Increase Revenue By Decreasing Churn

It can be hard to decide where to spend your time as an early stage founder. You typically don’t have the money to hire an expansive team, leaving you to handle sales, marketing, customer-success, along with many other tasks on your own.

Which begs the question — should you focus on hard sales or should you worry about eliminating churn to increase revenue? After all, revenue is the key metric to survivorship.. well, that and debt, but debt and funding are topics for another day.

If you have sustainable revenue or a trickle of customers coming in without hard sales, customer retention may be more important than focusing on sales.

Courtland Allen, founder of popular bootstrapping community, Indie Hackers, describes churn as a leaky bucket. Even if you increase the amount of water you’re pouring in, it’s going to take a really long time to fill the bucket if there are holes at the bottom — the same applies to your business.

Moreover, if you have holes in your bucket, leading to substantial water loss, it’s probably time to step back and reevaluate the core integrity of your bucket. Likewise, if customers are churning at an unhealthy rate, there’s probably a fundamental issue with your product. It’s likely not solving a problem for your customers or it doesn’t work as expected.

Focusing on customer retention is really a win-win-win. You improve the product, word-of-mouth sales increase, and you either sustain or grow revenue.

Improving the Product

The most effective way to decrease churn is reaching out to customers to get feedback on their experience with the product. Simply showing that you care and want to build a relationship can have a fairly profound effect on customer retention.

Not to mention, the useful feedback that you can take and in turn use to improve the product. You may have some assumptions or speculation about what your customer wants, you may have even surveyed people in your target demographic, but the feedback and desire that really matters is that of an actual, paying customer.

Increasing Word-of-Mouth Sales

Happy customers become brand ambassadors. Without even asking them to do so, customers that enjoy a product will often begin recommending you to friends, bring your product up in conversation, and interact with your content on social media.

This in turn drives more sales and hopefully increases your revenue.

Next Steps

Once you’ve brought churn down to a healthy level and have a system set in place to ensure happy customers moving forward, you should then resume hard sales and heavy marketing.

It’s important to have a system in place for continued success moving forward. To continue the analogy, manually fixing the issue without devising a solution for future customers would be catching the water with a cup and pouring it back into the bucket. Actually fixing the issue moving forward, would be mending the holes with melted plastic to ensure the integrity of the bucket for years to come.

A couple ways to address customer retention moving forward would be hiring a customer success rep that is responsible for forming and maintaining a relationship with each customer, or using a series of automated emails to begin communication early on and have a clear channel for customers to submit requests/issues where they will actually be heard.

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