7 proven ways to reduce customer churn rate

Pradeep Vasudev

January 30, 202312 min read

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Typically, customers churn when they are unhappy with a company’s products, pricing, or support, or when they get a better deal elsewhere. When they leave, they take their business with them — which is why it’s imperative that you prioritize controlling customer churn right away.

Different companies combat customer churn differently. Some accelerate their customer acquisition to replace the loss caused by churned customers. However, they forget one crucial fact: it costs 5x more to acquire a new customer than to retain an old one.

What does that mean?

It’s worthwhile to invest in customer retention, and one way of doing that is by delivering an omnichannel support experience to your customers.

Research reveals that companies offering an omnichannel experience retain customers 89% better than companies that don’t. That’s because:

  • 73% of customers use multiple channels during their buyer journey.

  • 90% of them expect a smooth experience no matter what channel they use, even during heavy holiday seasons.

  • 78% of boomers get frustrated when they have to restart conversations with a brand.

So there, we have it.

The modern consumer expects your brand to know them inside out, on whatever channel they decide to interact with you. It may seem like a tall order, but it can be fulfilled if you implement a truly omnichannel support strategy.

But before we delve into this, let’s discuss what customer churn is and how to quantify it.

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What is customer churn rate and how do you calculate it?

Customer churn or customer attrition is the percentage of customers who ended their association with your business over a specific period. The calculation does not include new customers acquired during the said period.

Customer churn calculation is mostly done monthly or quarterly in one of the three ways explained below:

  1. Simple: this method takes into account the actual number of customers that churned in a period but can be an unreliable method if your company is a fast-growing one.

    Formula to calculate simple customer churn rate for a specific period
  2. Adjusted: this method divides the total number of churned customers in a period by the mid-point of customers in the said period. Though it gives a more realistic picture of customer churn than the previous method, it doesn’t adjust when the period is expanded or contracted.

  3. Predictive: this method uses the average weighted mean of all customer churn rates during a period to give you a fair sense of how many customers will churn on any given day. It typically involves fitting statistical models on your historical churn data using AI-led tools.

Now that you know how to calculate customer churn, let’s talk about a few other critical performance metrics that are dependant on customer churn rate.

How to calculate customer lifetime value from churn rate?

Two important revenue-related metrics that are affected by churn rate are average customer lifetime and customer lifetime value. These two numbers indicate how long customers choose to stay with your brand, and how much value they bring to your company during their stint.

The average customer lifetime can be calculated using a very simple formula:

Average customer lifetime = 1/Customer churn rate

Say your company has a yearly churn rate of about 10%, the average customer lifetime would then be 1/10% which equates to 10 years.

Also with the churn rate, we can calculate the customer lifetime value for any customer as follows:

Customer lifetime value = 1/Customer churn rate * ARPA

Here, ARPA corresponds to the average revenue per month for a particular time period. Note that the churn rate and the ARPA must be measured with the same unit of time, either months or years.

For example, with the same calculation as above, if the ARPA for your brand works out to be $1000 per year, then the customer lifetime value would work out to be (10*1000) which is equal to $10,000.

What is considered a good customer attrition rate?

Even though attrition sounds bad for your business, an optimized customer attrition management strategy is key to maintaining a healthy mix of new and old customers and keeping your revenue flowing. A customer churn rate of two to eight (2-8) percent is generally considered an ideal number, although this can vary based on the industry too.

For example, with B2C companies, the mentioned 2-8% is considered a healthy number, while for B2B businesses, anything above two percent can be detrimental to your revenue.

Why does customer churn occur?

As discussed above, weak or non-existent omnichannel customer service contributes substantially to customer churn. Unfulfilled expectations of customers from multi-channel businesses eventually trigger them to leave a business. Let’s talk about them.

Lack of access to modern messaging channels

Customers (especially Gen-Z) do not want to be calling or emailing businesses for every setback they encounter. They want to quickly resolve their queries by talking to the brand via text messages and expect instant replies every time. If your business isn’t savvy enough to provide support on modern messaging platforms like WhatsApp or Live Chat, you risk losing these click-happy customers.

