Churn is your arch-rival. Retaining existing customers is much more important (and cost-effective too!) than acquiring new ones. What is the point of spending all your resources, energy, and time on acquiring new customers while ignoring the existing ones?

Customer churn rate is the worst enemy you can have while marketing your product. The churn rate refers to the number of customers lost over a period of time. It can be calculated on a quarterly or monthly, or yearly basis.

Wikipedia explains Customer Churn Rate as “a measure of the number of individuals or items moving out of a collective group over a specific period. It is one of two primary factors that determine the steady-state level of customers a business will support.”

Calculating Customer Churn Rate

Calculating your customer churn rate is not difficult. The most straightforward way to do it is:

(Total no. of customers who left/Total no. of customers in the starting) X 100.

For instance, if you had 500 customers at the starting of the quarter and 5 customers left, then your customer churn rate comes to:

(5/500) X 100 = 1% for that quarter.

As we said, this is the simplest way to calculate your customer churn rate in percentage. You can also calculate the churn rate based on your business’s recurring loss value or the number of customers lost.

(Image Source: Churn Rate 101)

Note for eCommerce Brands: Calculating the customer churn rate for eCommerce brands can be a little dicey but not impossible. It is because many times, customers make repeat purchases within a single quarter. In such a scenario, the brand can mark that particular customer who did not make any purchase during that quarter as ‘Churned.’

Calculating Customer Churn Rate: The Challenging Part

Many marketers confuse between revenue churn rate and customer churn rate. Although both look similar, they are actually different. Let’s take an example to clear out this confusion:

Let’s assume a company ABC has two product lines- basic and Pro. Now, let’s say there are about 3,000 customers who pay around $300/month each. It brings the total value to:

3,000 X $300 = $900,000 MRR

The other product, Pro, let’s say, has 1500 customers who pay around $100/month each. The total value comes to:

1,500 X $100 = $1,50,000 MRR

Summing it all up, ABC has in total 4,500 customers and $1,050,000 MRR.

Now, let’s assume that about 150 basic customers and 50 pro customers churn in one month.

Customer Churn Rate:

{(150+50)/4,500} X 100 = 4.44%

Revenue Churn Rate:

[({150 X $300} + {50 X $100})/1,050,000] X 100 = 4.76%

It indicates that the customer churn rate and revenue churn rate cannot be identical because the two product lines, basic and Pro, have different revenue values. This discrepancy keeps increasing as the number of product lines increases. Hence, when calculating, it is crucial to note which method you are using.

Revenue Churn Rate: Helps in analyzing the overall brand performance and financial status of the company.

Customer Churn Rate: Helps in retaining existing customers and re-establishing bonds with them.

For more details on various ways to calculate customer churn rate, you can refer to the cohort analysis by everengage.

Factors Responsible for Increase in Customer Churn Rate

According to research, about 20 percent of your existing customers contribute to 80 percent of your company’s future revenue. It just gives your team more reasons to work on reducing the churn rate percentage. Various factors cause your customer churn rate to spike up. According to a Preact poll, the customer churn rate increased due to poor onboarding (23 percent) and underperforming product (20 percent). Some noted causes are: 

Misleading Information = Customer Dissatisfaction

Your customers signed up with your brand because you promised to solve their problems or address their needs, and they believed you. However, if you are delivering nothing close to what you promised, you are literally making way to steadily increase your customer churn rate! Hence, it is paramount to stay relevant, stick to the context, and deliver what you have promised. If you can exceed their expectations, you indeed hit the jackpot. It increases brand loyalty manifold times and brings down the churn rate strategically. However, you mustn’t spread information that is irrelevant, misleading, and out of context. 

High Subscription Cost

Charging your potential customers more than they can afford or more than any other competitors is more like turning your back towards your customers. Of course that does not mean you will bring loss to your brand, but maintaining a standard price will benefit you in the long run. If charges are excessively high, those who signed up for the free trial will immediately switch to another product or service. You cannot help but accept that customers always have many options to choose from as per their wishes. It is up to you to convince and retain them once they sign up for your product or services. 

No Customer Engagement = Increased Customer Churn Rate

If you are not engaging with your subscribers, you can very reasonably expect a subscription cancellation soon enough. The essential part is to engage with your customers the moment they sign up. Yes, that is the exact reason why you receive welcome emails from brands the moment you sign up. If you can get your subscribers to use your product or services almost immediately after signing up, the chances are high that these customers will turn out to be your long-term customers. 

Failed Payment Gateways

Let’s assume your subscription plans are fantastic. They are cost-efficient and enriched with useful features, services, or solutions. You delight your customers with your comprehensive line of products. They now plan to get on board as paid customers. When everything was going so incredible, your customers start facing unnecessary failed payment issues. Commonly, more customers often result in payment issues due to reasons like expired credit cards, exceeding card limits, declining bank payments, and so on. These factors turn off your potential customers. Your hard work goes in vain unless you take a detour and recover these issues through dunning management practices. 

Giving ample scope to your competitors to poach your subscribers

Okay, so that is the worst thing you can do. Making way for your competitors is like knowingly risking your customer base. It is necessary that you continuously innovate and engage your subscribers. You need to retain your existing customers before changing their minds and switching to another service or product. 

Emails Reduce Customer Churn Rate Effectively

Emails have always been the best way to communicate, nurture and engage customers. Time and again, marketers have turned to email campaigns to create brand awareness, maintain brand loyalty and also establish a bond on a personalized level. When it comes to retaining customers, emails are touted as the best way to do so. In other words, you can bring down your customer churn rate with your emails. 

