How to reduce customer churn & capture low-hanging revenue

Customer churn is like the sneaky leak in your business’s bucket. It’s when customers slip through the cracks, and before you know it, your revenue starts to drip away. Reducing churn isn’t just about saving your existing customers—it's about capturing low-hanging revenue and making the most of your efforts. By focusing on key strategies like identifying at-risk customers, improving onboarding, and personalizing engagement, you can build stronger, longer-lasting relationships. In this article, we’ll dive into actionable strategies you can use to stop churn and plug the leak. Let’s dive in. 

What is customer churn? 

Customer churn, or customer attrition, refers to the rate at which customers stop doing business with a company over a given period. It’s a crucial metric for businesses and can send a signal for company performance. Low customer churn can indicate strong customer satisfaction and product-market fit, allowing companies to focus on innovation and expansion. On the other hand, high customer churn is a red flag that can signal strong competition, product gaps, or even broader economic challenges. For example, a software company experiencing high churn may need to revisit its pricing model, while an e-commerce brand might need to improve customer service to boost retention. 

How to calculate customer churn rate 

In a previous blog post, we went over the formula to measure revenue growth. In today’s lesson, we’ll walk through how you calculate churn. The magic formula: 

(Lost Customers ÷ Total Customers at Start of Period) × 100 = Churn Rate (%) 

Understanding this metric helps businesses assess their retention effectiveness and compare against industry benchmarks. In fact, according to an analysis of recent data, the average churn rate for SaaS companies is generally considered 5-7% annually. Smaller businesses or those targeting SMBs potentially experience higher churn rates around 3-7% monthly, whereas large enterprise-focused SaaS companies see lower churn rates that are closer to 1-2% monthly. 

Why reducing customer churn matters 

It’s no secret that businesses want to keep their customers and build strong brand communities, but there’s another big reason why reducing churn matters—it’s one of the easiest ways to boost revenue without extra marketing spend  

Churn reduction is one of the most effective ways to increase revenue without additional customer acquisition costs. Studies show that increasing customer retention by just 5% can boost profits by 25-95%. That’s because bringing in new customers is far more expensive than keeping existing ones. In fact, a new acquisition can be five to seven times more costly. That’s why focusing on retention is a huge gamechanger. 

Keeping existing customers engaged and satisfied is the fastest way to capture low-hanging revenue, which are opportunities that require minimal effort but yield significant financial returns. 

5 Key reasons customers churn 

Voluntary vs. involuntary churn 

Before we dive into how to fix churn, let’s take a step back and talk about why customers leave in the first place. Not all churn is the same, and understanding the difference can help businesses create the right strategy to keep customers around. 

• Voluntary churn: Customers leave due to dissatisfaction, pricing concerns, or switching to a competitor. 

• Involuntary churn: Customers churn due to failed payments, expired credit cards, or administrative issues. 

5 Main churn drivers 

There are a number of reasons why a customer might churn, but we’ve outlined five of the most common ones to help you build a strategy to combat them. Let’s take a look. 

• Poor onboarding: If customers don’t get a strong start with your product or service, they may never fully understand its value. A complicated or unclear onboarding process can leave them frustrated and more likely to leave. Companies that provide interactive tutorials, personalized guidance, and hands-on support tend to see better retention. 

• Lack of engagement: Even satisfied customers can drift away if they’re not regularly engaging with the product. If a SaaS company, for example, notices declining logins, it should implement strategies like automated check-ins, product update emails, or exclusive user webinars to keep engagement high. 

• Slow customer support: Unfortunately, slow response times, unhelpful agents, and unresolved issues create frustration and could push customers toward competitors. Offering always-on support, self-service knowledge bases, and proactive assistance can significantly improve customer retention. 

• Pricing issues: Sometimes it’s just about the cost. Some customers churn because they perceive the cost as too high for the value they receive. Flexible pricing plans, loyalty discounts, or value-added features can help mitigate this issue. 

• Competitor alternatives: And lastly, if a competitor offers a more attractive package, whether it’s better pricing, features, or customer service, customers may leave. Businesses need to continuously evolve, emphasize their unique value propositions, and build strong relationships with customers to stay competitive. 

