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How to Reduce Customer Churn


08 April 2021

6 minute read

Customer churn can never be entirely eliminated, but it can be greatly reduced. However, many businesses make the mistake of trying to change too much all at once. Instead, it's a better plan to focus on one small step at a time, making gradual improvements to your business's churn rate along the way. Let's look at five proven techniques to reduce customer churn.

If you're looking for ways to create more stability in your business, then the subscription payment model is one of the best ways to do it. With a monthly subscription service, you can move away from one-off sales and create a predictable flow of recurring revenue.

Your customers benefit from subscription pricing as well. These monthly payments lower the barrier to entry and give more people an opportunity to benefit from your products and services.

However, setting up your subscription service is only half the battle, because once your service is in place, you have to overcome the next big hurdle - dealing with customer churn.


Customer churn is the rate at which current customers opt-out of purchasing your company's products or services. It's the rate at which current customers cancel their service and don't return to your business.

Customer churn is inevitable, but a higher than normal churn rate could indicate a problem with some aspect of the customer experience. The average churn rate for a B2B company is 5%, while B2C companies experience a higher rate at just over 7%.

If you continue acquiring new customers, you may not realise the full impact customer churn is having on your business. According to a recent report, customer churn is costing Australian businesses roughly 5.5 million per year.

There is a cost to acquiring a new customer, and for a business to remain profitable, those costs must be outweighed by the lifetime value of that customer. If your churn rate is too high, it will affect the profitability of your business. So if you don't have a plan for reducing customer churn, now's the time to start.


Customer churn can never be entirely eliminated, but it can be greatly reduced. Instead of trying to change too much all at once, it's better to focus on small, gradual steps to improve churn rate along the way.

Let's look at five techniques to reduce customer churn.

1. Find out why your customers are leaving

You can reduce churn until you understand why it's happening. Are customers leaving because of a problem with your product, pricing, or customer service? Or is it a combination of all three?

The best way to find out is to analyse your customer experience data and solicit feedback from your customers. You can send your customers surveys and try to get them on the phone to learn more about their experiences with your company.

It's also a good idea to utilise social listening to find out what customers think about your business. Customers may not fill out that exit survey you sent them, but they may share their experiences on social media. By monitoring social channels for mentions about your company, product or service, social listening allows you to track and analyse information being shared, as well as even respond to customers. This type of audience research is incredibly valuable, and can assist in understanding customer churn and possible trends to explain the loss of customers.

2. Segment your customers

Next, you need to gain insight into which customers are the most valuable by gathering purchase data. By segmenting your customers, you can start to reach out to them in a more targeted way.

And while every customer is important, some customers are more high-value than others. You would talk differently to a customer who cancels after using your service for more than a year than you would a brand new customer who's ready to cancel.

Once you've segmented your customers into different groups, you can send them personalised emails aimed at bringing them back to your business.

3. Watch out for involuntary churn

There are two different types of customer churn: voluntary and involuntary. Voluntary churn occurs when your customers make a conscious choice to stop doing business with you. Businesses tend to give the most attention to this try of customer churn.

But, involuntary churn is just as problematic, if not more so because these types of customers never intended to leave your business. Instead, they were often lost due to avoidable causes, like a server error or failure to update their billing information.

Fortunately, you can take steps to stop involuntary churn and reduce its impact on your business. For instance, reminding your customers to update their billing information can go a long way toward reducing involuntary churn. In the near future, this type of involuntary churn will be remedied with the introduction of Network Tokenisation. Card expiration, for example, that would normally result in a declined transaction won't occur, as automatic credential updates will happen without a cardholder needing to do so.

4. Improve the customer experience

If your customer support is lacking, then you'll likely struggle to retain your customers. So, take a look at your current processes and try to find any gaps in the customer experience.

For instance, do you provide customers with multiple ways to get in touch with your business? Even offering a live chat option on your website, for customer convenience, can go a long way to improving the customer experience. This can help customers avoid problems or ask for assistance in realtime, allowing them to experience the best from your product or service. The evolution of digital technologies has made it easier for businesses to manage and improve online customer experience - read more about some of the most effective options here.

5. Improve your onboarding process

Many customers leave simply because they don't really understand how your product of service can benefit them. They sign up for a free trial, don't see results or receive what they were hoping for, and so they cancel shortly after.

This often indicates a missed opportunity in the customer onboarding process. An effective onboarding process is streamlined, guides your customer through the process of getting started, highlights the value, and provides clear contact information for when a customer may need to interact with your company directly. Guiding new customers smoothly through onboarding, or set-up, is likely to result in retaining their business.


It's common knowledge that it costs more money to find a new customer than to retain your current customers. Thus, customer retention should be a top priority for all Australian businesses.

Focus on understanding what's missing in your business, segmenting your customers for targeted communication, and improve the overall customer experience by reviewing all touch points that your customers have with your business. By doing this, you'll be well on your way to reducing churn and improving your customer retention rates.

Subscription-based billing is still the best way for businesses to create recurring revenue and offer a better solution for their customers. If you want to learn more about setting up subscription-based billing, or how Bambora can help, get in touch with us.