Don’t automatically downgrade users. If a user misses a payment, they’re often downgraded to a free version of the product. Avoid doing this, because a user will often log in later and not realize they’ve lost some premium functionality. Instead, put them into some sort of “deactivated†state that makes it clear what functionality has been lost. Then, make it easy (a single click + credit card form) for them to get it back.
Offer discounts to accounts before they churn. If you analyze your cohort retention rates, you might discover a certain timeframe that has an increased level of churn. Some products won’t have this – they’ll consistently churn out the same percentage every month. But if yours does, you can consider proactively and automatically offering discounts based on their continued usage. This is undoubtedly risky and should only be considered if you have some serious churn issues (which you should hope to eventually correct with product improvements). You should also make sure they have to jump through some minimal hoops to get the discount (like filling out a more in-depth satisfaction survey). Bonus points for driving them to tweet/like the fact that you just gave them an unexpected discount.
Require a reason for downgrades and cancellations. If you don’t know why a customer is leaving you, it’s really hard to figure out how to increase future satisfaction. And making the downgrade reason optional means most people will just skip it. Turn mandatory responses into direct tickets that your customer team can categorize and hopefully follow up on (just like they do with your satisfaction surveys). The right follow-up can often rescue a customer. Finally, the right language goes a long way too – be sure to communicate how important this information is to you and how much you appreciate the favor.
The path to customer retention nirvana comes through building and iterating your product with your users. There’s no substitute for a great product or antidote for a terrible one (though excellent marketing can do a good job of covering it up). These five tips should provide some easy wins to bump it up a few percentage points.
Richard White is a Co-founder and the CEO of UserVoice, where he focuses on making sexy products for un-sexy markets like customer service. He’s proud to say that his works give people more time to waste rather than waste more of their time.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
