An important component, that over time proves to be advantageous and essential to most subscription businesses, is understanding the procedure of customer churn analysis. Every organisation must keep a record of how many clients are leaving, and it’s essential that they follow up with this information at every turn, as it prepares businesses to tackle the concerns of the customers while making a churn combat plan.
Lower rates of user churn analysis mean your customers are satisfied with the products and or services your business offers, eventually meaning higher revenue generation. However, the higher the rate of churn analysis means a large portion of customers are not content and are leaving for some other subscription services.
What is Churn Analysis?
Customer Churn Analysis is a method of measuring the rate at which customers stop consuming the products and services a business has to offer, along with finding the reason behind their exit.
User Churn Rate = Bygone Customers / Existing Customers (Make graphics of this)
Analysing these factors doesn’t only mean getting hands on with the withdrawal information, but also utilising it to fix the issue and work on reducing the rate at which customers are leaving.
Answers to all your Which, When, Why and What of Churn Analysis.
Which clients are choosing to leave and When?
Out of these, it is possible that some of these customers may voluntarily decide to terminate the use of services. The various reasons are mentioned below addressing the same issue. This churn can happen at any interval of time, be it beginning of the journey, mid-way or after the completion of services for the desired time.
Additionally, there are times when many of the customers do not even wait for transaction completion and change their decision in the middle. This kind of churn takes place prior to the initial phase.
Whilst involuntarily exits occur for a variety of reasons like - checkout issues, payment failures, forgetting about renewal of subscriptions etc, and there is no fixed time constraint to these exits. It's accurate to describe them as situational call-offs.
Customers are leaving, but why?
●High cost of the product or service as compared to what is offered by the competitors is the major reason behind the churn. People will not pay more to you for the same kind of services they are getting at the cheaper rates somewhere else.
●Customers not getting their needs met with the service provided.
●No upgrade options in the services with changing customers’ requirements can take you down the lane of churn, eventually losing your source of revenue.
●No subscription based model acquired by the businesses is the tremendous mistake a business can make. This will not only allow customers not renewing their subscriptions but also cost you a customer and money as well.
●Not maintaining customer relationships is a road to nothing but churn. This puts a negative impact on a business's status when a customer does not get good customer support, and there are high chances of them not thinking of considering you again.
●Difficult onboarding process irk the customers and may lead to the dropout of the services right away.
●Providing services to the wrong consumers type who don’t need the product or service you’re offering not only leads to churn, but also wastes the money used to acquire them in the first place.
What steps can you take to lessen user churn?
●The first and foremost step to reduce the churn rate is to analyse the churn effectively to look for the issues where customers decide to leave.
●Asking for feedback from customers frequently is another finest and the paramount approach towards keeping customers hold on to your services.
●Analysing customer behaviour patterns helps in understanding the mindset of the customer.
●Ensuring a systematic communication path so that customers can reach out easily with the problems encountered.
●Watch out for the competitors. Yes. You read right. Looking out for what advancements are being offered by the competitors which may tempt your clients is crucial too.
Why is it important to predict Churn?
Yes, it is all connected.
Understanding the potential causes behind the churn rate and identifying customer churn analysis may not always be an easy road to take. Considering past data along with current factors could also not result in accurate estimates.
It is uncertain whether the churn will follow the same pattern as in the past, but it is still imperative to have these computed figures on hand in order to be ready for the same. Needless to mention that the future is unclear and that it is challenging to anticipate consumer behaviour.
It is crucial to follow and go through the entire customer journeys, accumulate the highlighted reasons, and map out a plan to obstruct them.
Final words
Churn Analysis is a strong technique to be followed and Churn Rate is a potent statistical metric that needs to be tracked down in order to rectify the situation. Every business, regardless of its size or age, old or new, big or small, should take the steps to reduce their churn rate.
Having a positive outlook towards the situation and rectifying distinctive issues to your product or service will keep your customer churn rate down and will keep you on track towards increased revenue in the future.
