How to Reduce Customer Churn Rate: 17 Effective Strategies

Wondering how to reduce customer churn rate for your business?

You’ve opened the right link! In this article, we review different ways to identify potential churn and deal with it.

Attrition is the bane of every subscription business; low retention rates will result in a duce and the customer lifetime value and revenue will plummet. But you can turn all that around with the right strategies.

TL;DR

• Voluntary churn happens when customers cancel or downgrade their subscriptions while involuntary churn happens when a customer can’t continue using a service for reasons that are partially or entirely out of their control, most of the time related to payment processing issues.

The main reasons for customer churn are:

• Bad product-customer fit.
• Poor onboarding.
• Bad customer service.
• Weak customer relationships (resulting from not listening through regular customer feedback surveys).
• Pricing.

How to track and identify potential churn issues:

• Measure customer satisfaction across the user journey.
• Track feature usage to understand customer engagement.
• Analyze customer behavior to spot sudden spikes in user activity.
• Identify at-risk customers using NPS surveys.
• Spot friction and drop-offs with a funnel analysis.
• Analyze customer behavior using in-depth segmentation.

How to reduce churn rate and increase customer lifetime value:

• Personalize the onboarding process for new customers to shorten time to value.
• Use an onboarding checklist to drive users toward activation.
• Drive customer success with contextual in-app guidance.
• Provide proactive customer service.
• Leverage secondary onboarding to unlock extra value.
• Apply gamification principles to enhance user engagement.
• Prevent involuntary churn with pre-dunning notifications.
• Re-engage inactive cohorts with customer retention emails.
• Optimize your cancellation flow to prevent customer churn.

Reducing customer churn rate with Userpilot:

1. Monitor in-app user behavior to predict churn.
2. Trigger highly personalized re-engagement flows to win back disengaged customers.
3. Gather insights from churned customers with in-app surveys.

• Book a demo with Userpilot to learn more.

What is customer churn?

Customer churn is the percentage of customers that canceled their subscriptions or stopped using certain aspects of your products or services during a specific period of time.

Churn impact your bottom line directly and can happen voluntarily when a user intentionally cancels their subscription or involuntarily when a customer can’t continue to use your service for reasons that are partially or entirely out of their control.

Why do customers churn?

Customers can downgrade or cancel subscriptions for a million reasons, but here are the main culprits:

• Bad product-customer fit: This mainly results from wrong positioning or sugar-coated marketing messages. Customers will leave when they get in and realize there’s a value gap.
• Poor onboarding: Nothing is more frustrating to new users than onboarding flows that aren’t tailored to their needs. It results in a delayed Aha! moment, and many users won’t have the patience to wait.
• Bad customer service: Both new and existing customers expect to get support the instant they need it. Long wait times, back-and-forth convos, and the absence of self-serve support frustrate users and result in a negative user experience that makes them leave.
• Weak customer relationships: Companies that regularly collect and act on customer feedback and still find creative ways to nurture connections naturally have quality relationships. The absence of these makes the relationship with customers purely transactional, and such users are quick to replace you with a competitor.
• Price: Sudden price increases without proper explanation almost always result in churn. Customers will struggle to justify your actions or see how the new price is worth it, so they’ll switch to cheaper alternatives.

How to track and identify potential churn issues

Every company experiences churn in a measure. What’s important is that you regularly track and keep your churn rates in check. The following strategies will help:

Measure customer satisfaction across the user journey

Keep tabs on customer satisfaction by triggering CSAT microsurveys at important touchpoints.

By asking specific questions about the user experience, you’ll identify areas customers may encounter difficulties or frustrations.

For example, you can inquire about the ease of navigation, the performance of certain features, or any bugs they have experienced. This information helps you identify the exact friction points causing dissatisfaction.

Track feature usage to understand customer engagement

Use tools like Userpilot to tag features and monitor how users engage with them. With Userpilot, you can even have a heatmap that shows, at a glance, the level of interaction for the features you’re monitoring:

The essence of this is to see if users engaged with key features for their use case and got value from them—it’s a churn risk if they don’t.

Feature tags can also show you features users interacted with but haven’t adopted. You can then investigate further and address any issues those users may be having.

Analyze customer behavior to spot sudden spikes in user activity

Monitor clicks, page activities, and your daily/monthly active users to notice sudden changes.

Decreasing product usage is alarming and one of the early signs of churn. When you notice it, you should take additional steps to segment the inactive user segments, find the reasons for their decreasing activity, and offer help.

Identify at-risk customers using NPS surveys

NPS surveys are great at measuring customer loyalty and identifying customers on the verge of churn.

Regularly roll out NPS surveys and follow up on detractors (those that rate you 0-6). They’re the most likely to churn, and interacting with them could help reduce customer attrition.

Spot friction and drop-offs with a funnel analysis

Start by clearly defining the stages of your SaaS funnel. Typically, this includes steps such as landing page visits, sign-ups, onboarding, activation, engagement, and conversion to paying customers.

Each stage represents a potential friction and drop-off and friction point.

Set goals for each important step in the user journey and use a robust analytics platform to see how users progress through them.

Identify dropoff points and investigate the product usage at those points to spot factors causing friction.

Analyze customer behavior using in-depth segmentation

User segmentation and analysis will help you identify at-risk users and address their issues before they churn.

Begin by analyzing the product usage of churned users. This will enable you to find customer attrition patterns. You can then segment customers with the same characteristics and monitor their behavior to quickly recognize churn risks.

How to reduce customer churn rate with customer retention strategies

Now that you’ve learned ways to identify churn, it’s time we go over strategies for reducing it.

Personalize the onboarding process for new customers

Use a welcome screen to collect vital data from new users. The questions you ask should focus on understanding their pain points and specific jobs to be done.