Insufficient self-service enablement

Research states that over 81% of customers would try to resolve issues on their own before reaching out to a support agent. In addition to improving your customers’ experience, robust self-serve support also reduces the inbound case volume for your support teams.

If you don’t invest in self-service solutions like a knowledge base or chatbot, you can’t take the agent out of the equation or empower customers to self-seek solutions.

How to craft a winning customer service strategy using self serve

Lack of personalization in customer interactions

Modern customers don’t want to be treated like a ticket number. They expect brands to understand their unique needs and previous interactions and delight them with a personal and memorable experience. If you aren’t aware of their past issues and sentiment for your brand, you can’t hope to satisfy the modern consumer.

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Slow and inefficient resolution

When customers reach out to your brand, they probably have tried to answer their queries themselves by using self-service portals or support documentation. So when they reach out to you after a dissatisfying experience with self-service, it is vital to be quick and reliable with your assistance.

Metrics like Net Promoter Score (NPS) and Customer Satisfaction Score (CSAT) help you understand the influence of your customer service on your users and indicate how happy they are with the experience. By watching these metrics closely, you can know if and when your customer service improvement efforts are being noticed.

How to identify customer churn?

Churn can occur at any time irrespective of the size or age of your business, but you can start identifying customer churn for any kind of business with a simple three-pronged approach:

1. Determine your customer churn metrics

Based on the type and nature of you business, customer churn can mean anything ranging from your customers purchasing lesser than usual or downgrading to a lower plan, to completely moving away from your business. You need to determine which type of metrics you need to take into consideration as churn, and then collect relevant data on them to accurately understand your churn patterns.

2. Collect customer feedback, both directly and passively

Feedback is an effective mechanism to understand customer pain points and actively work to mitigate or resolve them. You can obtain post-resolution customer feedback directly by using surveys such as CSAT and NPS. Also, you can actively monitor your community platforms, review sites, social media and any other platforms that your customers can post their grievances in order to keep in touch with your userbase and collect valuable insights that can improve your products and services.

3. Encourage customer success teams to stay in touch with customers

Your customers do not always have problems, and even if they do, you don’t have to wait until they reach out to you for resolutions. With customer success teams handling big accounts, you can insist them to schedule periodic catch-up calls to know about the customer’s status and stay informed of any potential issues or crisis situations. This way, you’ll earn the trust of your customer and also be able to identify any issues or roadblocks and fix them even before they actually affects your customers.

7 ways your business can reduce customer churn through omnichannel customer service

With all the above points in mind, here are a few useful tips for implementing in your omnichannel experience to improve the quality of support across all your channels and reduce churn.

1. Improve self-service — help customers help themselves

When more than 85% of customers worldwide expect businesses to have an online self-service portal, you need to pay heed to this trend. Providing an excellent self-serve system and maintaining it with all the latest, detailed information offers customers the confidence to resolve product issues independently and reduces your case inflow.

About 20% - 40% of live volume can easily be handled by optimizing your self-serve solution, say customer service leaders.


You can also maintain an active online community of your customers so that they can share their knowledge and help each other get the most out of your products.

2. Plan for mobile experiences when devising a support strategy

It’s no secret that modern consumers, especially millennials and Gen-Z, love their mobile devices. If your support isn’t mobile-friendly, you risk losing 52% of internet traffic that comes from handheld devices.

You also invite the wrath of mobile lovers who won’t shy away from venting out on social media platforms — driving away potential customers, investors, and employees from your brand.

That said, you need to move beyond basics when it comes to mobile-optimizing your support to prevent customer churn. Building a mobile-friendly website and mobile app is just the tip of the iceberg. To compete with mobile-savvy competitors, you need to include futuristic channels like voice, messaging channels, and even social media in your support strategy.

Maintaining an active presence on these messaging platforms makes it easier for your customers to reach out to you and resolve their queries.

