BlogCustomer Retention

How to Reduce Churn Rate with this simple strategy [Case study]

Luca MicheliJul 16, 2023
How to Reduce Churn Rate with this simple strategy [Case study]

Yes, I know. 

One of your business goals is to acquire more customers. After all, it will help to increase sales.

But, one thing is missing: You don’t have a plan of retaining existing customers.

The thing is:

Retaining existing customers is also very important, in fact, even more than acquiring new customers. Don’t believe it? Check out the stats below:

  • Various studies have shown that acquiring a new customer is 7-13% more expensive than retaining them. For businesses in the e-commerce niche, customer retention is 5x cheaper than acquisition.
  • Existing customers are 50% more likely to try new products and spend 31% more when compared to new customers
  • The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is 5-20%.
  • Increasing customer retention by 5% can increase a company’s profitability by 25% – 95%.

But, the thing is, most brands pay too much attention to getting new customers than they do retaining their old ones. In fact, a study revealed that 44% of companies have a greater focus on customer acquisition while only 18% of companies focus on retention.

Now, when you pay more attention to customer acquisition and you neglect customer retention, you run into customer churn.

So, what is customer churn?

Customer churn is the number of customers that stop doing business with you in a specific time frame. The truth is, 50% of customers naturally churn every 5 years. However, only 1 out of 26 unhappy customers complain; the rest churn.

So, customer churn is something you will run into sooner than later. Maybe you already have it but you don’t even notice because you are busy acquiring more customers. It will show up and you need to do something about it.

Before we proceed further, let’s look at the benefits of reducing churn rate.

Benefits of reducing churn rate

  • Reducing churn rate will help to keep your customers happy
  • Reducing churn rate means more money in your pocket
  • Reducing churn rate helps you to better understand your customers
  • Reducing churn rate means spending less on customer acquisition.

Now that you know the benefits of reducing churn rate, the question is:

How do you retain existing customers and reduce your churn rate?

It is easy peasy!

Yes, because we have done the work for you.

Customerly carried out an experiment on how to reduce churn rate by gathering feedback from customers. 

Look at it below.

The churn problem: 

We discovered we had a customer churn rate problem and we carried out an experiment to reduce the churn rate.

The solution at the churn problem:

We built a funnel template with all the inactive users of over 60 days.

Recover Churns Funnel Template

We sent a single plain text email to them.

The subject line was: “Your Advice please”.  This worked because we made our customers feel important by soliciting their advice. Everyone loves to feel important. The headline really improved the open rate.

See the body of the email below:

Churn rate

The email was short with simple questions that customers can easily answer. It is not written in a business-as-usual tone. It combined humor with simplicity.  Does it work?  You bet!

The result:

We had 31% open rate and over 200 replies.

We collected the replies with Customerly by creating a new Team named “Churn”

Check out one below:

Churn funnel template

Do you know the sweetest part of it all?

We can continue the discussion with them to recover them. We understood the issues we had, and we fixed them. This helped us to convert them to customers again. 

We have an automated flow to continue collecting this data in the future

We keep them active after 30 days 🙂

The experiment above shows it is possible to reduce churn rate by using customers’ feedback.

Customer feedback is an essential tool to reduce the churn rate. In fact, 11% of customer churn could be avoided if the business reached out to the customers.

It may be difficult to keep your customers from leaving, but you can ask them why they left.

Pay attention to the reasons they give and take action on it.

Customer feedback will give you satisfied customers who are more likely to upgrade or add services and are less likely to cancel. When they eventually become loyal customers, you can expect them to spend 67% more than new ones.

The best part is that you don’t have to manually do the task, you can automate it, just like we did in the experiment above.

Automation makes tasks like this a breeze.  Want to try it out?

Ok, let’s go get them!

Follow the steps below to reduce your customers churn rate

  1. Log in to Customerly. If you don’t have an account, simply create one here.
  2. On your top navbar, click on funnels and then create new.
  3. Click on the Recover Churn Template churn recover funnel template
  4. Select your right entry point (60+ days inactivity)
  5. On the right sidebar, change the state to “Last Page Viewed At”
  6. Change the condition to Date More Than
  7. Insert 60 days on the field. Save Filter.recover churn funnel template editor
  8. You can now push the continue button on the top right and publish this funnel.

Yep! You made it!

It is time to sit back and watch your inactive customers respond to your email. Read their responses and act on it. Keep the conversation going and soon enough, you will bring them back and reduce your churn rate.

It is easy, isn’t it?

Now, you know how to reduce the churn rate by gathering feedback from your customers.

Have you tried using this strategy before?  Share with us in the comment section below.

Luca Micheli

Luca Micheli

CEO @ Customerly

Luca Micheli is a serial tech entrepreneur with one exited company and a passion for bootstrap digital projects. He's passionate about helping companies to succeed with marketing and business development tips.

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