Inside: Your (almost) perfect customer retention plan

Hey — It’s Warren.

January was a crazy month of growth for this newsletter.

Business Deconstructed gained 849 subscribers. But also lost 289 subscribers.

And while 849 new subscribers are great, losing 289 is terrible.

One slow month and boom. 100s of subscribers gone.

So, I decided to look deeper into why people were leaving (the business term for this is churn).

And I discovered a few valuable things I’ll share.

By the end of this email, you’ll know them:

Note: This email focuses on customer retention and reducing churn (the number of customers that leave). It is geared to subscription businesses, but everyone can benefit from keeping customers longer.

There are a few reasons why this happened.

The first was a mismatch between what the subscriber wanted and what my newsletter promised.

You see, when you join my newsletter, I offer my free database of 150+ business ideas.

And by doing so, I get hundreds of people signing up.

But some of them just want the ideas, not the emails (the main part of the business).

This misalignment in what they want and what I provide, causes them to unsubscribe.

The fix? Set clear expectations for what your audience gets

The next reason is sponsored content. I used to place these ads at the top of my emails.

The first thing shown has a higher click-through rate. And when you all click on the sponsored content, I get paid.

Seems like a good idea, right?

But for subscribers who haven’t read my newsletter, the first thing they see is an ad.

Why are there advertisements in my email?

Boom. Unsubscribed.

Because they don’t know the value of the emails, they unsubscribe.

The fix? I moved the sponsored content later in the email, after I give value.

The last (and most important) change I made is using email automations.

I use two in particular:

For newsletters, keeping quality customers matters.

If the newsletter doesn’t get opened and clicked, it will go to spam. And the people who want to read it won’t get the benefits.

Keeping your customers happy and reducing the number of people who churn from your business is critical.

When you keep customers longer…

Here are three strategies to lower your churn and keep your customers happy.

Give an incentive for customers to take an action/follow something to increase the chance of gaining the desired result.

When your customer finishes 90% of your course, they are more likely to get their first client and buy more courses.

Find the actions the top 20% of your customers take and the actions that keep people from leaving.

Alex Hormozi explains this beautifully,

“Every customer that does (X thing) or gets (Y result) stays for longer than customers who don’t”

Find that X thing. Then help your customers do it.

Update your messaging, onboarding, and communication to optimize for those successful behaviors.

Alex continues by explaining the key X metric of Skool (his community business):

“Current data show hosts that get at least 3 group members stick with Skool way longer. That means we can roll the dice and hope they can get 3 members or... help them get 3 members.”

Alex focused Skool on helping the customer get their community to three members. They have training, tools, and resources all focused on helping achieve this result.

And when the customer achieves this, they are more likely to stay and keep paying for Skool.

Here are some common successful behaviors:

When you figure out these milestones and X actions, you can increase the odds you get a long-term customer.

Help your customers achieve their goal, and they will stay with you, refer others, and pay more in the future.

This strategy is a gold.

If you’ve had a business for a while you’ll notice your customers average churn time.

It may be two weeks, three months, or even a year. But once you know that duration, add rewards at those marks.

TV subscription with average churn of three months: “Unlock discounted pricing after three months of being subscribed.”

During these intervals you can offer:

This keeps your customer with you so they can get that reward. It plays on the sunk-cost bias that they are losing a reward and all their progress.

You can also reach out to your customers through calls, member events, or just by messaging them.

The personalized support and progress checks will keep your customers on track.

This strategy alone has saved me 134 subscribers. When your customer leaves, send them an email or get on a call and “resell them.”

Empathize with their problems and resell them on why they bought/subscribed in the first place.

Focus on what you can do to help your customers achieve their goals. Also look at what you did wrong and can fix.

Call, email, or message your customer when they cancel. You can set up automated emails like I did above.

If they still want to achieve their goal, ask politely if you can “redo” and try to help them another way.

This saves customers and helps you learn more about what your customers hate, so you can fix it.

That’s all I have.

-Warren

PS: See how the Deel ad is not in the beginning of the article. It is placed “under the fold”, and only after you see the value of the article.