An image with a quick tip about IVR Deflection.

That’s not all. There are other unexpected benefits of going mobile in your support. An average customer support call costs nearly $16.50 while a text thread costs less than $5 per interaction. Moreover, 58% of people are willing to pay more for the same products/services if they get better customer service in exchange. In short, you get cost savings and revenue by investing in mobile-first customer support.

3. Keep brand messaging consistent across all customer touchpoints

Maintaining a consistent brand voice across all channels is essential to making customers feel confident and comfortable when switching between platforms. To start with, educate your new agents on brand communication guidelines as part of their formal training.

You can then even choose to deploy workflows requiring agents to approve their messages before they are sent out to customers. You can ensure these messages reflect your brand voice until your agents are fully equipped to do it themselves.

4. Use social listening to deliver proactive support on your customers’ favorite channels

Proactive support is the need of the hour. By proactive support, we mean tapping early warning signs of customer churn by analyzing your customer communications. Often, customers share their poor brand experience with their family and friends – on social media and other public forums before they churn.

What’s the result?

They drive potential customers and leads away from your brand – often to your competitors – thereby pushing you several steps behind in the rat race.

97% of customers consult product reviews before making their purchase decisions.


A robust social listening and monitoring tool can help mitigate this risk. It alerts your support teams when a customer turns passive or hostile. They can then swoop in with timely offerings and answers before the situation flares up.

But there’s a catch. When you’re listening in on all your channels, it’s easy to get drowned in the noise and lose sight of customers and cases that need attention. That’s where the power of AI comes into play.

An AI-powered customer support solution can distinguish engageable messages from spam and score them intelligently basis their sentiment and severity levels. Your agents can then prioritize cases that deserve proactive support and prevent customers from churning.

An image with a quick tip about omnichannel support.

5. Fuel your email marketing with cross-channel insights

Customers can churn after a single bad customer experience or slowly move away from your products/services. While it’s nearly impossible to predict who might churn, you can identify customers that might soon become inactive by studying their cross-channel behavior. You can then leverage those insights to nurture customers with targeted emails, so they derive better value from your products.

When it comes to nurturing customers, emails have a good track record since 50% of consumers prefer brands to contact them via email. You can leverage emails to:

  • Educate customers about your latest products and offerings

  • Seek feedback through polls and surveys

  • Upsell and cross-sell with personalized deals and discounts

In short, when used strategically, emails can help move customers along the sales funnel and keep them loyal to your brand longer.

To get all the above benefits, tailor your email to your customer's pain points, buyer journey stage, and past interactions with your brand. If you follow your customers when they are browsing the web or venting on social media, you will learn a lot of hidden insights about them, which can be used to create personalized email content.

6. For a great customer experience, live chat is your best friend

A truly omnichannel solution can sync all your live chat conversations across all channels. From messaging apps to social media platforms, your agents will have visibility into what your customers want and expect from your brand. Armed with this information, your agents can offer faster and more accurate resolutions to your customers.

Live chat can also help humanize your brand and build a one-on-one rapport with customers, thereby giving you a fighting edge over competitors. Live chat agents with overarching empathy towards customers and their concerns help create a great overall experience for them, reducing customer churn in the long run.

7. Nail first contact resolutions to impress and retain new customers

New customers are more likely to churn since they are yet to establish trust with your business. If your support team can resolve their concerns in the first contact itself, you win their loyalty and satisfaction. They are more likely to return to your business for repeat business or refer you to their friends and families.

Train your support teams and analysts to focus on the first contact resolution or FCR metric, which measures the percentage of cases solved in the first contact.

To begin with, identify all the commonly-occurring issues (also called “top contact drivers’) and analyze their complexity level. Simple, repetitive concerns can be resolved without agent intervention by deflecting customers to self-serve channels like a knowledge base or community.

For more complex issues that need agent intervention, build standard operating procedures that agents can implement quickly. Ensure that you equip your agents with proper training, tools, and soft skills to deliver faster resolutions and reduce customer churn.

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