What is the real reason for customer churn?
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In today's brand marketing stage where products are highly homogenized, competition between enterprises is mainly reflected in the fight for customers. "The customer is God" prompts many companies to compete for as many customers as possible at all costs. However, in the process of developing new users at all costs, companies often ignore or have no time to take into account the loss of existing customers. As a result, this dilemma occurs: on the one hand, new customers are increasing in an endless stream, while on the other hand, customers that have been hard to find are losing quietly. If you only look at the company's customer churn rate data, you won't be able to tell much. It's just a piece of data without much information. However, if we move from data reporting to data analysis , we can extract a lot of very valuable information from it. Today I will give some examples of customer churn analysis, hoping it will help your operations . Don’t just focus on lost data In operations, measuring churn by the number of customers lost is the most basic approach, but doing so rarely allows companies to see opportunities for improvement. Therefore, it is unwise to look at the churn rate only to know how many users have been lost. In fact, it is very necessary to further analyze customer churn, and there are many methods. Let’s first conduct customer churn analysis with a basic change. Choose to calculate churn by revenue Measuring your churn rate by revenue requires you to look beyond simply the number of customers that churn. All users are different, and the revenue they contribute is also different. For example, some users have a large demand for our products, while others are customers of premium products, and so on. The user levels are different. This shows that measuring churn rate by how much revenue each customer can bring is also a good way to analyze churn. When calculating, you can set a reasonable measurement period, generally on a monthly basis. By comparing the company's monthly MRR (monthly recurring revenue) churn rate, the company can obtain more effective information and be motivated to maintain its momentum. There is a smarter way to analyze In addition, if we can analyze it further, we may be able to see the trend of user churn rate on a monthly or quarterly basis. Once we find that the trend is not good, we can take countermeasures early to save the bad churn rate data that may appear in the future. This also reflects that we need to work smarter rather than just harder. We don't need to go to great lengths to please every user. As long as we can find the root cause of the problem, we can plug the leaking part of the bucket. Learn to analyze user churn from different angles. User churn analysis In reality, there will be questions like "How many customers liked our products but had to cancel their use?" "How many customers stopped renewing simply because their credit cards expired?" In addition, churn is different from churn. The reasons and methods for customers to stop using the products are different. Being able to distinguish these reasons and methods will definitely be beneficial to our detailed analysis. Analysis of active user churn The user actively chooses not to receive service. There may be many reasons for doing this, ranging from a change in the client's business direction, to liking similar products from other companies, to the client not understanding the product, etc. These customers are the ones who require the most effort to win back. Analysis of user satisfaction churn The customer is very satisfied with the service experience of the product but still does not renew the subscription. Generally speaking, the reason why these users use a certain product is because they have some specific needs. They may just be there to host an event, complete an event, or simply to complete a short-term project. To identify whether a customer is a satisfied churner, you can get a rough idea by looking at how many accounts are reactivated and paid for in a short period of time. Or in this case, you can directly contact the customer to confirm the reason for cancellation. They should feel sorry for deactivating the product, or say they will use it again if needed in the future. It generally takes less effort to win back these customers. Analysis of Passive User Churn Customers fail to update their credit card information in a timely manner, resulting in failed renewals. It is very simple to win back these customers. You just need to take the time to give them a payment reminder. You can send them emails or text messages as reminders according to the customer's choice, or ask the customer to directly provide a more convenient and secure payment method. Analysis of vertical user churn What types of customers are lost? What types of churn do we have well? Which ones do we not have well? Obviously, vertical analysis of user churn is mainly suitable for B2B business, especially when the company's services are targeted at certain specific areas. In fact, if there is a serious loss of users in a certain target industry, you need to deeply understand why this is the case? Are there any aspects of the product that do not match this industry? Conversely, if the product has very little customer loss in a certain target industry, then you can rest assured to increase sales and marketing efforts in this industry to increase revenue. Analysis of planned user churn Which paid plan has the most churn? Basic? Premium? Enterprise? We also need to know that when offering different paid service plans or tiered bargain plans to customers, it is also useful to perform customer churn analysis on different plans at the same time. Because generally if customers don’t get enough value in a plan, they will definitely cancel or exit the contract. If a charge is highly likely to cause churn, it’s important to dig deeper to understand why customers aren’t using the product. The information and feedback collected can be used to guide the company's customer success work and even help the product development team focus more on the customer experience in their products. What is the reason? The reason why users are not interested in a certain product is generally that the product functions provided by the company at this price are not favored by customers or are too complicated to use. It may even be that customers find that the product they purchased does not include the most valuable functions of the product. Whatever the reason, you can develop solutions to retain these customers. User cluster churn analysis Which month has the most customer churn? What impact did last quarter's price adjustment have on customer churn? This shows that cluster analysis is an important part of a complete analysis of customer churn. Its value lies in its ability to show both the company's general business performance and the company's business performance following specific activities or decisions. In addition, we can gain important insights into the collective life cycle trends of all our customers. For example, in the above picture you can see that in the fifth month (the vertical row with the number 5), customer churn has been developing towards a higher level, from which you can know that customers are very likely to churn in the fifth month. If you know this, you can focus more on customer success efforts for customers in the fourth and fifth months, thereby preventing large-scale churn among customers who have been using the product for four or five months. Next, specific analysis examples can also be developed around business changes, such as analyzing customer churn around a newly launched paid service package, or analyzing customer churn around business performance after the release of a new product feature, etc. In summary, with cluster analysis, you can see how different decisions a company makes affect customer retention and whether new customer churn is greater or lessened after a certain change. Marketing channel user churn analysis Which marketing channel brings in customers most likely to churn? Did the new customer acquisition strategy from last quarter successfully attract more customers? It should be noted that customer churn analysis by marketing channel is an excellent way for companies to reform their marketing strategies in the early stages of customer acquisition, so that we don’t have to consider churn only after customers have purchased the product and have experienced the product. It would of course be best if we could do both - effectively deal with dissatisfied customers and improve the quality of channel customers from the source to increase retention rate . Of course, if you still want to use some common customer survey methods to supplement the customer churn analysis methods mentioned above, you can also try this timeless method: customer exit behavior survey. Interview customers who recently stopped using your product (and maybe offer them an incentive) and briefly ask them about their thoughts on the product, service, and their decision to quit. Of course, the response rate may be low, but the feedback and insights obtained are difficult to obtain elsewhere. In fact, we cannot prevent customer churn, but we can predict and prevent customer churn through a more comprehensive analysis, better deal with the adverse effects of customer churn on the company, and use the results of customer churn analysis to help us improve our products and optimize service solutions. Mobile application product promotion service: APP promotion service Qinggua Media advertising Author of this article@ Internet Operation Observation is compiled and published by (APP Top Promotion). Please indicate the author information and source when reprinting! |
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