How to Fix a Customer Churn Problem in Startup Tech Companies

Customer churn can devastate a startup, but there are some easy ways to fix it.

Customer churn is the rate at which you lose dedicated subscribers or paying customers. It’s a metric most commonly used in startups that have an ongoing subscription basis, such as SaaS companies, but can be used in any long-term customer arrangement. For example, if 20 percent of your customers abandon your service within a year, you would have an average annual customer churn of 20 percent.

Customer churn eats away at your profitability; a subscription-based startup’s best path to more revenue and stability is ensuring that clients stick around for as long as possible, since customer retention is less expensive and more important than customer acquisition. But what can you do if you’re already experiencing high customer churn?

Step One: Reclaim

First, don’t let your customers slip through your fingers. Set up a last-ditch reclamation effort to guide departing customers back to your brand. For example, you could have a customer service rep call any cancelling subscribers and give them special offers to win them back, or correct any problems that are affecting their decision.

Step Two: Investigate

Next, dig deep to find out why people are leaving. Instituting an exit survey is a must, and you may want to go a step further by prodding into your software’s usability.

Step Three: Improve

Take all the information you gathered in step two and use it to improve your current offers. Make your software function better, give people more options, make things more affordable, and overall, provide a better value.

Step Four: Incentivize

Finally, reward your customers for sticking around. Create a loyalty or rewards program, and encourage your customers to stay for the long haul.

With these four steps, you should be able to fix your customer churn problem, or at least prevent it from getting any worse. You’ll never be able to drop your customer churn rate down to zero, but you can keep it under control, and that’s usually good enough to keep your profitability as high as possible.

About the Author

Jose Vasquez is a serial entrepreneur and tech specialist dedicated to helping startup tech companies grow and succeed. As the founder of Build. Brand. Blast., Jose has worked with dozens of enterprises to find direction, gain momentum, and achieve results.