Grab these 11 Practical Strategies to Reduce Churn in Your Business [Expert Opinions Included]

Not every tool out there is like Tinder and has a “built-to-churn” model. For you, dealing with churn probably sucks.

We get it—at Close, we experienced it in our early days, too. And because of that, we’ll share our lessons with you so you can also overcome customer loss.

Churn is the percentage of customers who stop using your product during a certain timeframe. For SaaS businesses, this is the number of customers who cancel their subscriptions, while for service-based businesses, this can include fewer engagements or a canceled retainer.

Ready to reduce churn? Don’t count on the “gurus” with their hacks and tricks. Hell no. We’re fans of simple yet tested methods. And we agree with Lincoln Murphy, a customer success expert, that churn comes down to two things:

• Your customer went out of business
• Your customer didn’t get their desired outcome

Well, that’s the simplest way to put it. 

The first factor, as you read, is out of your control. But you can influence the second one, and in this article, you’ll learn how.

How to Reduce Customer Churn Rate: 11 Strategies You Can Start Using Today

Customer retention poses a significant challenge for many SaaS and service-based companies. We won't bombard you with startup failure stats, but we all know the struggle is real. While churn boils down to simple math, the reasons behind it are more complex.

Here are 11 practical (proven) ways to reduce churn in your business by improving your overall sales process and customer journey.

1. Fix Your Marketing Funnel and Improve Targeting

Happy and successful customers who stick with your business were, at one time, high-potential marketing leads.

Of course, to attract more of those leads with higher potential to stick around, you need to target the right people.

How to improve targeting to reduce churn:

• Identify high-value customers and create ideal customer profiles (ICP): Target those that fall within your ICP profile(s).
• Craft a focused content strategy addressing ICP pain points: Use this unified messaging on your landing pages, blog posts, videos, and social media posts to attract the right audience and position yourself as an expert.
• Use social media to monitor industry conversations: You'll see what topics are popular for your audience, and be able to jump right in.
• Optimize your website for search: Identify and target high-intent phrases that have the potential to attract new customers. 
• Use product marketing to attract the right prospects: As Mário Cruz, Head of Marketing at Onport, says: “A product marketing team should be actively focused on gathering information from customers." Then, they can build customer marketing assets—such as case studies, product videos, comparison pages, and more. These can be used to enhance brand awareness and increase revenue with campaigns.

Example: Not to toot our own horn, but we’re pretty proud of the way we use our weekly webinar series to attract new customers with a high potential for growth. This webinar is set up to show new prospects and leads the inner workings of Close, its main features, and how they can use it in their business. Prospects can sign up for this live event and get real-time answers to their questions, or they can watch an on-demand version at their convenience.

Here’s the point: by signing up for this webinar, new leads show high purchase intent. And since they give us their email address when they register, we can then follow up with them down the road.

2. Fix Your Sales Funnel and Do Better Qualification

Before optimizing sales, consider two crucial issues.

First, avoid chasing bad-fit customers; quality beats quantity. 

Second, churn is highly tied to how aggressive your sales offer is. Liam Brennan from BusterBox noted: “If your sales offer is focused just on getting as much new biz as possible, you’ll eventually lose them.”

The best place to start optimizing this process? From your very first sales interaction with a new lead: the discovery call.

Here are some ways to qualify more effectively on your discovery calls:

• Do better research before the call: The goal? To understand the prospect's industry, pain points commonly faced, and recent news about their company.
• Ask open-ended questions that dive deeper into the context of looking for a new solution: For example, instead of asking, "Do you have issues with your current software?" try, "Can you share more about the challenges you're facing with your current software?".
• Prioritize listening over talking: Aim for a ratio where you listen more than you speak. Give prospects the space to articulate their concerns fully. This not only helps you identify problems but also builds rapport by showing that you value their perspective.

Improving discovery calls should improve the quality of your leads and judge whether a prospect is a fit for what you sell or not. Later on, better-fitting customers should have a lower churn probability. And that’s what you’re striving for, right?