In a comprehensive article, BareMetrics, subscription analytics, and insights tools noted down 17 emails they sent to reduce their churn rate, increase engagement, and boost their revenue. Starting with Onboarding emails spread through 14-days to follow-up emails and in-app interactions- they have listed it all here. 

How email marketing automation can reduce your customer churn rate?

Emails can be the gateway through which you can build a healthy and personal relationship with your customers. Let your emails speak for your brand and boost brand loyalty. Retaining existing customers is not rocket science. All you need to do is nurture them with the right emails at the right time.

Before we discuss this in more detail, it is the prerequisite to know that getting a ‘Zero’ customer churn rate is impossible. Be it anything, do whatever you want- you cannot satisfy every single customer. However, you can always work towards bringing down the percentage considerably. Here are a few ways in which emails can reduce your customer churn rate: 

Send personalized emails to build relationships

There has been a detailed discussion on why personalized emails are a necessity for any brand. This email from GoodReads is an excellent example of customer retention- 

I received this email when I organized my lists of books that I have read and those I wish to read. Although it is not like they are announcing a product launch or new event invitation, this email is highly personalized and contains ‘news’ tailored just for me. 

Emails help in building personal relationships with your customers. The more they trust you, the better are the chances they will not switch. The whole experience with your emails should be smooth, personalized, and highly relevant. It has been revealed that about 89% of customers move to another brand due to lousy customer services. Innovate and engage with your customers from time to time. 

Groove, a SaaS startup, was consistently having a customer churn rate of 4.5%. Although there was a steady inflow of new customers, their churn rate was not reducing. What Groove did was segment their subscribers into a group comprising of those subscribers whose first session was less than 2 minutes. Then they sent out the following email to this group:

The results were magnificent— more than 40 percent of those who completed the process stuck with the brand for about 30 days. 

Segment Your Customers

The above case study of Groove also enunciates the importance of segmenting your customers. It is very important to segment your subscribers based on their behavior, how long they have been associated with your brand, whether they are on a paid or free plan, and so on. There is a huge difference between those customers who are with your brand for over a year and those who have just completed that 30-day free trial. You cannot send the same email to both of these categories.

Send out educational content

Your emails should not be restricted to just announcing new launches or providing customer services. Sending out educational content that is relevant and useful plays a big part in strengthening the brand-customer relationship. When you provide free relevant content that is useful, you create a brand impression. For instance, this email from

LeadFuze:

The opening lines will definitely strike the right chord with marketers. You get a vibe that you can trust this brand to deliver all that it had promised when you signed up. 

Another way is to provide short crash courses on various aspects related to your product or services and customer segment. 

Send email marketing workflows and reminders

Telling your subscribers explicitly what they can expect in the next email is more like preparing the ground beforehand. Apart from that, email reminders are an excellent way to establish personalized bonding. You show that you care. For instance, this email from Viator–

It helps your customers to be aware of all the requisites before going to their destination. You can say Viator provides a checklist just when you are all set to go. 

You can also send reminders for account renewals, account expiry, coupon expiry, and so on. For instance, this email from Dollar Shave Club. If you skip filling out the credit card information section when signing up with Dollar Shave Club, expect an email like this:

It is just one of the many retention emails Dollar Shave Club sends out. The subject line and the email content are both appealing and convincing at the same time. The ‘Free’ month promise and the image of this beautiful box are alluring enough. 

Send feedback emails

One unique feedback email example is that from ClickinsightsIO. Their email campaign is like a triggered loop. Below is an example of one such email-

This email does two things:

1. First, it gets feedback if anything is wrong or not.
2. Secondly, the links help them track user behavior and trigger more personalized emails in the future.

Another example is how the renowned marketing blog Kissmetrics handle feedbacks. A feedback bar is implemented for users. Users can provide suggestions or report complaints.

Congratulating your subscribers for their achievements

It is human psychology to feel elated when someone congratulates you for any achievements. So why not utilize that in your emails. For instance, this email from Elevate makes the recipient feel good and nudges him/her to go forward and explore more. 

Give out incentives and other such offers

It is vital to probe your subscribers to engage with your brand, and the best way is to offer something. One method is akin to what Dropbox does-

The idea of getting more storage by referring to is an excellent concept. Dropbox recorded a 60% spike in their sign-ups after implementing this referral program. 

The whole idea is to give something valuable to your customers so that they stick to your brand. 

Some more ways to retain users through effective email campaigns:

• Announce feature updates 
• Say Thank You to your customers for choosing your brand and sticking with you
• Investigate why your customers chose to leave your brand

All the above ways can be summed up as follows: 

Personalized and relevant emails can help in reducing customer churn rates. The more you can connect with your subscribers; the better are the chances of them sticking with your brand till the end. As I mentioned already, it is always easier to retain customers than to acquire new ones. If you have used emails in any other form to retain your customers and have been successful, do let us know in the comments section. It is always good to keep learning.

How email marketing automation can reduce your customer churn rate?

To conclude, using email campaigns can be a highly effective strategy for reducing customer churn rates. Emails offer a cost-effective and efficient way to communicate with customers, provide personalized content and offers, and establish a connection that can help build long-term loyalty.

By leveraging customer data and analytics to create targeted campaigns, businesses can proactively address issues that lead to churn, while also providing added value and incentives to retain customers. With the right approach and strategy, email campaigns can be a powerful tool in the fight against customer churn, leading to increased customer satisfaction, retention, and ultimately, improved business performance.

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