Customer Retention & Churn
Churn is a measure of lost customers over a specified period. Retention is the inverse
of churn, in that it expresses the number of customers who continue to use a product
over a specified length of time. Both are equally important aspects of user analytics that
identify what keeps and loses customers.
Customer retention is essential for any business to develop sustained growth and
revenue. It is inseparable from customer acquisition, as both are essential factors for
growing a customer base. Customer retention is arguably a priority over new user
acquisition, because the cost of acquiring a new customer greatly exceeds the cost of
retaining an existing one.
One of the main things I learned in this sales job was “it’s easier to keep your customers
than to get more”.Data shows that increasing customer retention (or decreasing churn
for that matter) by only 5% can increase profits anywhere from 25% to 95% and that
existing customers provide 65% of a company’s business. Here is a small chart on how
much churn matters.
Side note: having a subscription model recurring revenue company is the easiest way
to increase enterprise value. Bel balady y3ny law business 3ady hytba3 b 3 million
momkn wa7ed tany zyyh bzzbt ytba3 b 30 million l mogarrrad enh tech enabled w of a
recurring model.
There are two different methods of calculating churn:
● Customer-based churn is a measure of lost customers, which is vital for
maintaining a recurring customer base.
● Revenue-based churn is a measure of lost customer revenue compared to
overall revenue generated by the subscription service over a specified period.
Churn rate is calculated using the following basic formula:
Churn (%) = Customers Lost During Period/Customers at Beginning of Period
I won’t go in detail into SaaS metrics. This is supposed to be for churn, if interested just
watch this.
Churn tips from the Gym Industry
1. First, How about actually tracking your metrics and I still can’t get over this. More
than 70% of businesses don’t even track their metrics. JESUS.
2. If someone stopped using the service for about more than a day or two,
immediately have a process in place to contact them and try to get them back
into using the service again. Give users accountability around consumption. For
us that would look like making sure that users have higher streaks and higher
DAU rate and others,más o menos.
3. Having Exit interviews (in B2C SaaS that is
more about surveys than calls) which
means if someone cancels they have a call
with someone that asks them why they
canceled (could be a salesperson as well)
which of course is because of a problem
meaning an opportunity to improve and
something to solve that would probably
upset more of them. Sometimes your
customers just want to vent and if they
vented enough they reveal pain which if
dealt with properly they could be sold into a higher package.
4. They did member events which means they had a form of community that they
created. The extent to which it happened and the timing varied.
5. They had hand written cards that they frequently sent to people in their
community. Some of them were just for appreciation, some of them made it as a
gift card to a friend which is an easy way to get referrals, and some of them
would give kudos to their customers. They key was that it had to be personalized
so it can’t be “Thanks for being a member, Love you lots”. No,That bullshit doesn’t
work. It had to be something like “Hey Wahid, we noticed enk 3amalt progress
gamed fel gym awel youm geit mkont4 3aref t3mel pullups w dlw2ty bt3mel 15
mrta7, we knew you had the discipline to do so we are proud of you” That kinda
personalized attentive bullshit.
6. Every other week or so they would just check on their customers like normal
human beings so imagine your phones buzzes and it’s a notifications from your
coach just checking up on you making sure you are well and all that and as
someone who garrabha bnfsh sra7a (captain Bassel would randomly do that) it
works like fucking magic. You start to feel like “Hey, these people actually care
about me, they are not some sneaky sales evil people who only care about
sucking money out of my pocket”. THAT is a feeling and an experience that
creates loyal customers. Also think about it, people literally pay to get
personalized attention (personal coaches, private classes…etc).So DO NOT
AUTOMATE WHAT SHOULD BE SYSTEMATIZED. When the human touch is
gone people stop caring. Point is to make them feel like you give a shit and the
caveat is the easiest way to do so is to actually give a shit.
Churn tips from Netflix (the 8 Cs)
1. Consumption.
2.
More Tips on Reducing Churn/Increasing Retention.
1. Make the product and customer success experience match the sales and
marketing experience . 3omrak et3amelt m3 business w kan 4aklohom gamed
fel marketing el e3lan whatever w awl ma garrabt kan 5ara? Yk what?
Sometimes m4 5ara wala 7aga it’s actually good but el marketing was SO
INCREDIBLE that it gave you super high expectations w galak crash. THAT is a
very easy way to lose customers.
2. “Don’t wait till customers leave your brand” As the founder and CTO of
HubSpot (a 23 Billion Dollar Company and a startup unicorn) said once
.Measuring beforehand, collecting data and most importantly making something
of this data before cancellations is very important which is usually done through
● NPS
● Constantly doing customer surveys
3. Create a community around your product and its usage. Almost all
successful brands with low churn rate have some sort of community. You might
say “But Netflix doesn’t have a community” you are right, they have what’s better.