Also, ensure to keep your welcome survey simple. You don’t want to be asking new users questions that demand much cognitive effort.

After the survey, use the information gathered to trigger a personalized onboarding flow. This means the user will only receive guidance for the features they need. That way, your onboarding will have fewer steps and be highly relevant.

Your customers will experience value fast and be more willing to stick with you after seeing your tool can meet their goals.

Use an onboarding checklist to prompt user actions toward activation

Checklists bring order and structure to your onboarding process. The fact that users can tick items off one after the other also serves as motivation to complete the onboarding steps.

But don’t overwhelm your customers. Create customized checklists for each segment including only 3-4 key actions. Too many tasks in your checklist can intimidate users and result in low completion rates.

Done well, your checklists will help users reach activation quickly, and the positive experience will inspire them to stick around.

Drive customer success with contextual in-app guidance

Don’t leave customers to learn new features on their own. Many will struggle with it, and the bad experience contributes to attrition.

Instead, hand-hold them and trigger an interactive walkthrough to help them learn by doing.

How to reduce customer churn rate with interactive walkthroughs?

• Focus on major activation events.
• Be contextual. Trigger the guidance in real-time, based on user behavior.
• Trigger new tips only after the user has implemented the previous one.

Provide proactive customer service

Talk to customer support and success teams to identify the most common pain points and FAQs.

Use the information to anticipate customer service needs and create help resources beforehand. This way, customers don’t necessarily have to contact human agents to resolve their issues. You’ll save time and ultimately improve the user experience.

Embed your help resources into a knowledge base placed directly within the app for easy and quick access. You could even go a step further and show or hide knowledge base modules based on where the user is in their journey/the product page user is interacting with.

Introduce existing customers to advanced features to unlock extra value

The more users integrate your product into their lives, the less likely they are to stop using it. This happens because they’ll experience the ROI of using your platform, and the money and time will be totally worth it to them.

You can improve adoption breadth and depth by leveraging continuous onboarding. Segment users that are yet to adopt secondary features and trigger contextual flows reminding them of the feature and how to use it. Do the same thing when you roll out new features.

You can use tooltips, modals, slideouts, or any form of in-app communication to introduce and teach users to use your advanced features.

Apply gamification principles to enhance customer engagement

It’s basic user psychology. Giving users a dopamine hit will make them repeat the actions (or similar actions) to relive that initial feeling.

And that’s a win for you and the user. On the company’s part, more engagement leads to better adoption and high customer retention rates. For the user, it means they get to master using your tool to solve their problems.

To apply gamification, you can use celebration modals, badges, loyalty points, etc. Here’s an example of Calendly celebrating user success and providing links for the next steps.

The user will be more driven to continue engaging because now they know their actions are valued.

Prevent involuntary churn with pre-dunning notifications

Not all churn is voluntary. Customers sometimes unintentionally leave your platform due to technical or payment processing errors.

A major way to avoid involuntary churn is to use pre-dunning messages. This simply means sending proactive payment reminders a few days before their payment fails or their subscription expires.

You can use subtle banners for this sort of in-app communication. For example, the banner below reminds customers that their cards will soon expire (every company knows when their customers’ cards will expire, but only a few do something about it).

Re-engage inactive customers with retention emails

Inactive customers haven’t canceled their subscriptions, so there’s still a chance you can win them back with the right email campaign.

Your retention emails should remind them of your product’s benefits. You can also share case studies of successful customers and add links to educational content the user might need.

And, of course, don’t forget to end your email with a clear CTA that redirects them to the app.

Optimize your cancellation flow to prevent customer churn

Don’t give up easily. Use every avenue to draw customers back to your business—but avoid actions that will frustrate them further.

For example, some companies make it difficult to close an account. You’ll need to email or call in to have someone do it from the inside. This experience only aggravates dissatisfied users more.

Here are a few positive steps you can take:

• Use your cancellation page to remind users of the value they’ll lose (along with data, history, etc.) if they opt out.
• When they click the cancel button, trigger a churn survey to understand why.

• Retain customers by offering personalized, compelling solutions based on their answers. For example, if the user says pricing is the issue, you could offer to downgrade to a lower pricing tier or give a discount.

How to reduce customer churn rate with Userpilot

Product teams utilize Userpilot to drive adoption and unlock growth opportunities at every user journey stage.

Our platform helps you monitor in-app user behavior, trigger personalized win-back emails, and in-app surveys to gain insights into churn.

Monitor in-app user behavior to predict churn

With Userpilot, you can tag features and create events to track how various user segments interact with your platform.

From the data obtained, you can spot trends that will enable you to predict and prevent churn.

Trigger highly personalized re-engagement flows to win back disengaged customers

Identify key user actions or behaviors that are valuable indicators of user engagement, progress, or specific milestones within your SaaS product. Examples include signing up, completing onboarding, reaching certain usage thresholds, making purchases, or interacting with specific features.

Next, set up event tracking with Userpilot to know how many customers are completing the key events you created.

Segment users based on their activity level and trigger customized product experiences to drive engagement and retention. For example, from the data uncovered, you could identify your least engaged users and recommend relevant features they’re not yet using.

Gather insights from churned customers with in-app surveys

Userpilot allows you to build exit surveys and trigger them at the right time to understand the reasons behind churn.

You can also analyze the survey performance at scale and keep track of historical answers to observe trends and see if your customer retention efforts are working.

Conclusion

Your churn rate will not suddenly decrease because you read this article. However, that was a good first step.

Apply the strategies to your business and track how everything is working out. You can also run retention experiments to find what works for your audience.

As mentioned earlier, Userpilot can help. Book a demo call with our team now for a tailored discussion of how to reduce the customer churn rate for your SaaS.