How We Reduced The Customer Churn Rate By 20%

There’s a lot of focus in the business world on making sales. But a less talked about goal is ensuring your customers remain customers. Churn rate, also known as the cancellation rate, is the percentage of customers who have cancelled using your product or service within a given time period.

Importance of Reducing Churn Rate

Churn rate is easily one of the most essential metrics when measuring the performance of SaaS businesses such as Statusbrew. Success depends on not just getting customers, but on keeping them over time as a lot of time and money is spent on acquiring new customers. Since this investment pays off over time, the goal should be to have customers stick around for as long as possible. If your churn rate stays low, then there is one less thing to worry about in a SaaS model.

How did we achieve the 20% churn reduction?

We knew, like any other churn reduction strategy, there had to be the following two stages:

1. Figure out why customers leave.
2. Encourage them to stay.

Customers don’t make a snap decision to stop using a product unless things have really gone wrong. Typically we find customers to gradually stop using products, from using it every morning to every week to once a month. But, once they’ve reached that point, they'll be out just as soon as they can find the “CANCEL” button. Of course, we don't want them to leave, nor do we want more customers to follow suit.

To prevent more customers from leaving, we often asked ourselves:
Q1 - How did the churned customer get to that point?
And once they’re at that point,
Q2 - Is there anything we can do to save the account?

To work this out, we created a new Customer Success Team besides the current already burdened Customer Support Team. The main responsibility of the Success Team is to identify, reach out and convert unhappy customers into happy customers at any costs. So, here's what we did:

Step 1 - Integration of Live Chat

We empowered the Customer Success Team with the ability to reach out to our customers in real time by integrating Intercom’s live chat with our web application. The team continuously monitored various usage patterns and took keen records of various metrics such as the users who’d could have been troubled by some bugs or a potential problem. Intercom enabled our team to reach out to such customers before the customers tried to reach us for a solution. This helped us improve the customer happiness index which in turn reduced the number of people landing on the cancellation page.

Step 2 - Redesign Our Cancellation Page

From a basic one step cancellation page, we redesigned it to a short feedback ‘cum cancellation page which contained the top 10 cancellation reasons we’d previously collected through support mails and dunning mails for older churns. We made it mandatory to choose a reason or provide a one of their own before they could proceed to click the Cancel button they came for.

Step 3 - Slack Integration

As soon as a customer cancels a subscription, within no time, we get a notification in our priority Slack channel. Immediately, our team has a look on the notification to identify the type of problem which caused the cancellation. We try to quickly identify the nature of problem, such as in case of bugs, one of the concerned team member marks it with ‘Eyes’ emoticon to inform he’s looking into the issue and then leaves a comment below stating the reason for the bug faced and the steps needed to quickly fix it.

Step 4 - Trigger Conversation via Intercom

Once we get the reason for cancellation, in parallel to the Step 3 above, one of our Customer Success Team member quickly studies the user’s account usage statistics and makes a mind-map for converting the cancellation to re-subscription at any costs. The Success Team has the autonomy to decide how the users can be incentivised to make them happy at any cost. If the user is still online on our web app, we push a personalized message to them via Intercom’s live chat. And as soon as the customer replies back, one of our Success team member tries to engage the customer in a conversation while continuing to study and decide the best solution to their problem.

When we first integrated Intercom, we were surprised to see the many of the cancellations weren’t due to a problem but rather due to the fact that people weren’t able to make the best use of features as per their requirement or they’d bought a wrong plan altogether at the very beginning. Thus, we slowly integrated Intercom for all our website pages so that users could reach us anytime, be it at the time of choosing the right plan for them or while being in mid of using a feature. Intercom really helped us understand our customers better, providing them a more powerful support and at the same time, reducing the churn rate.

Step 5 - Follow-up Mails via CRM Softwares

While most of the times we have at least one team member to take care over Intercom, there are times when all of us are asleep together. For those times, we make use of CRM softwares to keep a track of all subscriptions and cancellations while we were away. We then, after studying the churned user’s use nature and their reason for cancellation, send them a personalized follow-up mail and try to retrieve them back. This way, either we are able to get back the lost customer or learn something we need to improve.

By making these additions to our daily routines, we were able to reduce our churn rate by 20% at the end of the last quarter. Some amount of churn is natural. In this dynamic era of social media, businesses come and go, as does demand for your product. But when a customer decides to leave, make sure they leave on good terms. If they have legitimate problems with your product, acknowledge them. Don’t delude yourself and fight back. Thank them for their custom and let them go. The easiest way to screw this up is to continue to spam them months or years into their departure. It does more harm than good.