How to Reduce Churn and Retain Revenue by Eliminating Friction
Written by Tobias M. Pasma
How to Reduce Churn and Retain Revenue by Eliminating Friction
- Last updated: 3 June 2020
Friction is a significant consideration in the early stages of your customer's buying journey.
It refers to all the things that get in the way of a pleasant buying experience. In other words, it's anything that slows your customer down, places obstacles in making a purchase, or gives them a reason to leave the buying process.
When you're guiding potential customers through the process of becoming a buyer, you want to eliminate as much friction as possible and make the experience as smooth as possible.
But what about after the sale? Your prospect is now a paying customer, but that isn't the end. The journey has only just started.
Your team's priority should be on retaining customers and keeping them happy to nurture long and rewarding relationships. In other words, you want to reduce churn.
And once again, eliminating friction should be a top priority.
In this article, we'll talk about how eliminating friction can help reduce churn, retain revenue, and ensure that your customers stay happy and faithful.
What is churn, and why is it your enemy?
Churn refers to the rate at which you're losing customers.
If your churn is high, it means people are buying your product or signing up for your service, but they aren't sticking around. For whatever reason, you're not convincing them to stay and continue to use your products or services.
Churn is a big problem, but it's not an unusual one. Avoidable customer churn costs U.S. businesses $136 billion a year.
There are lots of reasons why churn happens. But the simple explanation is this: churn increases if customers aren't having a pleasant experience interacting with your organization.
If you reduce churn, your customers will purchase your service again and again. You won't have to go through the entire marketing and sales journey whenever you want to make a sale. And you'll build a community of loyal supporters who will keep your business afloat through good times and bad.
The best way to reduce churn is to reduce friction. Remove the things that make it difficult for your customers to become repeat buyers. Make every stage of their experience as smooth and enjoyable as possible — not just the first few stages.
Here are some ways to do that.
1. Make More Relevant Upsell and Cross-Sell Offers
Upsells and cross-sells can be really welcome. After all, most of your existing customers need your offering, and they're happy to buy from you.
It should be much easier to sell to this group than even the warmest of leads.
Offering new products and services that match their previous purchases and provide genuine value can be an incredibly easy way to impress your customers and make more sales.
However, these offers must be relevant. If you target customers with the wrong upsells or wrong timing, it can seem intrusive and annoying and might even do more harm than good by creating friction and pushing them away from your brand.
HubSpot Tip: Create a list of contacts with open support tickets and low NPS scores. Use the list to exclude contacts when sending upsell/cross-sell offers; this might not be the right time for them.
2. Smoother Onboarding
First impressions are incredibly important. That means bringing your customers on board — whether they've just signed up or are on a free trial — should be as smooth and hassle-free as possible.
At this point, your customer is still new to you. They know about your organization, and they trust and like you enough to make a purchase, but you still have to impress them and prove your value to their business.
It's a little like a first date — they said 'yes,' but that's just the first step. If you want to create something lasting, the real work is yet to come.
Here are some ways to banish friction from your onboarding process:
- Understand your customer. Address their challenges and questions, speak their language, and give them what they want. Make sure your personas are not just 'buyer personas', but include details on how they want to be treated as a customer.
- Be personal. It's the start of a relationship, so this is an excellent opportunity to show your customers that you know and care about them.
- Make it interactive and rewarding. Use appropriate milestones and allow your customer to learn about your product in a hands-on way.
3. Managing Support Tickets
Customer support is one area where friction can be a real killer.
When customers come to your support channels, it likely means they already have a problem or question they want to resolve. Throwing further challenges into their path at this stage could be the final push they need to take their money elsewhere.
Your goal is to make it as easy as possible for your customers to get the information and support they need. Here's how you can do that:
- Use multiple channels. Today, customers expect a suite of options for contacting support. Live chat, phone, email, and social media are just some of the channels you should be using.
- Have self-service options. Customers have gotten used to solving their problems where possible. Tools like chatbots, knowledge bases, fora, and blog content allow your customers to access the support they need without the extra steps of contacting staff members if they don't want to. Of course, this also helps take the strain off your support team.
- Make it easy to cancel orders. Your buying process should be as smooth as possible. But it would be best if you also made it easy to cancel orders. It may seem counter-intuitive, but customers who have a simple cancelation experience will think of your brand more positively than if you try to complicate the process and lock them in.
4. Things to Measure
It's essential to measure progress to reduce friction and ensure your customers are as happy as possible.
Here are a few ways to do this:
Churn prediction algorithms draw on data analysis and modeling to identify which customers are likely to leave soon. It can help you direct your efforts in a more focused way to persuade them to stick around.
Expert Tip: Does a churn prediction algorithm sound scary or complicated? Checkout Dataiku. It's a drag-and-drop AI platform with built-in algorithms. Here's a simple step-by-step guide on how to run Churn Prediction algorithms.
Net promoter scores are a system where a customer gets asked to rate how likely they would be to recommend your business to a friend. It helps measure customer loyalty and gain an idea of how your buyers feel about you. A company I worked with in the past gave the board of directors the task to call all 1's and 2's personally to have a conversation with them, and solve their problem. Now that is an unbelievably good example of being remarkable as a business.
Customer satisfaction (CSAT) scores are another way to gauge how your customers feel. They measure customer's attitudes by asking for feedback in a range of areas, usually right after a support ticket is closed.
By gaining a clearer understanding of how your customers feel about your company and how impressed they are, you can make the necessary changes to remove friction, improve their experience, and retain them at a better rate.
Eliminate friction, eliminate churn
If you can eliminate friction, you'll provide your customers with a much more rewarding experience. They'll come to associate your business with reliable, enjoyable service, and they'll make more purchases with you.
It's one of the most useful things you can do to reduce churn and build long-lasting relationships with your customers.
To find out how Mavericks can help you do that, get in touch.
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