Understanding all the numbers involved with your business can be overwhelming, but despite the challenges, you have to make it a priority to learn them in order to be successful in today’s sales game.
On a regular basis, the number of calls you make or deals you close is one thing, however, another crucial number that a lot of businesses overlook is their churn rate. And not only do you have to understand these rates, but more importantly, the goal is to keep these numbers low so that you retain the most customers month after month.
That said, if you have no idea what churn rates are, here’s a breakdown to help get you thinking:
What is Churn Rate?
You can think of churn rates as the cycle of customers who don’t renew their contracts or cancel your products and services altogether. This cycle is represented as a percentage, also known as customer churn.
Now, you may think that customer churn rates are no big deal. After all, it’s natural for customers to eventually cancel or fall by the wayside. But for businesses that rely on customers who pay monthly or annual fees, churn rates are a valuable metric to keep track of.
How to Find Your Churn Rate
So as a subscription-based company, the idea is to have a low churn rate so that you retain the most customers possible, which also means retaining the most revenue.
HubSpot offers a pretty simple churn rate formula if you’ve never calculated your numbers before. Basically, the equation goes like this:
Customer Churn Rate = (Lost Customers divided by Acquired Customers) x 100%
And don’t try to pull together your lost and acquired customers over the course of your company’s lifetime—just focus on a specific period or quarter.
For instance, if during the second quarter you lost 40 customers, but gained 300, your churn rate formula would be…
Customer Churn Rate = (40 divided by 300) x 100%
Do the math and you get…
(.13) x 100% = 13%
So you have a customer churn rate of 13%. All things considered, that’s not terrible. Yet again, if you really want to work on customer retention and boost revenue, you’ll want this number to be as low as possible.
How to Reduce Customer Churn Rates
Lowering your customer churn rates won’t happen overnight. More so, you’ll never be able to get rid of your churn rate completely.
Losing customers is a natural part of the business that’s bound to happen. But regardless of how many customers you lose, there are always steps you can take to remedy the loss and build a more secure foundation of consistency.
1. Always Analyze Your Customer Data
The good news is that for every customer you lose, you should have enough data on that customer to research what caused them to leave in the first place.
Did they have complaints about a certain feature? Did you neglect to repair a problem they had? Did their activity go stale for a long time and no one followed up with them for a routine check-in? By using your CRM and any other CRM integration tools you have, you can dive deeper into what made the customer call it quits. And once you discover what went wrong, you can develop a new process to fix that problem for other customers in the future.
2. Engage with Your Customers from the Get-Go
You may think that lowering customer churn rates happens during and after someone becomes a customer, but initially, you can hook a new customer in deep with an engaging onboarding process.
This means setting up a dedicated time to speak with your customers and give them a tutorial of your products and services. You can automatically enroll them in email funnels that help educate them on what their subscription entails, as well as develop a variety of online content (blog posts, videos, social media campaigns, case studies) that gets them excited and active with your business outside of just being a customer.
Right from the start, you need to set a pace with your new customers and maintain that speed with them at all times. Once they start to rely on you as a source for their business growth and development, you’ll have no trouble retaining them as a long-term customer.
3. Spend More Time on Sales Engagement and Sales Coaching
Lastly, the best way to lower your customer churn rate is to spend more time on sales engagement and sales coaching for your team.
Sales engagement platforms are a great way to leverage customer data from your CRM and use it in a way that educates your team on how they can improve. For instance, Kixie is a full-service sales engagement platform that works alongside major brands like Hubspot, Pipedrive, Salesforce, and Zoho to automatically store call data and allow reps to access that information on moment’s notice. From there, team members can quickly go through call dispositions, work with their account managers to locate qualified leads, and close more deals with customers that meet all the right criteria for onboarding.
Sales engagement represents the overall process of how team members can use data to their advantage, but sales coaching accounts for implementing active measures to train employees on their selling techniques.
It’s not enough to simply order an employee to make calls and send emails like a robot. Instead, you need to foster better sales habits by holding mock conversations, running training sessions and “what if” scenarios, and using call whispering to quickly give reps the info they need to close deals with the right customers instantly.
Sales coaching is a vital part of the sales engagement process, so once you’re able to focus more time on preparing your team to execute deals and manage customers, your churn rate will drop accordingly.
Start Your Free Trial with Kixie Today
Your customer churn rate requires your full attention if you’re looking to lower your numbers, and with that in mind, you need a platform that equips you with all the right tools to stay focused.
Kixie is your one-stop-shop for lowering your churn rate and preparing your business for future success. Click here to start your free trial of Kixie today and learn more about what you can do to keep customers coming back for more.