Download HERE our latest e-book: CFOs vs CMOs, how to make joint decisions
Skip to

5 Customer Churn Risk Factors 

churn redution
Table of Contents
Estimated Reading: 8 minutes
Post Author: Giuseppe Iafulli
Reviewed By: Cory Anderson

Losing customers through churn is highly damaging for any business looking to build long-term repeat sales. How can you mitigate churn risk? Why is churn a threat? And how to turn prospects and customers into regular business? 

15 Best Customer Retention Strategies [Tested & Proven]

Identifying Key Customer Churn Risk Factors

Typically, churn is whenever a customer leaves your business for a rival. The term first came to prominence when insurers, banks, cable TV, and then mobile phone providers kept losing their customers to rivals. Now any SaaS business fears churn thanks to the growing number of rivals and the explosion in aggregated services offering more than your product does. 

Typically, the lure of a better offer would see many customers move from business to business, following the deals. That trend rocketed with the rise of “compare the market” style services that would find people the best deal. 

The opposite of your churn rate is retention, and a strong retention figure is key to business growth. Beyond that, most firms look to upsell and get existing customers to spend more, but it all starts with keeping them loyal and stopping them from heading to a rival.  

To stop them from leaving, consider these risk factors that can affect any business, then take time to consider the solutions and benefits of addressing them. Churn affects all sizes of business, and while the likes of Gartner provide advice for software enterprises, there is plenty of accessible vertical or market-centric information about the risks available. 

Risk Factor 1: Poor Customer Service

A bad customer experience can be a knife through the heart of any sense of customer loyalty. It will typically occur over a poor sales experience, a billing issue or exasperating customer/technical support. If not resolved in a matter of minutes, the problem is very likely to see a customer start looking elsewhere. 

And if your business uses a chatbot with a limited set of stock responses, has no direct connection to a human or other way to resolve their issue, those minutes will tick by very quickly.

At best, the customer will stop buying from you and remain a zombie account. At worst they will be gone, no matter what your retention team says to them (assuming you have one).  

churn risk

Risk Factor 2: Lack of Engagement

Engagement goes both ways, and a quiet customer is a sign of concern. Perhaps nothing will bring them back, but all firms should make the effort, testing new feedback mechanisms, fresh offers or truly personal engagement methods. 

Businesses and service providers need to keep the conversation going to ensure a customer feels valued. Major businesses love to talk about cross-channel campaign management (CCCM) to engage and talk to their customers, wherever they are. But are they really talking to the customer or just their imagined version or persona of a customer? 

In reality, a customer wants to feel special, which is why they feel cheated when their cohorts or friends just got the same “special” deal they did. At scale, customer engagement becomes tougher, which is where smaller businesses have the advantage. They can engage at an individual level, and take more time to explore their customers needs.

Risk Factor 3: Inconsistent Product Quality

One of the joys of SaaS or a highly digital service is the constant product quality for all users, and if there is a problem – you fix it for all of them. But consider any “softer” service, from food or parcel delivery to face-to-face business sessions, if there’s a drop off in quality, real or perceived, customers will rapidly look elsewhere. 

On the plus side, you may be able to fix this by addressing negative feedback, or introducing new efforts at monitoring product quality. But, if word does start to spread about poor quality, it can have an outsize impact on the business, with media and similar providers at high risk

Risk Factor 4: Competitive Market Pressure

Your business doesn’t have to do anything wrong to be at risk of churn. Competitive market pressures can make your offering look less compelling compared to that of rivals. At its broadest, this can be the volume of competition that makes it harder, and more expensive, for your product to stand out or hit the top spots on Google. 

More specifically, you are also at risk of a race to the bottom in pricing with rivals who have bigger wallets. Or they can outbid you when it comes to online advertising. They might also resort to price gouging, poaching your talent, making direct plays for your customers and other tactics to gain a competitive advantage.

Risk Factor 5: Pricing and Value Mismatch

Your internal value and pricing of your product or service can differ from that of the prospect or customer. This is typically true during the formative years of a company when it is trying to find its place in the market and may vary prices to find a sweet spot. 

As companies mature, prices will typically go up, especially in challenging markets. And other factors such as rivals’ pricing can see customers changing their view of your value to them. You can take steps to avoid these issues, including intensive research before launching your products, and should provide very good reasons for any price increases, but should pay constant attention to the markets as you look to avoid losing customers. 

Developing Strategies to Mitigate Churn

All the problems highlighted above can be mitigated to some degree, even as churn becomes a common or more urgent fact of life for all businesses. 

Before addressing the churn problem, established businesses may need to address their data problem, if multiple apps and services do not communicate, leaving the business partially blind. Fixing that problem by consolidating all the data into a single source of truth can help solve churn and many other business issues.  