A community for peaky blinders, a community for game of thrones, a community
for lord or rings..etc
4. Have excellent customer service (A lot of which is just being available for your
customers on the platform they want in the channel they want whenever they
want However they want). Poor customer service is the biggest reason why
customers leave. In fact, According to a survey done by Oracle
● 86% of consumers will pay more for a better customer experience.
● 89% of consumers began doing business with a competitor following a
poor customer experience
● 79% of consumers who shared complaints about poor customer
experience online had their complaints ignored.
● Of the 21% who did get responses to complaints, more than half had
positive reactions to the same company about which they were previously
complaining. (on point 3 and 4 from Gym industry lessons)
● 50% of consumers give a brand only one week to respond to a question
before they stop doing business with them.
● A simple response can make a tremendous difference. By acknowledging
complaints, organizations stand to win back frustrated customers. In the
instances when an organization responded to a customer’s negative
comment, here’s what happened: 46% of consumers were pleased. 22%
posted a positive comment about the organization
5. Improve onboarding experience. 40-60% of people who sign up for free
software or SaaS application trials will use it once and never again. It’s most
likely because they’re unable to see how they could benefit from the product.
This is why you need to improve your onboarding process and clearly
communicate with your users. The best way to keep a customer is to show them
how they can squeeze the most out of your product as soon as possible and not
let them wonder not knowing how to use your product.This hugely depends on
the complexity of the product and you can see this all the time in games. They
always give you an onboarding and scaffolding experience to show you the game
around and make sure you got the workflow or playflow for that matter of the
game so that you don’t end up wandering around confused like a motherfucker
not knowing what to do. 3omrak fata7t abl kdh 7aga w battalt tst3mlha mn abl ma
tl7a2 tst3mlha just from how awful the user experience and the onboarding
experience was. I know one in the language learning industry, it’s called Lingq. I
am saying this as someone who likes lingq but burv… the ux for me was AWFUL.
6. Set up milestones and offer incentives – A great way to make your service
more interactive is to set up milestones along the way. This encourages users to
take the next step and continue their contract, thus it'll reduce churn rate. In a lot
of cases if they have something undone they won’t leave until they are done.
7. Send personalized emails – While automated emails are highly convenient, it's
wise to personalize these emails so that your customers feel important. Emails
from real people will work wonders to reduce churn rate. Steer clear of sending
robotic emails from a “no-reply” address. For Goldfire Studios, automated
personal messages are sent out from the CEO’s email address. This has not only
improved the quality of their feedback, but also helped in re-engaging with users.
8. Provide Value when you communicate and reach out to your customers.
Don’t just email them marketing shit. Give them pro tips, educate them, share
success stories with them….etc.
9. Monitor Customer Engagement. A sign that a customer is on the verge of
churning is reduced product or service usage. So, keep an eye on that. Also, be
observant enough to know to notice when a customer stops visiting your
website.Identifying customers who show signs of churning and reaching out to
encourage them to increase their interaction with your product can reduce your
churn rate. You could help them with an issue they’re having with your service or
provide them with tips on how to use a new feature, or even how to get the most
out of a feature they already enjoy.
10. Foster customer loyalty (oftenly done through loyalty programs). Offer
loyalty incentives to your customers such as rewards or bonus programs that
motivate them to stay. While these sometimes require an investment, if it results
in an increase to customer lifetime or what they are willing to spend on your
product over time, it will be well worth it. Ensuring that your customers stay for
long periods of time is essential in a subscription-based business, as you earn
sustainable revenue over a long period rather than relying on an immediate
product sale.
11. Conduct a Cohort Analysis A cohort analysis, which examines segmented user
behavior over a particular time span, can be useful for your marketing efforts.
Consider this example from Google’s Analytics Advocate Justin Cutroni: "If I was
an ecommerce business owner I would want to create a cohort of customers who
make their first purchase on Black Friday. This cohort is important because they
made their first purchase during a very important time, the holiday buying
season.” Keep things simple when identifying your cohort. You will want to gather
data for, and later visualize, a starting condition (e.g., when the customer signed
up) and the variable (e.g., the customer’s activity over time). An example cohort,
as explained here at Intercom, might look something like this: As Des explains,
these parameters show a snapshot of the amount of customers that sign up at
Date X and are still active after Date Y. The cohort analysis offers a variety of
data insights, including when customers are actually being lost, and if the the rate
at which you are losing customers is improving (or getting worse). Des goes on
to cite a really great piece on cycle plots, which can be used to take a simple
chart such as this:..and include multiple months on the same chart. As you'll see
in this piece by Des, these cycle plots can be used to compare the retention rates
for months two, three, four and five on the same graph:How do you use the
results of the cohort analysis? As outlined in this post by Kareem Mayan, if you
discover that, for example, the average customer cancelled their subscription
after 61 days, you can adjust your onboarding tactics and follow-ups to better
match customer behavior.
