Reduce Churn and Reactivate Past Users to Increase Sales
Why do people stop doing business with you? Why do they stop those recurring payments?
One of the biggest mistakes you could make is to think you can sit around a conference room table and figure it out. This isn’t an answer that can be brainstormed, it has to be discovered.
And, there is a sure-fire and direct way to discover the specific answers (plural).
Once found you can take those answers and create positive changes to reduce the churn rate in your business.
Your retention rate will increase because you are doing less to drive them away and providing a higher quality service at the same time.
This creates an impact in the referral rate, too. And, it is not hard.
The first step is to discover WHY people are leaving. The fact that people are leaving is a big deal.
Think about it… they have to research new vendors, engage in a signup process, transfer information and HOPE that the new vendor is better.
The absolute best method I’ve found for this problem has two steps:
1. Use the Net Promoter Score (NPS). This is a very simple 3 question survey that is designed so shrewdly I am surprised every company on Earth hasn’t already adopted it.
After each sale or customer service interaction or time period you send out the following:
“On a scale of 0 to 10, how likely are you to recommend xyz company to a friend or colleague?”
The next question depends on their answer.
If they give a 9 or 10 they are considered a Promoter which means they will be loyal and positively recommend your company to those they know when the opportunity arises.
If they give a 7 or 8, they are considered Passive. This means they are satisfied enough to hang around but won’t give you a glowing endorsement and are susceptible to a better offer.
If they give anything below a 7 they are considered a Detractor. This means they are not loyal, will likely stop doing business with you at the next hiccup in service or performance and will most likely say negative things about you if the subject of your product or service comes up.
One of the main things that has kept them from leaving is the overall inertia and annoyance of switching vendors.
The next question is:
“What’s the most important reason you gave the score that you did?”
The final question depends on their score:
9 or 10: “If you were to recommend us to a friend or colleague what would you say to them?”
7 or 8: “What could we do to cause you to give us a 9 or 10 in the future?”
Below 7: “Would you mind someone calling or emailing you to discuss this further?” Then provide a place for their email and phone if they say yes.
This will give you a good amount of data to read through.
It is EYE-OPENING, to say the least!
The data from the 9s and 10s you want to know because it shows you where you excel and what you should NOT change. Further, I like to use the statements in marketing materials. Oftentimes someone will come up with an angle/idea/statement that we (marketers) never considered or worded properly.
This is pure gold for copywriters!
The statements from 7-8 should be considered when planning improvements or changes to the product, service or operations. Don’t let it conflict with anything having to do with the 9s and 10s comments, though.
Below 7 you want to look at where you could really make some meaningful improvements.
If there are outstanding customer service issues you want to make attempts to handle them. I’ve seen 3s and 4s jump up to 9s and 10s after a quality response here.
But, the thing to REALLY look for is trends.
We read the data and tabulate the responses that are the same or similar and rank them. By knocking out the highest ranking issues we know we are improving the company to such a degree that we’ll have fewer Detractors and more Promoters.
Your NPS is something you can track and improve over time. As you knock out issue after issues you’ll see it climbing.
From the NPS website:
“To calculate your company’s NPS, take the percentage of customers who are Promoters and subtract the percentage who are Detractors.”
(PRO TIP: By the way, if you are also using my “WHO” strategy you’ll want to connect NPS scores to individuals in the segments. In this way, you can find out which segments are most likely to be Promoters and thus your best customers.)
That’s the first step… Get NPS running as a process and a Metric in your company.
The second step is based on it.
Now, we are going to recover those people who stopped doing business with you. We are going to do it with hat-in-hand.
Take the top few reasons you uncovered from the initial rounds of NPS surveys and craft a one-page letter and/or email.
You are going to hit all of those top reasons head on and show that you’ve taken steps to correct them.
Let’s say the top 3 reasons people canceled were: site unavailable too often, didn’t cache so I lost my work and customer service unavailable, you’d hit those issues head on in your reactivation letter.
In emails and letters, I use the headline, “Have we done something wrong?”
I noticed it’s been quite awhile since you’ve done business with us. As the head of abc Company I never like to see that so I have to ask, “Have we done something wrong?
Or goal has always been to provide software that makes it easier for our users to create amazing infographics.
Over the last few months, we’ve taken drastic steps to increase the availability of our service. It now stands at an amazing 99.99% availability. Further, our caching capability is much improved so you don’t have to worry about losing your hard work.
We’ve also expanded our customer service hours by another two hours to accommodate people on the East Coast or others working later into the evening.
If we have done something wrong or you feel like we haven’t lived up to our side of the deal, I’d sure like the opportunity to correct it so feel free to email me at email@example.com
If that’s not the case, I’d still love to have you back. When you decide to order again here is 10% off – no expiration date but I hope you’ll do business with us again real soon.
Now, what do you think a person is going to do when they get a letter like THAT in the mail?
Since I’ve done this many times I can tell you: They are going to be amazed.
Who does that?
It will make quite an impression. I received letters and emails back saying it was the best business letter they’ve received. (The real ones I’ve sent not the example one above).
It has caused as much as an 18% revenue increase in a single month just based off of past customers who had not repurchased in over a year. Quite powerful.
It works because it is a reactivation program based on the primary reasons users defected in the first place. A general reactivation program will do only about a third as well.
Using the above you can reduce your churn rate and reactivate customers who have defected.
If you need any guidance I’ve done many projects like this in the past, feel free to contact me for more information on how we can work together.