Don’t Allow a High Churn Rate to Sabotage Profits

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Push annual subscriptions over monthly billing: Paddle research shows that churn rates are lower at companies that have a higher percentage of annual contracts. Nudge new customers toward annual plans with discounted prices (such as one month free). This is an okay and super-normal way to implement discounts.
Match onboarding preferences to pain points: Out-of-touch onboarding sucks. So, learn about what matters to your customers and personalize their onboarding process to match their pain points.
Corey Haines, founder of SwipeWell, says this: "Broadly speaking, churn is much higher in the first three months of a customer's lifecycle. This is why onboarding is so critical to high retention: the customers that churn early on were likely never truly onboarded; they were essentially paying for a trial.”
These strategies can help you preempt churn—but what if a customer is already at the point where they’re ready to cancel? Here are two things you should do that can help reduce churn:

Offer downgrades (and discounted upgrades) during the cancelation process: Churning customers are often looking for a better deal somewhere else. Instead, bring it to them by offering to downgrade to a less expensive plan or upgrade to add extra features at the same (or discounted) price. Just be careful—discounts can be a slippery slope.
Ask customers why they’re canceling: A churning customer can help you understand why churn happens. Use customer surveys, or even call them up! If they hesitate to leave feedback, offer an incentive. After all, if churn is draining your profits, that $10 Starbucks gift card will be worth the insights you get.
Customer churn is a compounding issue that needs to be solved ASAP. Neglect it, and you’ll watch revenue dwindle, growth rates suffer, and the longevity of your company slowly slip away.

There is a clear financial incentive for reducing churn. It also leads to more accurate sales forecasting and better customer satisfaction. And even if it hits the benchmark, remember: the lower your churn rate, the better.

So, to achieve that low churn rate, study yours, calculate it (via cohort analysis if necessary), and implement strategies to improve it.

It might seem like a hopeless, time-consuming task at times, but stick with it. It pays dividends (literally).