12. Stand for something. Very few customers feel they have relationships with the
brands they purchase from and use. In fact, a study by the Corporate Executive
Board that included 7,000 consumers from across the U.S. found that only 23%
of consumers have a relationship with a brand. Interestingly, 64% of the
consumers who said they have a relationship with a brand cited shared values as
the primary reason for that relationship. Most people prefer products and
companies that resemble them in some way. This cognitive bias is called implicit
egotism and is an important thing to keep in mind. Customers are more likely to
ignore you if your company doesn’t stand for anything. If you want loyal
customers, you need to create real connections with them by letting them know
what values you share. For example, in 2019, we completed the process of
becoming a certified B Corp. The certification both keeps us aligned to our values
as a company and shows our customers that our purpose is not only profit but
also a positive impact for employees, communities, and the environment. As Nick
Francis writes: “There’s no such thing as being ‘above politics’ or not taking sides
as a brand. It would be great if companies didn’t have political agendas, but they
inevitably do. And if companies are inevitably political, then we want to be
deliberate about the things we stand for." What does your company stand for? If
you define your values and highlight them as part of your brand, it will be easier
to retain the customers who share those values.
13. Surprise and delight your customers. Little gifts ‘just because’, some
customer recognition through a digital certificate perhaps — anything that helps
put a smile on your customer’s face can really help reduce customer churn. A
Reddit user who received a handwritten thank you message from a company
they’re subscribed to (as a customer). They logged onto their Reddit account to
share their testimony and enthusiasm.
btw, What business do I keep coming back to and I absolutely love? and WHY?
I think another way of phrasing this that would be easier to think about would be why don’t you
cancel?
JUDO-Captain Bassel:
● I loved Captain Bassel and I loved the place. Well, why? I felt that I belong to a
community first and foremost and not just a community BUT a community of supportive,
fun to hangout with, kind, competitive people. So there was SUPPORT AND
COMPETITION.
● The training never got too hard and it was almost never too easy. It was challenging for
lack of better terms. Always hard enough that i need to ACTUALLY try to get any
progress whatsoever like i couldn’t get away with half-assing it and simultaneously easy
enough that it was rarely that i got frustrated and when that happened i had very
supportive consultation gabby at all times (Captain Bassel) in this case.
● He made us feel like we are his friends and younger brothers and he ACTUALLY
CARED FOR US not just el tarmeen w em4h and taht was demonstrated in a plethora of
situations en kan lamma kan ya5odna y3zemna 3la asab b3dha sa3at w bta3 walla en
kan el tare2a el caring elly sa3at byst3mlha w hwa bys2al 3leik w t7essh bgd genuinely
2albh 3leik m4 7aga tanya, his demonstration to not care about the money but on our
own development had a huge part in building this trust and love we had for him for lack
of better terms. “Cared about us more than the money”.
● El community brdo bs el mara de m4 el support of the community and the fun of the
community but rather the accountability of the community law 8ebt marra el marra ely
ba3dha everybody would be like “kont fein w mget4 leh w bta3” ht2olohom eh? Et3ol2t?
You need to be some -ve ego shameless motherfucker to say such a thing 3ady kdh.it
won’t fly law kolko bt3mlo nfs el 7aga. 7atta bein el so7ab law karrarto kolena hna5od
course fel youm law wa7ed bs w2e3 mnena youm hytksef y2ol 7aga zy “kasselt” or any
of this garbage.
When did I cancel? When the things that got me there to subscribe to begin with was no longer
there?
● Didn’t feel any progress lamma mkan4 feh 7ad 8ery ana w el atfal dol bs. It was rather
boring and frustrating to actually fight atfal t7es enk bt-abuse-hom lol
● It got boring lamma el nas m4yet
● Lamma el nas m4yet mb2a4 feh community b2a ana w bs
● Kont da5el 3la fatret emt7anat w bsbb el 7agat elly fato neither the time investment nor
the money investment was worth it at that point. So in nerdy business terms the value to
price discrepancy was not in their favor as a business anymore. Actually the value got so
low when these things happened that if it was free i probably wouldn’t have gone back
again.
● I wanted to try something that would actually be applicable in a street fight. So you can
count that as “the long term desired outcome was not met or the belief in it coming was
not there anymore”. Because when i was training so hard fel 7arakat elly applicable zy el
seoi nage msln aktr and i got to a point where i can objectively use them somewhat
comfortably maybe the desired outcome of being combat ready for street fights wasn’t
met BUT the belief that it was met was there or was magnified to be more accurate and
specific.
