Does your organization lose customers quicker than expected? This article outlines frequent reasons for user churn to get you started on minimizing customer attrition in 2023. Read to the end to learn about a modern approach for customer retention.

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Let’s define user churn

First of all, one should know how to measure churn in the first place. We can for instance define a comprehensible KPI as the number of lost customers over the number of total customers in a fixed time (for example a quarter).

So the lower that ratio, the better your customer retention. While this might be a suitable method already, there are alternatives. For example, consider lost revenue or lost number of pieces as well. Clearly this comes down to which number you aim to minimize.

Once you calculated your churn rate, ask yourself – did you expect that number? Is, say, 5% too high? Apparently, this depends on your business and user group.

However, do not underestimate the significance of this metric, even if low. When you lose users, it means you need to acquire the same number of new clients actively again just to keep a constant count. This comes at a cost. The cost of new users is typically a lot higher than the cost for retention of existing customers. Consequently, if you have either a lot of customers or heavily invest in lead generation for a small user base, the effect quickly adds up.

KPIs are a first step to tackle user churn. As shown above, knowing how many customers leave makes cost saving potential obvious. After you have gained that transparency, the next challenge is to understand underlying reasons. Finally, with insight about users, you will be able to actively refine your customers‘ journey.

General reasons for user churn

The general reasons for churn are unsurprising. Customers leave because of dissatisfaction. Clearly, it comes in different forms.

Firstly, there is a chance they had a bad experience along their user journey. This does not necessarily mean they are not in favor of your product. A single occasion, for example a bad service experience, can be enough. For instance, think about a service call that went wrong.

Secondly, clients become more demanding over time. If your company lacks innovation or does not value loyalty, customers feel they miss out. Customers may also find a better product elsewhere. The key to retaining users to your product lies in continuous innovation. The combination of above brings user experience to higher levels and increases convenience.

Lastly, users may like your product and can even find it useful. This is not enough though. You need clients who are willing to pay for your service or product.

Understand your client base from data

At the end of the day, common reasons often do not work. In the worst case, you find your business with several personas of leaving clients, each having distinctive features that do not make sense in an overall view. However, there are means to get around those downsides.

The key to decisive insights is your data combined with the right toolset to analyse it. bergamot_ai automatically identifies customer characteristics that explain individual churn events. For instance, a customer leaving because of a bad service experience can be distinguished from another one not taking part in your loyalty program. That way, you are in fact able to identify customer personas that churn most likely, based on your data instead of market research statistics. Additionally, bergamot_ai adds a layer of explainability on top.

Learn what features drive churn and see individual contribution of customer qualities. We call that the data-driven approach to tackle customer churn in 2022.

Start to minimize customer churn based on your data. Get in touch today and ask for a demo of bergamot_ai.

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