MBA1395 Q&A Wednesday: My churn is out of control. How do I reduce churn ASAP?

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Hey O welcome to the Hundred Dollar MBA show. The answers your business is looking for every day with their daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online and today's episode is a Q and A Wednesday episode. On our Q and A Wednesday episodes I answer a question from one one of our listeners. If you have a question you want to ask, just email me over at omar00mba.net Today's question is from Paul and Paul asks. I run an ongoing membership program but my churn is totally out of control. How do I reduce my churn asap? Solid question Paul, and I totally understand your urgency. Churn will eat your profits for breakfast and lunch and dinner for that matter. If you're unfamiliar with the term churn, it's basically the percentage of customers that leave your business that don't continue to pay for a membership and this is very common in subscription based businesses, whether it's a software or a membership of some sort. So a simple example is if you have a hundred customers and ten of them leave, then your churn is 10%. Paul's having a tough time wrangling in his churn and wants to know how he can lower it as much as possible to keep his profits in the bank. I'll answer that question and more in today's episode. Because if your churn is out of control, it doesn't matter if you grow at 5, 7, 8%. If it's less than your churn, you're not making a profit. You're actually losing money every month. Let's put a stop at that, learn a few things and help Paul in the process. So let's get into it. Let's get down to business. If you run a membership business, a subscription based business of any kind, a subscription box business where you send something every month to somebody, a software, a community, a course, whatever it is, if your customers pay you every month to be a part of your offering your product, you need to be careful with churn. This is applicable to brick and mortar businesses. If you run a gym, churn is your biggest enemy. Retaining your customers is key. With any subscription business, you want to keep your customers as much as possible. Like I mentioned at the top of the episode, if you're growing at 5%, which is great month over month, but if your churn is above 5%, 6 or 7 or 8 or 10%, then it's going to be really hard for you to make a profit month over month over time. You can grow because let's say, for example, your growth is at 5%. So you have a hundred customers, that's 105 customers. If your churn is 5% as well, that's 5% of 105. So it's not exactly five customers, but it's cutting it close. So I'm going to give some quick tips in today's episode to wrangle in your churn and lower as soon as possible. Number one, recognize that your customers are leaving for a reason. And if you don't know those reasons, there is no way for you to correct Churn. So you need to make it a requirement for people to tell you why they're canceling when they cancel. This could be something as simple as a cancellation form, a Google form, a type form, whatever, when people request to cancel. It may not be the easiest experience for people to cancel for your product, but it's essential right now to find out why people are leaving. So. So don't let them cancel without giving you feedback, even if that means getting on a phone call or sending you an email. We built a cancellation process inside of our software, Webinar Ninja. So when people request to cancel inside their account, they actually provide the reason why they still have to self cancel and it's going to take them a minute or two to give us some feedback before they can cancel their account. But that information is gold because when we put that into place, we realize what are the biggest reasons why people are canceling all our software. And now that you have that information, you can make those your top priority in improving your product, your service, your whole membership. Because you know that if 40% of all of your customers are canceling for the same reason, you fix that reason. That singular reason is going to help you reduce that churn significantly. Some people send out a cancellation feedback form after they cancel, like an email, but it's too late because many people are not required to do it. Some people are not so happy about asking for feedback before cancellation. They think it's maybe a tedious process. That might be so, but as long as they have the ability to cancel and get a cancellation confirmation in a reasonable amount of time, it's not asking too much to get some feedback. Your business depends on it. You need to get this information to improve. And guess what? When you do improve your product, when you do fix the problem of why they canceled, you can follow up and let them know, hey, you canceled two months ago because of such and such. Well, we fixed that. We'd love to have you back on board. If it's absolute code red and your churn is totally bonkers, then I highly recommend you actually contact every single person that cancels with an email, with a phone call, with some sort of reach out and say, hey, I'd love to know why you canceled. You won't hurt my feelings. I need to find out so I can improve. I think you would understand that your feedback is so welcomed. Sending a message like that shows you care, shows that you actually are interested in genuine feedback. And yes, not everybody's going to reply, not everybody's going to get on a phone call with you. But you'll get enough to know where you need to improve. Where you need to actually make some changes to put your churn back into a normal rate. Another thing you want to ask your customers during the cancellation process or when you're doing that follow up call or email is how they found out about you. We talked about in yesterday's episode why the buyer's journey is so important and that not all customers are created equal. Maybe your churn is so high because you're attracting the wrong customer, the customer that is not a good fit for your product or service. It's always better to find your best customers and find out where they came from so you can triple down on on marketing in those areas in those places and attracting more customers just like that. Some of us, our Churn is quite high because we're getting people canceling because they're again disappointed, not because your product stinks. It's just not what they expected. So you want to find out how they learned about you. You also want to find out how it was a disappointment. Maybe you need to revisit your marketing messages on your website, on your landing pages, in your videos, in your content. Churn is a killer and you want to make sure you get as much information as possible of where you can improve as quickly as possible. Also, you should be tracking your Churn. I know this is obvious but a lot of people just think, hey, my Churn is really bad because I see a whole bunch of cancellations in my inbox but don't really know the trends or the numbers. I recommend you check out ProfitWell. It's a free tool for you to check your subscription based metrics like MRR and Churn. And you can definitely track every single day how your Churn is doing, if your changes are improving things or not, as well as the history of your churn. See where you went wrong? Maybe you launch something new that is causing people to cancel. Remember, Churn is going to show up a little bit later after something happens in your business. So if you start making some corrections, if you start implementing some of the things, the fixes that you're hearing from customers when they cancel, it's going to take a cycle. So if your subscription is monthly, it's going to take about a month or so for you to start seeing some results.

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Churn is a symptom of something going wrong. You need to find out what is going wrong. You need information and this is why your exit surveys, your cancellation surveys are so important. Prior to canceling is actually the ideal situation. If you can't implement that quickly, then a post cancellation survey will do. But make sure you find out why people are canceling, make the changes needed and track your progress and see how these changes affect your churn. It's a slow process, but you'll feel them empowered once you have the information. Trust me, I've been there. And when you know exactly why people are canceling, it makes you feel positive. It makes you feel like, wow, I know. Now I'm empowered. I know what to do. Now it's clear there's hope. Paul, I hope that answer helps you and helps everybody who's listening. If you have a question you want to ask, just email me over at Omar MBA net and I'll make sure I answer it right here on Q and A Wednesday. If you love the show, hit subscribe. And the best thing you could do to support the show is to tell your friends and family. Share it on social media. Share it on Twitter right now, or Facebook or Instagram. Take a screenshot of your phone right now and share it. Let people know where they can get daily business lessons. Thank you so much for listening. Before I go, I want to leave you with this once you have Churn under control and you know where to find the best customers. It's all a game of math is about doubling down on what works and continuing to get feedback from customers to continue to improve and lower that churn. That's a great place to be in when you have that all dialed in. Something to look forward to. All right, thank you so much for listening. I'll check you in tomorrow's episode. I'll see you then. Take care.

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