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November 27, 2015 // 8:00 AM

The Right Way to Reduce Your Churn Rate

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Some customers are past saving. They’ve made their decision to leave, and they'll be out just as soon as they can find the “cancel” button.

Of course you don't want them to leave -- nor do you want more customers following suit. 

To prevent more customers from leaving, you need to ask yourself tough questions: How did your churned customer get to that point? And once they’re at that point, is there anything you can do to save the account?

Let’s Not Play “Hide the Cancel Button”

Recently, I was on the other end of the churn process -- and it got me thinking about those tough questions. I decided to cancel my subscription service to a local CSA. It delivered fresh fruits and vegetables to my door twice a month from local farms, but neither the prices nor the quality of the produce impressed me compared to the local supermarket.

I went onto my online account and spent 20 minutes trying to find a way to cancel ... and came up with nothing.

Finally, I just emailed them. “Hi, how do I cancel?”

The CSA's response:

Thank you for your recent inquiry. You may close your account at any time by calling or emailing us with a clearly stated request to cancel your account and a reason for cancellation. We will process this request as soon as possible.

When your account is canceled, we invite you to return at any time. You can always resume your services by logging on to your account online and clicking the link to reactivate, or by giving us a call and asking to have your account reactivated.”

Besides the fact that I was clearly speaking with a robot, the CSA's customer retention strategy was transparent: Force customers to have a difficult conversation before they go as a deterrent to leaving.

As retaining technique, hiding the cancel button doesn’t work at all. You're just delaying the inevitable. As any number of ex-boyfriends and ex-girlfriends can tell you, when you’re out, you’re out. Having to go through a hard talk to get there isn’t going to keep anyone around. 

The CSA could have handled this much better and perhaps even have kept my account. Here's what the cancel process should have looked like.

How to Set Up a Cancellation Process the Right Way

When a customer is jumping ship, you have a few opportunities that can turn one loss into long-term gain.

1) Have an easily accessible “Cancel” button.

2) This cancel button should auto-trigger an exit survey to find out:

a) What the customer expected to get.

b) What the customer thinks they’ve actually received (or not).

c) If there’s anything that might get them to stay.

3) Look for patterns in the responses.

People leave a service when there is a mismatch between what they hoped to achieve and what they were actually able to do.

Once you have this information, you can look for patterns that can tell you how well your company tells its story and targets the right customers. Then, you can use that information to build better policies and procedures for customer success.

(Hint: If they say “lower the price,” that doesn’t mean you should lower the price -- but rather that you have failed to impart the value of your service).

4) After the survey, include another page with succinct (yet friendly) copy that reminds them of why they signed up in the first place -- and what they’ll lose by cancelling.

This is where the CSA also took a misstep. I was welcome back any time with no penalty (not that there should be penalties -- that’s no way to make friends!).

But if there had been a loyalty rewards program -- maybe when you buy 10 boxes, you get the 11th one free -- it could have had returning customers forfeit their pre-cancellation points. For another SaaS business, what departing customers lose could be saved data or the investment in the product up to this point. Weight the decision to cancel with consequences that exiting customers have to consider carefully -- but also give them the cancellation button. Don’t hide it.

Besides highlighting what I was giving up, the CSA could have:

  • Reminded me why I joined -- which was to support local farms and receive fresher (closer) produce.
  • Created an email campaign introducing me to local farmers, telling me which seasonal fruits and vegetables were ripening, and upselling me to fresh-made jams.
  • Helped me feel like part of a close community of farm-to-table supporters in my local area by hosing a lively Facebook group or even a Meetup group.

In other words, it needed to remind me that price wasn’t the point of the CSA -- being an integral part of the local food community was.

Once a customer’s decision is made, it’s frankly very hard to change. They’ve already sold themselves on the idea that your service isn’t worth the money.

But remember -- your customers don’t want to leave. They want to love you! So instead of trying to make cancellation harder, use entrance and exit surveys to get smarter about acquiring new customers and keeping the ones you already have happy.

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Topics: Inbound Marketing Marketing Automation

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