For most businesses, especially SaaS businesses, customer churn is a big problem. There are a lot of challenges in keeping the customers stay in business with you.
There are options aplenty for your customers too which makes it all the more difficult to reduce churn. App churns impact the lifetime value of customers, impact user acquisition, impacts marketing spend, and more.
What is Customer Churn?
To define customer churn, it refers to a customer stopping his business relationship with a company. The cost of churn includes not only the revenue loss but also the time and effort involved in replacing those customers with new ones.
Not only that, but the customer acquisition cost also may not have been covered by the customer who left. Also, it is well known that it is more difficult to acquire a new customer than it is to do business with an existing customer.
Businesses must be in a position to understand why customers are going to churn and also find out which type of marketing activities can keep the churn to a minimum. If you know answers to the two unknowns, then you will be in a better position to reduce churn.
Why do customers churn?
- Low engagement. Customers might not be using the app as much as they wanted to. You need to track engagement. Know more about it using customer surveys. Net Promoter Score is one of the best ways to do it.
- Frequency of bugs in the app or performance issues. You can track this using the NPS survey at customer touchpoints.
- Bad UI/UX. Again, NPS is a metric that you can use to check this.
- Lack of customer support. NPS helps measure the effectiveness of the customer service team.
- Loss of key users. There are a handful of product evangelists who are interested in using your product. If they leave the company, you are at a high risk of churn.
- Awful onboarding process. NPS can help track its efficacy.
There are many more reasons for customer churn. But the point that we wanted to make was that NPS will help you unearth all the issues that you have which leads to customer churn by identifying those areas.
The Net Promoter Score is an index that ranges anywhere between -100 and +100 which measures the willingness of a customer to recommend your company’s products or services to people they know. It is used to find out the customer’s overall satisfaction with the product and the loyalty of the customer towards the brand.
The respondents, as we know, are divided into three categories namely Detractors, Passives, and Promoters.
The NPS calculation is based on subtracting the percentage of promoters and detractors.
Detractors are people who respond with anywhere from 0 to 6 are expected to leave your business soon while Passives (those gave you 7 and 8) will stay for some time as they are moderately satisfied with your product but will leave you for a better one.
Your Promoters (scores of 9 and 10) are the ones who love your brand and it is expected that they will renew their subscription with you or buy more from you in the future.
What is so special about NPS is that it helps you identify the customers who are more likely to churn. Promoters are the least likely to churn while Passives and Detractors are at risk of leaving your business. But that’s not all. There are several other ways in which you can reduce churn using NPS.
How to Reduce Churn Using NPS?
NPS results can really help control customer churn. What you do with the NPS results dictates if you will be able to reduce churn or not. Companies usually use this to reach out to promoters to increase the referral volume and take steps to ensure that passives and detractors do not leave them. Here’s how you can reduce churn using NPS.
Customer journey map & NPS
NPS, CES, and even other customer satisfaction identification tools give you data on how you can decrease customer churn. Think of your customer’s entire journey inside your app/website. Not only after they become a customer, even before that when they are checking out your offering.
Mapping the customer journey is all about understanding your users, how they behave when visiting your website, what you can do to improve their experience, etc.
Customers can take different routes. So you need to envision different routes that the customer might take. In fact, go one step ahead and create a customer journey template. It will help you immensely in your marketing efforts.
Using a customer journey helps you understand how customers traverse through your sales process. It will help you recognize the effectiveness of the current method you are using.
Use surveys at all the important checkpoints. The NPS survey that is used at various interaction touchpoints can be used for both free and paid customers. If any paying customer who visits the app or website drops off midway, then you need to investigate if there is an issue at that step. Based on the NPS data, you can find out if you are doing something wrong in warding off customers. It is an excellent measure of what people are not willing to accept.
Find out customer issues using NPS
NPS survey is the best way to find out if there are any issues for customers at any point. How? Because, at the end of each interaction, you can ask them the NPS question based on their experience. If they said that they have had a bad experience, you can respond back to them to close the feedback loop. By closing the feedback loop, you are effectively solving the issue they had in the first place.
They might be looking for an extra feature, or they are looking for a better plan. By asking them what they have in their mind and following it up with relevant questions, you are able to solve the issue for the customer.
When responding to customers who have complaints, ensure that the response is personalized to them and it adds value to whatever they asked of you. Give special attention to the detractors as you have the opportunity to make them promoters or at least a passive by working on the issue that they faced.