Example: When your sales team act as consultants, they can help guide prospects to the best option for their situation. They’re quicker to realize when a prospect isn’t a good fit for your business, and more diligent in qualifying effectively. Learn more about what it means to be a consultative salesperson in this video:

3. Optimize Your Pricing Plans

No matter if you’re a SaaS or a service-based company, pricing is a big deal—and it’s far too easy to get it wrong. Unclear pricing structures, over- or under-priced tiers, and lack of scalability are common issues. 

And if you get the urge to discount? Tread carefully—too many discounts can devalue your product in the eyes of the customer. 

Maciej Wilczynski, a pricing expert and Founder of Valueship, gives this advice: “Offering discounts from the get-go isn’t the way to retain customers.”

Here’s what he recommends instead to optimize your pricing:

• First, try to understand the reasons for churn (beyond just price): Are they using all the features they’re paying for? Could you adjust your pricing tiers to better fit customer usage?
• And second, try to understand what would have to happen so the customer can pay that price: What kind of ROI would they need to see from your product? Or how much would their team need to scale in order to use it well?

When you optimize your pricing to fit what your customers need, you’ll build stronger customer relationships and reduce churned customers.

Example:

Most SaaS companies use tiered pricing, and Livestorm is no exception. They offer usage-based tiers that fit their different types of customers. They also show which customers are using which plans, giving new customers a good starting point on which plan is best for them. Optimized pricing means each customer pays for the features they use, and none of the ones they don’t.

4. Create Insanely Good Customer Onboarding

In both SaaS and service-based companies, onboarding is the red-carpet moment that turns first-time users into loyal fans.

Waleria Pagowska, a product marketer at Brand24, says that they realized that churn often stemmed from a lack of customer engagement or understanding of the tool. “We set up more comprehensive onboarding, with personalized tutorials and regular check-ins, and significantly improved customer retention.”

Yes, you read that right—onboarding is an awesome way to show value to a customer, quickly.

Here are some steps to improve your customer engagement (and reduce churn) with better onboarding:

• Identify your main activation events: Which features do users need to try to get that “Aha!” moment in your product?
• Find ways to educate your new customers on those features: It could be through an email campaign to follow up with new customers, or using in-app education with a tool like Appcues.
• Offer 1:1 onboarding for more complex situations: If users need to migrate data, train a team of new users, or face other time-consuming barriers to onboarding, offer to reduce friction with direct help from your team.

Example: The email marketing tool GetResponse uses Appcues to create educational onboarding experiences for their users.

These quick tours of their main features help new customers learn how to use the tool. Within days of setting up this new onboarding process, they increased email creation by 60 percent and email sends (their main activation event) by 16 percent.

5. Regularly Ask for Feedback (And Act on It!)

Active listening applies not only to discovery calls but throughout the entire customer journey. Gathering feedback and acting on it is crucial for reducing churn.

To gather feedback, ask:

• How well does our product address your specific needs?
• Are there any features you wish our product had?
• How would you rate the ease of use and user experience of our platform?
• Have you encountered any challenges with customer support or onboarding?
• How well are we meeting your expectations in terms of performance and reliability?

B2B Marketing Consultant Michal Szermelek recommends organizing quarterly business reviews for deeper insights. 

He says:

Go beyond NPS scores and actually talk to your customers. You’ll be amazed at the insights you’ll discover.

Example:

Boundless UK, a membership club for experiences, used customer surveys to better understand how users were interacting with their website. When asking users about their experience in the renewal process, the team at Boundless discovered that a whopping 25 percent of customers had trouble renewing their membership (meaning they were losing money to accidental churn).

Using these insights, they were able to make some easy changes to the renewal process, and the number of customers who found it difficult to renew their membership dropped to zero.

6. Be Proactive with Your Customer Support

Oh, well, customer support. Either it’s your biggest blessing or a curse.

Imagine this. Your product works well. But one day, bam, there is a critical bug. It depends a lot on how your customer support team will tackle this issue because you can definitely smell churn around the corner if the issue is significant for the customer.

How do you improve your customer support and enable them to help reduce churn?

• Invest in hiring great folks for the team: Your customer service team should be all-stars in caring about what’s going on with customers. 
• Give them in-depth product training: Your customer support team should know your product inside and out, include common workflows inside the product, top integrations, and more. They should be able to answer questions quickly, with actionable advice your customers can work with immediately.
• Enable them to monitor product usage and customer interactions: With the right insights, your customer service team can spot early signs of churn—lower engagement, fewer logins, lower usage metrics, or lack of responsiveness. Then, they can proactively reach out before things go south.

