How To Reduce Churn Using Data

Understand your customer data and use it to reduce churn and keep your customers.

How To Reduce Churn Using Data
Adaptive Pulse

Churn is the enemy of SaaS businesses. Churn rate means the number of people who discontinued your services during a given period. It tells you how many customers you lost. In SaaS business, it is essential to maintain a high Net Revenue Retention. However, if the customers terminate their subscription, the NRR will reduce. To increase your NRR, you have to decrease your churn rate and to reduce it, you have to analyze and then strategize.

Data helps in understanding where you went wrong and how you can improve. However, not every business has the privilege of using data to reduce the churn rate. A few of them have to rely on unreliable sources such as third-party site reviews or their instincts. These subjective methods force the customer success managers to opt for trial and error methods. In such a case, no definite patterns or values indicate the cause of the churn. Thus, the CSMs have to rely on their bias. You can notice the cycles, right? Without proper analysis and metrics, you would not have the correct information to strategize. You cannot even guarantee the success of your strategy in this case.

Without proper analysis and metrics, teams are not enabled with the proper information to best serve and retain their customers, let alone creating effective Customer Success plans and playbooks. Thought-leading customer teams are moving away from subjective and unmeasurable methods to a data-driven approach with the option of a human-in-the-loop. You can reduce your churn rate using data confidently. Let us find out how.

1. Study Customer Behavior

By using data the right way, your Customer Success Manager can map the customer journey with your product. Customer retention metrics such as days sales outstanding, the time between purchases, net promoter score and product return rate are helpful in the process. Each metric helps you understand the problem behind churn and then find the appropriate solution. Automated analytics will allow you to go deeper into customer behaviour. It will help you find the root of the problem, the reason behind churning.

2. Spot The Patterns

After studying the consumer behaviour of the users who quit your product, it is time to find the similarities. You have to find the reason behind the majority of the churn. If the time between purchases is significantly longer in all the cases, it indicates that the customers are not excited to come back and complete the repeat payment. Every time they purchase, they are in doubt. Thus, you can focus on providing incentives for such customers to come back and reduce the time between purchases.

3. Focus on Customer & Cause

Along with finding it in the customer journey, you also have to find a pattern in the customer's interests. Using the power of machine learning, you have to find the segment of your customer base that has the highest tendency to churn. Analytics will help you to gather the demographic, psychographic and behavioral details about the churning customers. Spot the similarities in all the customers who cancelled the subscription. These will be your target audience. You have to strategize, keeping in mind their interests and behaviors.

4. Strategize

Firstly, set the goals based on the metrics. Keep the target to reduce your churn rate by a certain percentage and then work on it. You have all the data and KPIs ready with you. You understand the problem and the customers, and you know your business. You can give incentives, focus more on email marketing, or improve the product to retain the customers. But you can make this decision only when you have the data.

Once you start using data to understand your customers, you can start making data-driven decisions to deliver value and success to your accounts, reduce churn, and optimize expansion to increase your Net Revenue Retention rate. You are an expert in your business and running it which is more reason why you don't have time (or it isn't feasible to) monitor and analyze every data point from every customer. Adaptive Pulse enables you to run your business with a data-driven and proactive approach.

Feel free to reach out if we can help you with your qualitative customer intelligence or for a blog topic request to [email protected] or visit our How It Works page!

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