The 4 Best Retention Strategies to Reduce Customer Churn


Why worry about churn when you can just get new customers? New SaaS companies are obsessed with growth, and for some reason, startups have this belief that acquiring new customers is easier than creating loyal, brand advocating customers.

Customer Retention Strategies

But, that’s not true. Gartner Group statistics tell us that 80% of your company’s future revenue will come from just 20% of your existing customers. And, if that’s not enough to convince you of creating loyal customers, according to Bain and Co., a 5% increase in customer retention can increase a company’s profitability by 75%.

Think of growth like hosting a party at your home. You stand out in your front yard and invite any passerby to enter, while your close friends are sneaking out the back door because you’ve not offered them a drink or a snack.

Your house will fill up quickly but without hospitality, your guests will leave just as quickly. The same applies to company revenue. Without after sales service or customer care, you’ll hit a point where the revenue you lose has greater impact the bigger you get.

Churn is the term for customers asking to stop their subscription, or customer attrition. For SaaS companies, and any subscription company, churn is the enemy. It drains revenue and impacts deeply on company morale.  customer retention vs customer acquisition cost: getting new customers is a terrible way to reduce churn's impact on your revenue

When the company gets larger, the amount lost to churn becomes substantial. In the pie chart, we lost $3m and it hardly matters for a small growing business as it’s possible to overcome from damage with new bookings. However, finding an additional $30m in bookings just to stay at the same revenue level as the previous year presents a huge problem.

There is only one boss. The customer! And he can fire everybody in the company from the chairman on down simply by spending his money somewhere else – Sam Walton

My solution for churn is *Positive Psychology*. It is not therapy, it means carrying others’ interests along with your own. You need to be clear where the win-win point falls on the axes.

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the best customer retention strategies happen at the breakthrough point

The win-win point indicates the breakthrough expected by both parties during the dialogue. Customers accept the situation and slowly move toward happiness or loyalty along with expectations.

An example could be a customer being charged twice due to a technical glitch and a refund request. Offering payments in next billing cycle or a five-day extension would be regarded as a breakthrough point in this situation.            

How to take charge and reduce your customer churn rate

There are two categories of churn to understand:

  • Customer churn (Monthly/Yearly Basis)
  • Revenue churn (Monthly/Yearly Basis)

From there, you can analyze churn over a monthly or yearly basis but the biggest question is how to find effective customer retention strategies, and what is the best way to reduce churn?

Understanding four customer personas to help you kill churn

At Kayako, our support department prepares a monthly churn report containing details on direct requests for cancellations, refunds, and/or seat reductions.

This helps the support department hold accountability across the company for our performance. It allows us to spot symptoms and predict when a customer wants to leave. Here are some examples:

  • “I want to export my complete database”
  • “Fix it soon. Otherwise, I will have to look for an alternative”
  • “I am not happy with the way you’re moving on this matter”

While some may seem obvious, we’ve also been able to to identify four typical customer personas, to confidently adapt our customer retention strategy to decrease the chance of churn. They are:

Responsive customers

For responsive customers, a dialogue should be initiated as soon as possible. Agent turnaround time hardly matters. Within a minimal timeframe, you can:

  • Make a call and talk with the customer.
  • Reach out with a customized email to initiate the dialogue. Your focus must be on major concerns and quick fixes. Avoid standard emails templates or a static approach. Customers must feel that you are personal and open to feedback.

“People don’t care how much you know until they know how much you care” ― Theodore Roosevelt

You can set out your intention and show you care.

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For Analyst customers, you first solve the mystery by having a detailed look at current and archived conversations. Collect the facts and list these in sequence. This what we do:

  • Listen carefully to what our customers tell us
  • Search the conversation history and try to find major breakout/deal breaker
  • Be clear on the licensing: pricing, plans, number of seats, annual or monthly billing for the account
  • Make a decision on whether it’s worth trying to talk the customers into staying. Some customers will churn.

Before you cancel an account, know exactly how much money you are letting walk away – it should dictate how much effort you go to keeping the customer. $39/month? no stress – $360/month? worth spending a couple hours if we can.


For the artist persona, an individual who expresses themselves through drawing, writing or other art, your content should express exactly you are trying to do. These customers need to feel your intentions. It is not unlike writing a love letter to win or influence the emotions. Make a great first impression by:

  • Showing some love for using your product
  • Displaying empathy for the customer
  • Respecting the decision of your customer
  • Embracing with your intention

That first customized email or call will decide if you win or lose the game. Here is a sample email:

email template for customer retention strategy. Email is one the best ways to reduce customer churn

“When you help others feel important, you help yourself feel important too.”  – David J. Schwartz


If the persona appears to be an opportunist, give them the benefit of the doubt at first in spite of being aware that some people have poor intentions. Most people hesitate to behave this way. Some customers will try to grab the best deals or freebies. It’s not wrong until or unless negotiations are on right path, I believe.

You have to figure out the opportunities that will lead you toward a breakthrough point. Your focus should be on:

  • Space where we can pitch alternatives
  • Breakpoints where customers can compromise
  • Other benefits the customer can gain value from
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Here, quick decisive moves are required. Sometimes this means on a real time basis during a call.

We have to consider the benefits we offer to reduce churn. Every SaaS company runs against revenue numbers, and we try to avoid offering discounts. In Kayako, we go further. We offer benefits during calls, emails, and direct communication that will help win customers around:

  • Free month while we get them better set up
  • Personal consultation by Customer Success Manager
  • Quick fixes


Difficult situations (such as churn) and hard communication (such as reporting a bug) are painful realities that all businesses have to deal with. Churn drains not only revenue and user accounts, but badly affects overall performance of the organization, enthusiasm in culture, and the ability to be competitive.

Everyone – even market leaders – suffer from customer churn. Understanding what causes formerly loyal customers to abandon ship is crucial to finding a consistent pace of growth.

All successful and growing businesses have a common trait. They understand humans and behave like humans.

Your reactions and decisive moves decide your path and it’s milestones, hurdles, and the destination.

“I convince a crowd, not because I’m an extrovert or I’m over the top or I’m oozing with charisma. It’s because I care and relate” – Gary Vaynerchuk

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