And heck, even if your customer has already dropped off, great customer support can sometimes change their mind. 

Example:

Social media marketing app Hookle has a five-star customer service team, as shown by this experience:

7. Use Predictive Analytics to Preempt Churn

Predictive analytics is your low-key ally in this battle. Use health scoring—it's like checking the vitals of your customer accounts, minus the white coats.

For example, use key indicators of value in your product and measure those value indicators per customer account. With these health scores, you can spot which accounts are doing well and which are at risk of churning.

Later on, you can develop playbooks based on those scores to reach out to your customers. Think about it like a game plan that can help you in churn prevention.

8. Build a More Personalized Customer Experience

Personalization is seriously overused in the business world, and it can mean anything from inserting a person’s name into an email to creating a whole custom product or service just for them.

Whatever form it takes, personalization isn’t optional—research by McKinsey found that 71 percent of customers expect personalization, and 76 percent get frustrated when they don’t find it.

Here are some of the types of personalization McKinsey found that users expect: 

Personalization in sales can be based on many things. Context. Location. User choices or survey answers. Use this data to make users think, “Wow, they really know what I need.”

Examples:

We’d all love to be Spotify and personalize each customer experience in an insanely unique way, but let’s face it—that’s just not possible for the rest of us mortals.

So here are two ways other companies are personalizing their experience.

Need something simpler? If you’re early stage, just getting your first customers on board, send them personalized emails after they sign up.

Of course, this doesn’t work at scale, but it’s a great trick for when you’re starting out. In these emails, refer to specific use cases, reasons for signup, and features that can be important for this particular person.

From our experience, an “ugly but personalized” email gets way more responses than a “perfect but soulless marketing mass mailing.”

Later, your customer success team can keep the ball rolling. When the prospect converts, the team should engage proactively, understanding user needs, and addressing concerns.

9. Incentivize Customer Loyalty

When you give people a reason to stay, they’ll be more likely to do so (as long as that reason is truly motivating to them). 

Liam Brennan, Founder of BusterBox, shares in his podcast how he approached this in his business: “Consider offering bonuses or discounts to customers who commit to a 3-month subscription, fostering a sense of immediate value. Reward them with frequency so they know that the good things are coming up. 

“You can also set up email automation to let them know they can activate these rewards by responding to the email. It can be anything—a credit in your shop, a free product, or an extra feature.” 

Here are some simple ways to incentivize loyalty and reduce churn:

• Build a community: When you create a space where loyal customers can interact with each other, you help them develop a deeper bond with each other (and, ultimately, with your brand).
• Create a reward program: Whether customers earn points for each purchase or get rewards for committing to a longer subscription period, a clear incentive program can help happy customers stay with your brand.
• Start a referral program: When customers feel they can help their friends (and get benefits for it), that can motivate them to stick around.

By encouraging longer-term relationships, you create a stable customer base. It's crucial, however, to manage customer expectations transparently. 

Clearly communicate the benefits of loyalty, ensuring customers understand the value they'll receive in return for their commitment.

Example:

The Mailchimp & Co. program is built to help small agencies and freelancers who are using Mailchimp to build marketing programs for their clients. This membership program is more than just a referral program for partners—it’s a place where small businesses can learn, engage, and grow. Members get exclusive training, tools built for their specific needs, and events to build their network.

10. Ask Churning Customers Why They’re Leaving

“Well, thanks, Captain Obvious,” you may say. But seriously, it’s really that simple. Churn surveys are a goldmine of good (but uncomfortable) data. 

Key elements of a churn survey may include:

• Reasons for leaving: Enquire about the specific reasons customers choose to discontinue their subscription or service. Is it because of pricing concerns, technical issues, or dissatisfaction with features?
• User experience feedback: Ask about the overall user experience and whether there were specific pain points or challenges that influenced the decision to churn.
• Competitor comparison: Explore whether customers switched to a competitor and, if so, why. Understand where your competitors shine.
• Feature requests: Check if some specific features or functionalities would have encouraged the customer to stay. This insight can guide product development.
• Customer support assessment: Evaluate the customer's perception of the support they received during their journey, identifying areas for improvement.
• Satisfaction levels: Measure overall customer satisfaction with the product or service and any changes or updates that might have influenced the decision to churn.

