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A high churn rate may not seem like a big deal if your company is acquiring new customers like crazy. But if you let this problem run unchecked it can have serious consequences on your bottom line.
The higher your churn rate, the more customers you must acquire to grow. Let’s say you start the year with 100 customers but have a churn rate of 30% annually. This means that over the course of the next year, you would have to attract 31 customers in order to grow by just one single customer. That’s incredibly inefficient in both the time and the expense of acquiring a new customer.
The problem can often be fixed with a simple — if unintuitive — solution:
Stop focusing on getting customers to convert as fast as possible, and start focusing on educating them before they even click the sign-up button.
Poorly qualified customers may churn for a number of reasons:
Your product doesn’t have the features they really need.
Your product has way more features than they want.
Your product isn’t the right fit for the type of business they run.
Any of these things could be true — or the customer could incorrectly believe they’re true because they didn’t have time to read through your product documentation.
Whether you have wrong customers signing up for your product or right customers leaving because they mistakenly think the product isn’t for them, churn suggests the customers who signed up weren’t well qualified.
Take a look at your current customer acquisition funnel. Are you educating your potential customers at every step about exactly what your product does, how to use it and why it will add value to their lives?
One surefire way to make certain customers are qualified before they convert is to make them move more slowly through the customer acquisition funnel.
Your goal should be to lead prospects from awareness to opt-in one careful step at a time. When the prospect first becomes aware of your product, the first CTA they see shouldn’t be to sign up for a free trial — it should be to learn more.
Too many companies use the free trial as a way to educate their customers about what their product does, but that can be incredibly inefficient and confusing. Instead of just inserting customers into a trial and hoping they figure it out, give prospects the tools and knowledge they’ll need to make the most of your trial — well before you give them the option to sign up for it.
Take a look at the homepage of H.R. management software company Workday. Instead of a big banner advertising a free trial, the main CTA is an orange button promising to tell you why you should switch to Workday.
Click the orange button and you’re led through a series of educational pages:
First, you’ll see a page that gives the option to either watch a demo (if you want the quick version) or to scroll down to view features and read deep content. This content is mapped to the job title of the software’s potential users, allowing visitors to self-select their experience. At the bottom of this page, there’s another “Learn More” CTA.
The second page is full of deeper information — including case studies — which invites you to see how others have used the product. There’s also another “Learn More” CTA.
Click this last CTA, and you’ll be taken to a product preview page where you can fill out a form to watch the product preview.
By the time you type information into this form and watch the product preview video, you already have a pretty good idea whether or not Workday is a good fit for your needs.
According to Patrick McKenzie, CEO of developer recruitment firm Starfighter, 40-60% of users who sign up for a free trial of a software or SaaS application will use it once and never come back.
“Many companies produce software whose first-run experience is an accident,” he writes for Inside Intercom. “Here’s the software. Here’s a user. User meets software at an unpredictable angle and unpredictable speed. Mayhem ensues. Ambulance called. This is our fault. Instead of throwing the user into the software and hoping they understand it, we should actively craft their first experience.”
The demo stage should offer multiple training opportunities. These can be in the form of pop-up tip boxes, an email training series or demo videos.
You may even consider setting up a short demo project to give users a quick overview of the ropes before they go off on their own.
You might be thinking to yourself, “We already have plenty of training! We have FAQs, product documentation files and hours of webinars up on YouTube!”
Well, it doesn’t matter how many training materials you have available: if they’re not seamlessly embedded into the customer acquisition funnel, most prospects won’t seek them out.
An embedded 30-second video explaining a quick tip will be far more helpful to a prospect than a 30-minute video giving a thorough overview of the entire product, especially if that quick tip video is accessible within the product right where the user has the most use for it.
Give your customers the tools they need for success with your product. You’ll see better-qualified conversions and fewer frustrations — all of which will lead to a measurable improvement on your churn rates.
Becky Krill heads up marketing at SchoolKeep, a modern software platform for creating branded training resources and delivering them from within your web and mobile applications.
