On a subscription basis, stable income is key to maintaining business continuity and increasing the revenue base to create the best possible service.
Customer retention is the key to your success.
On average, 5.6% of customers stop using Recurly Research data. However, few companies know that they can retain customers if they apply certain strategies. The most important thing is understanding the fact that it is necessary to retain the client before he decides to leave and will share negative reviews about your product.
Some businesses have costly retention strategies, and even less expensive retention strategies can add up as they scale. Many businesses use very costly customer retention strategies, and when they scale, the cost rises. However, retaining customers is also easier than looking for new ones. Invesp claims that it will cost a company 5 times more to acquire a new client than to retain one. In addition, it is known that 40% of companies give the same attention to customer acquisition and customer retention.
As sad as it sounds, retaining customers and preserving income is only part of the story. After all, for the clients themselves, increasing income is also an important task. Bain & Company conducted research and concluded that reducing your churn by 5% can increase revenue by more than 25% in the financial sector, and research by ChurnZero found that reducing churn by 1% can increase the valuation of a SaaS company by 12% through 5 years.
Finding leads and measures to reduce churn:
Bearing in mind that churn has an impact on income, it definitely makes sense to look for ways to find solutions and identify risks.
Here are a few steps to troubleshoot and find churn:
1. Understand how valuable churn reduction is for your business, make an individual approach to each of your clients and assess his churn risk
2. Target high-value customers with increased risk of churn during segmentation
3. Don't forget about retention strategies
4. ROI should be measured by observing churn rate
Using the example of Proseware, Inc, a music streaming service, you can consider the implementation of the above strategies.
Proseware, Inc. has about 20 million users worldwide, and about 6% churn rate per year. Subscriptions average is about $ 12 per month. Proseware, Inc. also offers some physical merchandise, band branded merchandise, averaging $ 30 per customer per year. So, it is possible to calculate that the annual churn will be around $ 208 million.
Importantly, Proseware, Inc. used Dynamics 365 Customer Insights to unify data from subscription, music listening, and marketing datasets to create unique user profiles. Using the churn forecasting feature, Proseware, Inc. analyzed the risk for each customer profile and created a whole segment of customers with high risk of churn.
Proseware, Inc. has created a marketing toolbox for email loyalty offers, with free product offers. Also, offered to reduce the cost of subscription in volume for its renewal. The company's strategy is to reduce customer churn by increasing loyalty and the quality of its services. Besides, work with clients so that they can make suggestions for improving services.
To summarize, Proseware, Inc. cut churn rates by 1.5% after analyzing the customers who had the highest chances of unsubscribing. Thus, the activities carried out by this company help it retain more than $ 50 million in revenue per year.
How Microsoft can solve the churn problem in your company
Dynamics 365 Customer Insights has a churn forecasting feature that enables companies to identify and work with unsubscribed customers to focus on retaining those customers and improving ROI.
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