Strategy 1: Enhancing Customer Service

Customer service in the digital era goes way beyond your website being .3 of a second faster, or any personal interaction they have with your organisation. Every step of the customer journey is game for service improvement, either based on your internal feedback, customer experience or what your competitors are doing. 

From wholesale changes in user interface design or sales scripts, to incremental improvements in feedback processes. To better understand the value of your customers, use metrics like the Customer Lifetime Value to establish the cost of losing them. 

You can also consider the additional costs of your retention strategy to ensure it is effective. And that agents or teams have the power to go as far as economically justified to retain customers and get them spending with you again. 15 Best Customer Retention Strategies [Tested & Proven]

Strategy 2: Boosting Customer Engagement

Engagement comes in many guises, from traditional marketing emails and social media posts. But to truly engage, you need to be part of a two-way conversation, actively listening to your customers, providing useful content and getting early adopters or major clients to advocate for your business. 

These goals may be enabled through high-value loyalty campaigns, feedback-based rewards, or encouraging social media sharing (where suitable). If you lack the human resources, then AI-enabled chat and engagement are possibilities.

Ensuring Product Quality

A quality product is a major part of any value proposition, but even then, that is only part of the story. A quality product sold through a poor website, or with no-frills service can damage any brand. 

Focus on end-to-end product and service quality, and always push to deliver the best service. At the back-end, ensure your supply chain and inventory forecasts are robust, and deliver the best quality parts or components for physical products. If working in the digital markets, use tools and metrics that deliver the best possible application or service quality. 

Strategy 4: Addressing Market Competition

Your place in the market is typically a factor of budget and the power of your competition, which is why so many serial entrepreneurs look to new avenues to gain an early-mover advantage. Even then, markets boom, contract, shake-out weaker players and are absorbed into others faster than ever. 

To remain a competitive force and grow in your market, constantly research the opposition and the consumer landscape. Find a unique selling point and hammer it home in marketing, and ensure your product continues to evolve and has the best-of-breed features that users or consumers expect. 

Strategy 5: Optimising Pricing Strategy

Price optimization is a series of articles in its own right, but the brief version is to thoroughly understand the market and your cost base. Then consider dynamic, tiered or bundled pricing depending on your product to maximise revenue. 

Then constantly monitor pricing trends and customer feedback (note the blowback about dynamic or surge pricing in mass markets). Respond to changes urgently, but keep customers informed as to why pricing is changing, especially for subscriptions, and for any business audience. 

If possible, time price increases to coincide with new features, product launches or other events that can limit the impact. And, where possible, price cuts are always welcome for consumers, and a permanent price cut sounds better than the endless round of sales that flood our inboxes.    

Implementing and Testing Churn Reduction Strategies

All of these concepts rely on your business understanding the underlying data and reacting to it positively. Doing so in an unplanned and chaotic manner will only further muddy your trading waters and threaten any efforts at improvement or recovery. 

Implementing the Strategies

Firstly, never “just do it.” Plan ahead, base decisions on data and understand your best options for succeeding. If there’s no clear path, research how others in your market have dealt with the issue, there are typically plenty of case studies to read up on real-world examples.

Take the time to inform other teams across the business what your plans are, and how they might impact other operations. And don’t be afraid to ask for help, larger businesses will likely form a tiger team or center of excellence to address the problem, gaining insight and expertise from across the organisation. 

Where possible, for churn mitigation efforts that will have a major impact, try to run a test on a small percentage of your customers to see what the impact is. But be sure to keep tests low-profile to avoid customer confusion and anger. 

Monitoring and Analysing Results

With analytics tools, you should measure the results as they come in, and across the longer term, to determine how effective your efforts were. Highly positive results should be welcomed, but the battle against churn will never be completely won, but such efforts should be rewarded. 

Results with no clear outcome will require further investigation to establish if a few tweaks to the pricing or offer plan can reinvigorate the approach. And if that first churn-avoiding effort does go horribly wrong, you can look at different angles to try and restore the confidence of your customers. 

Combat Churn With Kleene’s Decision Intelligence Platform

Churn is a constant business battle that will only grow alongside your customer base. To manage the problem, using decision intelligence can make the metrics and data points manageable.’s platform delivers key leadership and operational insights from a single source of truth across the business to understand the data around churn, helping them make informed decisions. 

Decision intelligence can take data from multiple applications or services, avoiding siloed or historic data that can have outsized impacts on business when they come to light. 

With decision intelligence fighting in your corner, you can focus on avoiding and minimizing churn, and seeing how your efforts to remedy churn or boost customers are working in real-time. 
If you are having trouble understanding how to calculate and optmise your churn, talk to us. At Kleene, we’re experts in helping convert your cold retail data into actionable insights and goals.

Use data to guide your business decisions towards better results

From managing your customer acquisition and retention, to product optimisation; Kleene can help
G2 award winter 2023
G2 Awards - the leader in summer 2019
4.5 out of 5 stars on
Used by incredible data-driven companies