In this article we'll cover top tips for reducing customer churn. We will explore:

Customer churn is typically viewed as a percentage that shows you what proportion of your customer base you are losing over a given time frame.

To calculate your customer churn, simply divide the number of customers you lost over a period such as a month or quarter, by the number of customers you had at the beginning of that period.

Why bother? While it’s a fact of life that you will lose customers along the way, should your churn rate rise above what is normal or average for your store, you will need to take action. Responding to increases in churn rate is important because:

Being able to predict customer churn is a huge advantage, enabling you to step in and prevent the loss of the customer before it happens. To improve your ability to predict churn, we recommend:

Surveying churned customers and collecting qualitative data on why they have not decided to purchase from you again will provide insights that could help you predict whether or not there is a particular issue you need to resolve, or a wider trend that you need to react to

Reviewing the customers who have recently churned will help you to understand if there is a particular segment that is more likely to be at risk. Looking at demographic data such as age, gender or location could help you to spot where churn is likely to continue coming from in future.

Analyze the behaviors of customers who have already churned to understand what happened before they stopped repeat purchasing. Look out for behaviors such as paused subscriptions, increased interactions with your Customer Service Team, late payments or longer times between purchases which could be red flags that a customer is becoming at risk of churning.

So you know what customer churn is, and you know how to spot it, but how do you prevent it from happening and impacting your returning customer rates?

Let’s explore our top strategies for reducing churn.

One of our most basic suggestions for reducing churn can actually work the hardest. If your churn rates are on the rise then we strongly recommend evaluating your comms strategy - in particular email and SMS.

Are you using loyalty messages effectively to keep in touch with customers in between transactions, to keep reminding them what makes your brand special, and to keep them up to speed on their loyalty program perks?

At the very least, you should ensure that you are sending the following loyalty messages:

The key to ensuring that your emails and SMS messages effectively reduce churn, is making sure they are as personalized as possible. Loyalty data such as a tier information or available rewards are a good place to start, however we recommend using your loyalty program to incentivize the collection of zero-party data that you can use to segment and personalize even further.

Find out more about loyalty emails, or find out how to set up custom rules to collect zero-party data.

Once you’ve identified which customers are at risk of churning, you can run a winback campaign in order to retain them. Winback campaigns do not need to include discounts or free products. Instead we recommend crediting at-risk customers with surprise points that allow them to unlock a reward should they return and purchase again.

We also suggest surprising and delighting at-risk customers with an unexpected reward such as early access to a sale or new product so that they feel they are receiving VIP treatment.

Where possible, your winback messaging should remind customers why they chose you in the first place. For example, if your brand values centre on a specific characteristic such as sustainability, ensure you remind them of that.

Winback campaigns can be set to run automatically, triggering messages whenever a customer meets a specific criteria such as a certain number of days since their last order.

Loyalty tiers can be a powerful tool when it comes to reducing customer churn for two reasons:

Once you have your loyalty tiers in place we recommend upgrading at-risk customers to a higher tier than they are currently sitting in. This gives you an excuse to contact them with good news, however it also gives them access to additional perks and benefits they were not expecting. For example, in going up a tier they may be able to access benefits such as free shipping, or early access to sales. These rewards could be the motivation they need to return and repeat purchase rather than shopping elsewhere.

Explore loyalty tiers in more detail.

Our final recommendation for reducing customer churn, is to ensure that you’re responding to customers as and when they have negative customer experiences. A customer support ticket can be a red flag for churn but the right response can turn things around.

We strongly recommend integrating your loyalty program with your helpdesk provider. This helps customer service representatives to respond to churn risks in a number of ways including:

Using your loyalty program to support the resolution of issues reduces churn by improving customer experience. However, it can also reduce your reliance on refunds and future discounts, while simultaneously ensuring that at-risk customers have points and rewards that they will now return to use.

Find out more about our helpdesk integrations with Gorgias and Zendesk.

Need a hand setting up any of these churn-reducing strategies? We’re here to help - just contact support@loyaltylion.com.