How to reduce customer churn: 10 actionable Strategies 

Reducing customer churn requires a proactive and intentional approach. To truly keep customers engaged and loyal, businesses must implement targeted strategies that focus on building stronger relationships, improving the customer experience, and using data to predict and prevent churn before it happens. In this section, we’ll dive into 10 actionable strategies that will help you tackle churn head-on and retain your valuable customers. 

1. Identify at-risk customers early 

Churn isn’t something you should wait for. There are ways to spot it early. For example, early warning signs of churn include decreased product usage, fewer logins, and negative customer feedback. Churn prediction models, customer health scores, and churn risk assessments can help businesses proactively identify at-risk customers. By tracking user behavior and engagement metrics, companies can intervene before customers decide to leave. 

2. Improve customer onboarding  

It might be a cliche, but it's true when it comes to retention: first impressions matter. A strong onboarding experience can set the tone for a lasting customer relationship. Businesses should focus on making the onboarding process as seamless and engaging as possible. Send clear and informative welcome emails, offer interactive product walkthroughs, and provide dedicated onboarding support. Additionally, businesses can use AI-driven onboarding tools to tailor the experience based on customer needs, ensuring each user gets the most relevant guidance. 

3. Personalize customer engagement 

Customers don’t just want to feel like another name on a list—they want experiences that actually resonate with them. Personalized emails significantly improve response rates. In fact, personalized email outreach results in 29% higher open rates and 41% higher click-through rates, making personalization an essential strategy for improving engagement and conversion. 

AI-powered product suggestions, proactive customer success check-ins, and behavior-triggered messaging can all help deepen engagement and make customers feel valued. For example, Outreach’s AI Prospecting Agent enhances personalized outreach by delivering relevant communication based on deep account research, ensuring that every interaction feels thoughtful and tailored.  

4. Leverage customer feedback loops 

Customer feedback is invaluable for understanding pain points and making necessary improvements. Businesses should actively collect feedback through NPS surveys, CSAT scores, and direct customer interviews. Once that data is collected, companies that actually make changes based on customer input show they care. When businesses respond to feedback by improving products, refining support, or tweaking pricing, customers take notice. That kind of responsiveness makes all the difference in reducing churn and turning customers into long-term advocates. 

5. Strengthen customer support & success 

Since lack of customer support is one of the leading causes of customer churn, strengthening this area should be a top priority. Providing top-tier customer support is a non-negotiable for reducing churn. Customers expect quick, effective support, and when they don’t get it, they’re more likely to walk away. That’s why investing in faster response times, 24/7 live chat, and easy-to-access self-service resources like knowledge bases, such as Outreach University, and FAQs is a must.  

6. Optimize pricing & offer incentives 

As mentioned earlier, price is often a key factor in churn, and businesses need to be flexible in their approach. Offering tiered pricing structures, personalized discount plans, or long-term subscription incentives can encourage customers to stay. Many companies can successfully reduce churn by providing loyalty programs or exclusive benefits for long-term customers. 

7. Build a community around your product 

Community is everything for a business looking to retain customers. A strong community fosters loyalty and long-term customer relationships. Companies can create exclusive customer groups, forums, and networking events to encourage engagement. Outreach does this by hosting customer webinars, such as the What’s New, What’s Next series, where users can explore new features, share best practices, and learn from industry leaders. These interactive forums help customers stay connected with the brand while offering valuable insights into improving their engagement and usage. 

8. Proactively address competitor threats 

Keeping an eye on the competition is critical. Companies should consistently highlight their unique value propositions, provide features that competitors lack, and proactively reach out to customers who may be considering a switch.  

9. Automate churn prevention with AI & predictive analytics 

Churn prevention? There’s an AI for that! An AI sales tool can predict and reduce churn by identifying at-risk customers before they leave. With Outreach’s Sales AI platform, sales teams can stop wasting time on repetitive tasks and focus on making smarter decisions that improve retention. 

Here’s how AI can help: 

• Automated renewal reminders: Set it and forget it—AI sends reminders to customers about renewals, ensuring no one slips through the cracks. 

• Predictive analytics for at-risk customers: AI analyzes customer behavior and identifies those who are most likely to churn, allowing you to intervene before they leave. 

• Personalized retention offers: AI helps craft tailored retention offers, so customers feel valued and engaged with your brand. 

With these AI-powered tools, businesses can proactively tackle churn and improve retention. 

