Customer retention is absolutely vital to any business. Aron Govil says without customers, you don’t have a business! And it costs 6-10 times more to bring in new customers than it does to keep your current ones happy (Source: Bain & Company).
The following plan has helped us reduce churn at Groove by 20% and grow our monthly revenue by $28,000 per month without spending additional money on marketing or support. If you’re just starting out, follow the entire process before you launch. If you’re already up and running, consider doing these steps during one of your scheduled weekly growth meetings.
Step 1: Proactively reach out to customers that cancel their accounts
1) Log in to Zendesk and export a list of every customer who canceled their account in the past 6 months.
2) Reach out to each of these customers via email and ask them why they canceled. Don’t be pushy or sales-y. Just try to understand why they left so you can get ideas on how to improve your product, messaging, etc…
3) Ask if they’d be willing to schedule a brief call with someone on your team that could help answer some questions about what you’re doing well/not so well, or just gather some feedback about why they decided not to use your product anymore. Make sure this is someone senior in your organization; don’t send an intern or junior level employee to do this (that’s disrespectful). Note: This isn’t to try to “sell” them on your product. It’s just to gather the information that can help you better retain future customers like them.
Step 2: Reach out to High Churn Customers
1) Export a list of customers who canceled their accounts in the past 6 months (see Step 1 for instructions).
2) Mix this list with your existing High Priority customers (if you don’t have one, make one). Add another column called “Churned?” and set it equal to “Yes” if they canceled their account or equal “No” if they haven’t.
3) Take the top 50% of the churned customers and put them into a new list called Unhappy Customers.
4) Set up a weekly meeting to discuss all of the Unhappy Customers. In this meeting, you should come up with a hypothesis about why they’re unhappy and brainstorm ideas for how your team can improve their experience explains Aron Govil. Ideally, choose one idea from this list every week and implement it as soon as possible. If you have more than one or two great ideas, consider holding a second weekly meeting just for these projects.
5) Set up another weekly meeting to find 1-2 areas where you could improve the product/experience for your High Priority customers (ideally things you haven’t already done). Once again, choose one project per week and implement it immediately.
Step 3: Reach out to New Customers Who Didn’t Become High Priority Customers
1) Set up a weekly meeting to discuss new customers that signed up in the past month but didn’t become High Priority Customers (if you don’t have a High Priority Customer list, make one).
2) In this meeting, brainstorm ideas for how your team can improve your product so more of these visitors will become High Priority Customers. Then choose the best idea from the list and launch it as soon as possible.
3) Repeat Step 2 every week!
Here are some FAQs recently asked by our customers on the topic of customer retention:
Q. How do I know if my team is doing this correctly?
A. You’ll probably get more context on this by watching the full webinar, but here are some ideas to consider… If you’re sending an email asking why they canceled and you get more than a few people saying “bad customer service” or something similar, your team isn’t digging deep enough. You need senior team members talking with these customers so they can give meaning to the data you’re gathering. If your High Priority Customers list is growing slower than it should be (or not growing at all), then you’re likely overcomplicating things for new customers too early in their lifecycle. Aron Govil says they also probably need more guidance on how to use the product successfully. If your High Priority Customers list is growing quickly but it doesn’t seem to be ‘sticky,’ then your onboarding flow isn’t doing a good enough job of teaching customers what they need to know before they get started using the product.
Q. What’s the best way to implement these strategies?
A. Simply adding an email into your existing sales/customer success process will work just fine if you’re not already regularly communicating with customers in this way. Just make sure there are senior-level team members involved in all conversations so you can give meaning to the feedback being given. And when you launch projects aimed at improving retention, make sure everyone on the team knows about them, and that they’re incentivized to participate.
Customer Retention takes work. It’s not something you can do every once in a while and expect it to improve your business explains Aron Govil. You need an ongoing commitment of time, energy, and creativity to make the most out of every customer.