Steli Efti, CEO of Close, adds why asking customers what’s missing is key. “Let’s say a customer churned because they’re missing a specific feature. But maybe you’re about to release this feature in your product. In cases like this, churn can be prevented.”

Example: Hussle, an online marketplace for gyms and spas, set up a customer churn survey to see why users were canceling their subscriptions.

Using these surveys, they found a clear gap in their features. And in time, this led them to develop a whole new product inside their service. Luke, Product Lead at Hussle, says this: “We send these surveys out to every churned customer, and get a few new insights every single day.”

11. Segment and Analyze Churn by Cohort

Segments will give you information about the users who completed a specific action, while cohorts blend events in a set period of time. 

Here’s how to use both:

• How to use segmentation to reduce churn: Identify users who have shown decreasing engagement over time by segmenting them based on their activity levels. For instance, group users who haven't logged in or used key features in the last 30 days. Target this segment with personalized re-engagement campaigns, offering incentives or highlighting new features to reignite their interest and curb potential churn.
• How to use cohorts to reduce churn: Create cohorts based on the month users joined. Examine the onboarding experience for each cohort to understand if there are common pain points or drop-offs. If a particular onboarding process correlates with higher churn, refine it for new cohorts. By continuously improving the onboarding experience, you address issues early on, enhancing user satisfaction and reducing long-term churn.

Of course, all of this requires having the right tools to create and analyze cohorts. Tools like Amplitude, Mixpanel, and Fullstory are all top options.

Once you see your data, you can make small changes, and A/B test the results. Try testing a different campaign, a new onboarding process, or a simplified renewal process. By running these tests in your cohorts, you can double down on successful actions and ultimately reduce churn.

The Top 9 Reasons Why Customers Churn

According to Gartner, budget cuts, bugs in the software, and weak native integrations are among the top reasons why users churn.

Here’s a hard fact: you can’t reduce churn to zero. You’re not Superman! Some of these churn factors are simply out of your control.

Let’s discuss some of the most popular reasons why people churn and talk about how you can use the above strategies to reduce churn as much as possible in each situation.

Their Budget Has Been Cut

This is a tricky one because there is no better argument to cancel than, “I don’t have money for this tool.” While you can't control their budget constraints, you can offer flexible pricing plans or temporary discounts to accommodate their financial situation.

But, most importantly, please keep in mind the break-even point and don’t discount your product too much. Remember: the bigger the discount you give, the lower the perceived value for those who get it.

They Churned Unintentionally

Passive churn happens when their card expires or gets blocked. Simply put, you can’t charge your customers, and they drop off (many times, by accident).

So make it easy for your customers to pay, for example:

• Reduce the number of screens they need to go through to pay.
• Remove the clutter from the paywall page.
• Make it a really one-click thing. 
• Implement preventive mechanisms, e.g., a workflow when a card gets rejected.

As Gabriel Ramuglia of IOFLOOD adds: 

“Make it easy to remain a customer. If someone has to ask you to cancel their service, they are less likely to do so. 

“Do what you can to get customers to put a reliable payment method on file when they first sign up and agree to automatic renewal payments. Credit card processors also have features now to automatically update credit card expiration dates when a customer gets a new credit card. This can be a powerful way to reduce churn.”

Your Champion Leaves the Organization

When your primary advocate and supporter within a client organization, often referred to as the champion, departs, it can introduce a significant churn risk.

B2B consultant Michal Szermelek explains: “Usually, the next champion won’t just pop into existence. Even if you feel that you have a great relationship with one particular person in the customer's team, remember that they can (and eventually will) look for new opportunities.”

If that’s your case, identify and cultivate relationships with other key stakeholders. Proactively communicate with the new decision-makers and ensure a smooth transition. 

Your Product Didn’t Work Well

This is table stakes. Heck, your product has to work to remain valuable for customers. 

