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5 Reasons Your Churn is Increasing

Posted by Origins Ecommerce - February 12, 2016 in , ,

Customer churn is the arch adversary of most subscription companies.

Not only does it directly impact customer lifetime value (CLV), it directly affects the ability to grow your business. Understandably, minimizing it is as critical as onboarding new customers.

Although a Preact poll cited poor onboarding (23%) and an under-performing product (20%) as the leading causes of customer churn, it’s well worth taking a deeper dive. Here are some of the most common reasons your churn may be increasing:


1. You’re Not Delivering the Value You Promised

People became your customers because they believed your product would solve a problem or meet a need. But if there is a discrepancy between the expectations you set and what you can deliver, you’ll likely see your churn rise quickly.

Therefore, it’s important to ensure that the approach of your sales and service teams is aligned for setting and delivering customer expectations. Customers expect companies to deliver on their promises, but they love it when you exceed their expectations. Not only does it increase customer loyalty, it also helps reduce churn.

2. Your Competition is Outshining You (And Poaching your Customers)

To keep your subscribers engaged, you need to be constantly innovating and adding more value to your offering. If you stop improving your service, you risk your competitors surpassing you in terms of the value they can provide to customers. This can cause your customers to cancel your service and switch to another.

Track the improvements your competitors are making and ensure you don’t lose your advantages. In addition, knowing what your competitors are doing allows you to strategically add features that they don’t have and maybe haven’t thought of.

3. Unnecessary Failed Payments

You’ve worked hard to acquire your customers, and you have a growing business. But the more customers you have and the longer you’ve had them, the higher the risk of failed payments for any number of reasons:

  • An expired credit card
  • The issuing bank declines the charge
  • The card number was changed and the customer didn’t notify you
  • The card exceeded its limit

Those failed payments can turn loyal customers into former customers. Fortunately, you can often avoid or recover failed payments through dunning management practices.

4. Lack of Customer Engagement

An unused subscription is often soon to be a cancelled subscription. If you’re not engaging with your customers, especially immediately after signup, you are likely going to start to see churn increase. This means providing help getting started and consistent reminders of the value customers can get from using your product. If you can get subscribers regularly using your service quickly, they are much more likely to stay signed up.

5. Ignoring Customer Behavior

If you think your company is doing everything right, but it’s still experiencing increasing churn, then there’s a disconnect between you and your customers. The key is to always be listening to your customers and tracking how they are actually using your service. What features are being heavily used and what are being ignored?

Similarly, try using customer satisfaction surveys as a way to be proactive. If done right, surveys will give you actionable insight and feedback that you can use to help stop customer churn. While most customers will reach out if something goes sideways, they typically won’t tell you when they’re ready to leave to a competitor or why. This is where intelligent customer satisfaction tools can identify at-risk customers so that you can take action to keep them.

Key Takeaway

Clearly the key to reducing churn is knowing your customers, delivering on your promises and having a strategy in place to address failed payments and competitor poaching. Focusing on customer needs and the value your product provides will go a long way to keeping those customers around and reducing churn rates.

If it’s too late and you’ve already lost a customer (or three), reach out to them and ask why they cancelled their subscription. That way you can glean insight about why customers cancel, learn from it and decrease your churn over time.

About the Author

Origins Ecommerce

We love sharing our expertise in online payments and helping our customers succeed. From the technical team to our customer service team, everyone at Origins Ecommerce is ready to support your success. Our goal is to reduce your expenses and risks while optimizing your revenue, by managing your online payments for you. The Origins Ecommerce payment solution is there to keep your payments in motion, so you don’t have to.
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