5 Ways To Slash Your Churn Rate & Keep Customers Longer

What exactly is churn rate, and why is it a problem for your business?

According to Forbes, churn rate is “the rate at which subscribers or customers stop transacting with your business.”

Clearly, then, the lower your churn rate, the better. Imagine if you never lost a customer! If you had a zero percent churn rate, every new sale and every new customer would add on top of each other, accumulating into one massive customer list.

Unfortunately, that isn’t realistic. All businesses lose customers over time, but successful businesses focus on retaining their customers for as long as possible. Otherwise, you end up stuck on the hamster wheel of new customer acquisition, never able to truly grow.

Let’s explore how to evaluate churn rate in ecommerce stores, the four pillars that keep churn rate low, and practical tips for turning one-time buyers into longtime brand fans.

How to Calculate Churn Rate in Ecommerce

To calculate a basic churn rate for your ecommerce store, you’ll first select a designated time period to draw from. Then, divide the number of customers you lost during that period by the number of customers you started with at the beginning of that period. Multiply the result by 100 for a percentage.

For example, if you started with 100 customers in January and lost 3 during the first quarter, the math would look like this: 3/100 x 100%

Your churn rate for the quarter would be 3%.

How to Keep Churn Rate Low in Ecommerce

We’ll start by exploring four core concepts for keeping your churn rate low in ecommerce stores, followed by five actions you can take to start reducing your churn rate today.

1. Quality

The first pillar of low churn rate for ecommerce stores is quality — quality product, and quality brand. Make sure customers receive at least the value they expect from your product (hopefully more!). A disappointed customer will have a short life with your brand.

Think of it this way: Every time a customer makes a payment to your brand, they decide whether it’s worth continuing to pay. If they don’t see enough value, they’ll stop paying. To make sure customers stick around, your product or service must provide a perceived high value for the cost.

2. Customer Care

The second pillar of low churn rate for ecommerce stores is customer care. It’s much cheaper to invest in making current customers happy than it is to acquire new ones.

If current customers are happy, they’ll become advocates for your brand. Shoppers are much more likely to buy from you if they get a reliable third-party recommendation.

Learn more about how social proof sells better than you do here.

3. Constant Improvement

The market moves fast these days. Even if you have the best product today, it won’t be the best product tomorrow — unless you continue to improve it. If you don’t invest in improvement and innovation, your customers will jump to another brand that does.

4. Brand

Investing in your brand is the ultimate key to reducing churn rate for ecommerce stores.

Your brand is your only true differentiator. Products can be copied easily, and a slew of alternatives probably already exist. But people will spend more and stay longer if they connect with your brand — who you are, what you stand for, and how you do business. So be sure fostering this connection with your customers is core to your strategy.

Action Items: Reduce Your Ecommerce Churn Rate

1. Boost Your Response Time

Whether pre-purchase or post-purchase, response time is incredibly important when someone needs help or has a question. Even if you can’t fully answer the question or complaint immediately, customers (or potential customers) need to know you’re working on it and trying to help.

We live in an “instant” world. Customers get frustrated if they don’t hear from you right away. Aim to get back to customers within a few hours — no more than 24, ideally.

2. Back Your Product

If you have a quality product, back it!

If you don’t believe what you are selling is backable, then you need to rethink your product. If you believe in what you’re selling, offer outstanding guarantees or warranties on your product to make customers feel comfortable purchasing from you.

3. Avoid Gotchas or Fine Print

Don’t trick your customers into making a purchase. You might make one sale, but you definitely won’t earn repeat business.

The days of the used car salesman approach are long gone. Be sincere in your offer and listen to feedback.

4. Develop Consistent Communication

It’s important to stay top of mind with your customers, so create a consistent avenue for communication with them, whether that’s social media, email, and/or SMS. Then, use that avenue to deliver value to your customers. Don’t spam them with constant promotions or crowd their inboxes with meaningless communications.

5. Aim for Constant Improvement

Make sure you’re launching new products, new versions, or improved services regularly — and tell your customers about it.

Your customers should know that you listen to them and that you’re working to create the best product or service out there. Otherwise, you leave space for other companies to swoop in with products or services that outshine yours (or seem to), carrying away all that repeat business.