Lincoln Murphy of Sixteen Ventures has a strong stance on this topic:

“If your product development roadmap is emphasizing shiny new features over fixing or adding things that will make your existing customers successful, you’re doing it wrong. Most companies blame their customers for asking too much of them. But if you think asking for a product to reduce downtime or avoid data corruption is 'too much,' then I’d say you don’t deserve customers!”

Harsh, but true. Listen to your customers and focus on building a product that people actually want to keep using!

They Found an Alternative that They Like Better (and the Switch Was Easy)

Well, shit happens, right?

There is so much competition on the market that customers change providers. But some tactics will help you keep them longer. First, focus on highlighting your unique value propositions and consistently enhancing your offerings to stay ahead in the market.

Gabriel Ramuglia also gave us some insights on how to make users stay: “You should focus your marketing efforts on the types of customers who will be more sticky. That would be people who have more to lose in terms of time, money, or risk by switching providers. 

“In the dedicated server hosting space that I'm in, for example, customers who sell virtual private servers (VPS) are less likely to churn, because it would be difficult for them to move all of their customers onto a new server. If they do want to switch to a new provider, they also risk losing customers due to downtime during the moving process. 

“Customers who run game servers, however, can switch much more easily, and the impact of downtime from switching is minimal. Focusing on customer types who are less likely to switch providers can help reduce churn dramatically.”

They Never Figured Out How to Use Your Product Well

If your onboarding sucks, your customers won’t stay. It’s that simple.

It’s your job to make sure that customers are successful using your product, and this brings us back to optimizing your onboarding and customer support. Clear communication and ongoing support also play a crucial role in addressing usability issues.

If you want to spot users who don’t get your product or specific flows, session recording tools can turn out to be a great help. You can watch how they use your product “in the wild,” and see where users most commonly get stuck.

They Felt You Didn’t Listen to Their Feedback

Active listening doesn’t end on a discovery call.

When the competition is fierce, you have to really show your customers that you care. About their results, about their success, about them.

And when you ask them about feedback, heck, use it later on. Implementing suggestions shows that you want them to succeed, and commitment contributes to trust, too.

They Had a Bad Experience With Your Brand

This one really sucks too. If you lose a customer because of a negative experience with your brand, it means that either your support doesn’t work well or something big just happened.

It can be anything: poor service, product issues, differences in ethical values, or communication breakdowns. But it all comes down to you losing money and reputation. To prevent it, add a personal touch to the relationship with a customer, implement feedback, address their concerns along the way, and be as transparent as possible about what went wrong.

Their Business Closed

Well, here you can’t do much. What you can do is stay in touch with them and reach out from time to time to see if the situation changed or if the founders built a new company that could benefit from your product. 

Our CEO, Steli, adds: “In some ways, you can blame your marketing and targeting and say that we should improve targeting so we talk to companies that are mature and stable. But in terms of edge cases—there is little power.” 

Final Thoughts: Build a Strategy to Handle High Churn in 3 Steps

Lastly, take a look at our suggested step-by-step approach to keep churn under control.

Set Clear Churn Goals

First, check your churn monthly to know whether you're growing or not. If you keep it under 10 percent, that’s alright. But if it goes above, try implementing strategies from this article to lower it.

And you know, specific, measurable goals are always good in churn reduction. Align these goals with broader business objectives, ensuring clarity on what success looks like in the context of customer retention.

Analyze Your Customer Churn Data

Again, Waleria, the product marketer at Brand24 said it well: “I think that in SaaS, it's crucial to understand that churn is not just a number but a signal of deeper issues in customer experience or product-market fit. Continuous monitoring and quick response to customer feedback are essential in this dynamic environment.”

Thus, dive deeply into customer churn data. Look for patterns and key factors to understand customer behavior.

Take Action, Analyze, Reiterate

Okay, you have goals and see a churn pattern. What now?

Implement a flexible strategy. Test different onboarding workflows. Adjust your pricing tiers to fit the features that people really need. Conduct churn surveys, and see if there are common areas where you can improve. 

You won’t be able to address every churn reason right away—start with the burning issues, and you’ll make headway to a reduced churn rate.

And remember, keeping an eye on churn is an ongoing battle. Check churn stats at least monthly and act fast to prevent customer dropouts.

Need a partner for better customer communication? See how Close can help your business develop deeper relationships with customers, and improve your retention rate.