How to reduce churn: 5 essential customer retention strategies

5 essential customer retention strategies nfinitiv

If you can keep your customers from taking their business elsewhere, your customer retention rate will remain high

You’ve got a plan to expand your business and take it to a new level. You’ve set clear goals and a timeframe, and you’ve got the drive to achieve growth. But for any of it to happen, your business has to have a solid foundation.

If you can’t retain your existing customer base, it doesn’t matter how quickly you’re gaining new customers. You’ll always be on shaky grounds, a few bad months away from disaster.

You can stop leaking customers today, you just need to prioritise it.

What is customer retention?

Churn is when customers stop doing business with you. For example, when they cancel their subscriptions. You need to do all you can to avoid high churn rates.

Customer retention is the opposite side of the coin: it means avoiding churn. If you can keep your customers from taking their business elsewhere, your customer retention rate will remain high.

If you want to improve your customer retention (and you definitely do), you need to reduce churn. Easy as pie! 

Calculating customer retention rate

Your Customer Retention Rate (CRR) is a good measure of the health of your business. It shows the percentage of customers who remain loyal within a given time period.

Also Read: What’s your TRUE customer lifetime value (LTV)? – DCF provides the answer

There are a few different ways to calculate it. We like to keep it simple, using Zendesk’s formula

 [(E-N)/S] x 100 = CRR

S – The number of existing customers at the start of the time period (S)

E – The number of total customers at the end of the time period (E)

N – The number of new customers added within the time period (N)


You start the month with 100 customers, and you end it with 130 customers. During the month, you acquired 40 new customers.

((130-40)/100) x 100 = 90 per cent Customer Retention Rate

Your churn rate is the inverse of that: Churn Rate = 100-CRR.

Also Read: Interpreneurs: The key to successful global growth 

So, if your CRR is 90 per cent, your churn rate is 10 per cent. Now you have to figure out if that’s good enough.

Customer retention rate benchmarks

Calculating retention rates don’t mean much unless you know what’s expected in your field. 

For a rough estimate, you can use Profitwell’s research on retention rates per industry:

  • Retail: 63 per cent
  • Banking: 75 per cent
  • Telecom: 78 per cent
  • IT Services: 81 per cent
  • Insurance: 83 per cent
  • Professional services: 84 per cent
  • Media: 84 per cent

There are some niche-specific reasons why customers might find it extra easy (or unusually difficult) to switch to a new product or service. That’s why it’s helpful to benchmark yourself against your industry to see where you stand.

Strategies for customer retention

If you’re unsatisfied with your CRR, here’s what you need to change:

Implement a customer feedback loop

It’s difficult to know where to start if you don’t know how your customers feel.

To keep up with your user base, you need to use different metrics and surveys for different situations. Some ideas: 

  • Add CSAT surveys to solved tickets in your help desk. This lets you stay on top of issues and resolve them in real-time. The surveys also give you insight into tactical improvements you can make later.
  • Send quarterly NPS email surveys to all customers. Recurring Net Promoter Score surveys capture your customer base’s general sentiment. The focus here isn’t on problems but on getting a complete picture of the customer experience.

Combined, CSAT and NPS will give you a lot of the information you need to make improvements to improve retention.

Find and track the red flag metrics

You can’t prevent churn entirely. But when a customer does cancel, you need to use it as a learning opportunity.

Use surveys to find out why the customer decided to leave. Then try to connect some of those reasons with KPIs that you can track.

Also Read: How to conduct a customer survey 

I’ll use an example from my own company, Simplesat. Our product is a customer feedback management tool, and a common reason why our users cancel is that they aren’t getting enough feedback to justify the value of their subscription.

We want to make sure that doesn’t happen. So one of the NPS survey questions we send to our customers is “Are you happy with the amount of feedback you’re receiving?” This lets us identify red flags early on.

Consistently communicate the value you deliver

Another common reason behind cancellations is neglected communication from your side.

Some customers stop seeing the point of paying for your service simply because you’re staying out of sight and out of mind. They start to forget why they chose you in the first place. They may assume you’re stagnating or get tempted away by a more aggressive competitor.

Make sure customers are aware of new features and enhancements you’ve made.

You should also ensure customers understand what you’re doing for them day in and day out. As IT Business Growth expert Richard Tubb likes to say, “Let your client see the pain, but not feel the pain.” 

If your business involves behind-the-scenes work such as IT security monitoring, show customers the potential crises you’ve averted for them.

Take customer support seriously

Aim to solve customer questions or issues in the first interaction.

Basically, you want to avoid the please stay on the line, I have to ask my manager’ effect.

Escalating issues to a higher support tier may seem efficient for you internally, but it prolongs your customer’s waiting time. It makes them feel unappreciated, all while their issue remains unresolved.

We live in the era of Zendesk, Intercom, and other online support tools. There’s no excuse to keep people waiting. You can and should deliver near-instantaneous support around the clock.

If you don’t think this is important, don’t worry… your competitor does. By getting around to your customer, they might have already found a solution elsewhere.

Focus on a truly remarkable product or service

You can do plenty to keep your customers engaged by paying attention to them:

  • Use CSAT and NPS surveys to gain a full picture of how your customers are feeling about your service.
  • When a customer decides to leave, make it easy for them to tell you why they cancelled.
  • Make sure every customer understands what you’re doing for them. In case of any problems, provide instant help.

But none of that’s enough if your product or service doesn’t measure up.

Customers are rational decision-makers (well, mostly). You must have an attribute that differentiates you from the competition – cost, quality, reliability, or whatever else. If you can’t keep providing that consistently, they’ll find someone who can.

Start with understanding what’s going wrong

As your company grows or changes direction, it’s not easy to keep your finger on the pulse of your user base. 

But with enough information and prompt customer support, you can head off any issues before people even think of leaving. Simplesat was created to help with that.

With straightforward, customisable surveys, you can learn what disappointed customers think. Only then can you decide how best to change their mind and keep them loyal.

Cory Brown

Cory Brown

I'm currently building a startup called Simplesat. We're on a mission to create the most simple, useful, and fun customer surveys on the market. Check us out!


Using data to make better business decisions

Early-stage companies that understand the value of data analytics and develop a business model that intelligently uses insights gained from the analysis of their data often get to market faster, have better products, and are more efficient in their operations. As a company grows, it automatically collects a lot of interesting data about its market, its customers, its employees and its financials.

Read More

How to Start a Brand from Scratch? (Beginners Guide)

It’s often said that your brand is everything. And when it comes to startups, that’s especially true. Your branding is what will set you apart from your competitors and help you make a strong impression on customers. So if you’re just starting out, it’s important to put some thought into your branding strategy. In this complete guide to startup branding, we’ll walk you through the basics of creating a successful brand identity. We’ll cover everything from logo design to marketing collateral, so you can create a cohesive brand that represents your business well. Let’s get started!

Read More
5 video marketing trends that marketers can leverage in 2022

How Can Influencer Marketing Improve Your Startup?

If your startup does not have a sensible and robust marketing strategy, you’re in for a bumpy ride. Image branding, reaching out while attempting to speak your audience’s language, selecting the right marketing platform for your products/services, and finalizing only the optimum marketing strategies, can undoubtedly be a real challenge.

Read More