of animations should be considered and purposeful.

UX Copywriting

UX copywriting is a complex skill that requires a lot of attention for micro-copy elements that you might not have considered. Micro-copy is responsible for helping customers easily navigate your site and encourages users to convert or take specific actions. By encouraging conversions and making your site easy to navigate, UX copywriting is an effective way to reduce churn.

Run through your site as a new customer and pay attention to whether you are implementing effective call-to-actions that resonate with your customers. Is the language clear, or is there too much ambiguity in your copy? Also look at your site links in the navigation, header, and footer: Is the text clear and descriptive of the pages they will take you to?

Retain Customers and Reduce Customer Churn

Churn is not necessarily related to your product’s quality but the standards and service surrounding the delivery of that product. Satisfy your users with a well-designed, user-centric website and you will reduce churn by retaining customers. Stay engaged with your customers’ needs, and adjust your website’s usability and functionality so that it solves your customers’ problems.

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