These are people who love your product and you should be wise by leveraging their emotions towards you. While promoters are usually more than happy to say good things about you, providing them an incentive makes it extremely lucrative for them. Not only will they buy more from you, but they will also spread the word about you to their immediate circle.Here is how you can get their help to get new leads and reduce churn:
- Ask them to send a testimonial explaining how they are happy with your product
- Ask for reviews on portals like G2, TrustRadius, etc
- Let them write blog posts where they tell about their success story
- Involve them in case studies
- Write customer success stories using their example
When the passives and detractors go through such content, they would be wondering if they are making a mistake by even thinking about leaving you. This is the kind of validation that your business needs to reduce customer churn. Even though you might have a lot of promoters for your business, you need to ask them to write reviews.
A simple email like the one below is more than enough:
We are extremely glad to know that you enjoy using our tool.
You would know how fellow entrepreneurs like you rely on online reviews to make their buying decision. It would be helpful if you could tell us how our product has helped you. We understand that you are busy, so here are the links that you can use to post your reviews.
We totally understand if you would prefer not to post a review.
Appreciate your continued business with us.
CEO, XYZ .com
Once you ask for reviews, you will actually find them coming in because people are always happy to share their positive experiences, but only if they are specifically asked for.
By closing the loop
Write down every comment that you get on the follow-up to the NPS survey, no matter who it is- Promoter, Passive, or Detractor. Once you have the entire list with you, ensure that you solve the problems one-by-one. As soon as you get started on solving the problem for each of your customers, let them know immediately that you are working on them.
You can send a personalized email to each of the customers signalling that you will solve the problem. Along with it, send an email to everyone in your mailing list that you will be working on these issues.
Make the ones who didn’t reply to the NPS survey by giving them another chance by sending them the link. Along with it, ask them if they would like to pass comments, they will be well received and worked upon, like how the previous NPS responses got.
Once you have closed the loop, inform the customers that you have made all the changes requested. If there was an issue with the service, as told by the NPS survey respondents, then mention in the email that you are working on that too.
Apart from the email, create a video, preferably by the CEO or someone in the management team explaining the changes you have made and how it will impact the customers. This is easily one of the best ways to make all your customers into promoters.
Leveraging your passives
The passives are those who have higher chances of churning than a promoter. While they are in a much better position than the detractors as they are moderately satisfied with your product, they will leave you at the first prospect of a better choice.
Here is how you can turn passive into a promoter:
- Reach out to them directly with questions as to where they found your product/service lacking.
- Ask them that at which place did they feel as if your product/service wasn’t as splendid as they expected it to be.
- Find out if they are planning to leave you. If yes, then find out the reasons behind it and if it is something you can work on, then assure them that you will work on it immediately.
- Under promise and over deliver to them in each of the interactions
- Create a better bond with them
If there was any slip up by you in terms of service, assure them that it won’t happen again. Explain to them how you intend to make the situation better. Most businesses lose customers because of bad service. You don’t want to end up losing customers who love your product but are dissatisfied because of a mistake from your customer service team.
Ensure that the interface is simple, train your customer service agents, expand your knowledge base so that it will address more questions, offer live chat, add features to your product without having any impact on the price, and so on.
Once you know that you have made significant progress in terms of your product and service level, invite your passives to check out the product. Ask them if it is well within what their expectations were and promise to keep improving so that passives will soon become promoters.
NPS puts you in a retention state of mind
It is easier to make more money with your existing customers than it is to get newer customers. Everyone knows the value of retaining your existing customers, this is exactly why the entire article is dedicated to controlling churn.
When there is a shift in mindset where you concentrate on keeping existing customers happy rather than just plan on getting incoming leads, then you will see changes happening.
If you follow-up properly with promoters, you can get more than just a short review from them. Recommendations, video testimonials, and more can be a possibility if you play your cards right.
NPS is one of the best tools out there that businesses can use to improve their metrics. Controlling churn directly is not something that NPS does, but using the data from it can work wonders for businesses that are trying to reduce it.
A special thing about NPS is that you can use NPS to test out a lot of initiatives, apart from just asking for the satisfaction of customers with the business. By collecting NPS data and finding the insights, you can make a world of difference to your business.
With NPS, you can find your customer’s attitude towards your business. The ones who have a positive outlook will stay, but you need to request them to more positive testimonials so that it acts as a validation for your existing customers who are promoters and detractors while also helping prospects take a clearer decision.
If you are looking for a reliable online survey tool using which you can send NPS surveys, then look no further as you have landed in the right place. With SurveySparrow, you will be able to send conversational surveys that will have a terrific impact on the conversion rate of your surveys. With a dashboard that helps you gain rich insights from, SurveySparrow is your best bet for NPS surveys. Use the tool for NPS surveys to collect reviews, customer testimonials, and recommendations for your business. Get in touch with the customer success team at SurveySparrow to know how exactly we can help you send NPS surveys.
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