10. Offer a win-back strategy for lost customers 

Not all churned customers are gone forever—sometimes, they just need a little nudge to come back. Win-back strategies, like targeted re-engagement emails, exclusive discounts for returning customers, and personalized outreach from customer success platforms, can help reignite interest and strengthen relationships. With the right approach, many churned customers can be successfully won back, boosting loyalty and revenue. 

How reducing churn captures low-hanging revenue 

It’s clear that retention isn’t just about keeping customers—it’s about tapping into low-hanging revenue. After all, once you’ve invested in acquiring a customer, it’s much more cost-effective to nurture and retain them than to start the acquisition process all over again. By focusing on retention, businesses are driving revenue with minimal additional investment. When you reduce churn, you’re unlocking the potential of your existing customer base without needing to spend extra on new customer acquisitions. 

Take action to reduce churn with Outreach 

You’ve made it to the finish line! Now, let’s take that retention knowledge and turn it into action, so your customers stick around too. Proactive retention efforts, strong customer engagement, and leveraging AI-powered tools are the keys to keeping your customers happy and loyal. With Outreach, you can predict at-risk customers using insights like Deal Health, automate engagement with retention triggers, and build a strong customer community to drive long-term success. 

Ready to take the next step? Analyze your churn risk today with the Outreach Customer Churn Risk Quiz and uncover personalized actions you can take to improve retention. .  

FAQs about reducing customer churn 

What is a good customer churn rate? 

The “acceptable” churn rate varies significantly by industry. For SaaS companies, a good target is typically less than 5% churn per month, while in e-commerce, churn rates can be higher, ranging from 20-30%. Ultimately, the key is to measure your churn rate consistently, understand what’s driving it, and continuously improve over time. Regularly analyzing this data allows you to make informed decisions and reduce churn more effectively. 

How long does it take to see results from churn reduction efforts? 

The timeline for seeing results depends on the specific strategies you implement. Short-term actions, like improving onboarding processes or launching targeted outreach campaigns, can show results in a few weeks to months. However, long-term initiatives, such as adjusting pricing or building a strong community, may take several months to a year to fully impact churn. Regardless of the strategy, tracking your retention metrics regularly and refining your approach is essential for long-term success. 

Should I focus more on preventing churn or acquiring new customers? 

While both retention and acquisition are vital, focusing on retention tends to be more cost-effective than acquiring new customers. In fact, acquiring a new customer can be 5-7 times more expensive than retaining an existing one. By emphasizing retention—through proactive engagement and personalized experiences—businesses can see sustainable growth. A balanced approach, however, that includes both solid retention and strategic acquisition, will set you up for long-term success. Additionally, with tools like our upcoming AI Prospecting Agent, you’ll streamline customer acquisition efforts, saving both time and resources. 

What’s the difference between logo churn and revenue churn? 

Logo churn refers to the number of customers lost over a specific period, while revenue churn focuses on the amount of revenue lost due to churn. For example, losing a large, high-value customer can significantly impact revenue, even if the total number of customers lost (logo churn) is small. Tracking both types of churn is essential for gaining a full picture of how churn affects your business, helping you prioritize retention efforts that minimize financial losses. 

How can I use customer segmentation to reduce churn? 

Not all customers churn for the same reasons, which is why segmentation is key to reducing churn effectively. By grouping customers based on behavior, needs, and engagement, you can tailor your retention strategies. Some useful customer segments include: 

• High-risk customers: Those with low engagement or negative feedback, who may need extra attention or incentives to stay. 

• Power users: Loyal, high-value customers who can help promote your brand through advocacy and referrals. 

• New customers: Those who are in the early stages of their journey and need additional support during onboarding to ensure they remain engaged. 

By focusing on these segments and addressing their unique needs, businesses can significantly reduce churn and boost retention. 

How can I measure the success of my churn reduction efforts? 

To track the effectiveness of your churn-reduction initiatives, there are a few key metrics to monitor: 

• Churn rate: Measure churn before and after implementing retention strategies to assess improvement. 

• Customer retention rate: The percentage of customers who stay over a given period. 

• Customer lifetime value (LTV): The total value a customer brings to your business over their lifetime, which increases as churn decreases. 

• Net Promoter Score (NPS) or customer satisfaction scores: These metrics help gauge overall customer satisfaction and their likelihood of remaining loyal to your brand. 

In addition to tracking these metrics, A/B testing different retention strategies will give you insights into what works best for your audience.