How to Reduce Churn Rate – 3 Legitimate Tips

Heya, in my previous post, we learnt what exactly is Churn Rate. Now you know, that more churn is bad for your business. Let us discuss some cool tips to reduce churn rate in your business.

Reason I titled this post with “Legitimate Tips” is because we would focus on building our fundamentals strong instead of trying out some quick fix leak patching techniques. This would take a bit of longer time, but is worth it in the long run, especially when you look towards sustainably scaling your business in the long term.

Legitimate Tips to reduce churn rate:

Preventing Customer Churn or Exits or Opt-outs

  • Price:

One of the primary reason many customers opt out of your service is because they do not like your price. Remember that nothing is too expensive for a customer if he is made aware of the real value of the product. Hence, work with the customer to make them aware of your product features, functionalities and business benefits so that they gauge the real value of your product or service offering. You may cite the benefits by doing a cost benefits analysis of non-tangible things like Time Value, Quality of your offering, ease of use, Customer Support and assurance being delivered in your offerings, etc.


  • Mis-selling:


Second biggest reason why Customers leave is because after few months they realize that the product is not really meant for their usage or they are not appropriate intended user for the offering. They realize that some sales person did a push sell just to complete their sales quota. In this case it is bound to backfire to your business, since they would opt-out in reasonable amount of time. In this case, try to avoid doing mis-selling or push sales. The world is big enough and hence try to sell to those whom you thing could be interested in your offering or are the right intended users.


  • Customer Success or Engagement

Many Businesses think that once they onboard any customer to sell their subscription based service, their job is done. Chief Marketing Officers should realize that once the sale is done, job is not yet over. The real journey of customer begins from the moment they start using your product or service. Hence it is important that you start engaging with your customers by involving them in regular product update announcements, social media interactions, priority support, training sessions so that they can effectively use your product to realize its true potential benefit.

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What is Churn Rate?

What is Churn Rate?
If you run a subscription based business where you gain monthly or periodically recurring revenue, Churn Rate is one of the important parameters to consider for forecasting your future revenues. This metric is not just a KPI for Sales & Marketing department but also directly impacts Finance department for their future financial forecasts as well as impacts Operations or Delivery department in order to plan for scaling up or scaling down of existing business operations or infrastructure.

What exactly is Churn rate then?

In Simple terms, as the name suggests, Churn rate signifies the rate at which you lose your recurring revenue. Churn Rate can be estimated either on revenue or on the user headcount numbers depending on the way your business operates. In the Software subscription (SaaS) Industry, Churn Rate is usually calculated on user base.

Hence if you have 100 users at the start of the month and you lost 5 users by the end of the month. It would mean your churn rate is 5%.

However, I would also suggest you should keep a tab on Churn rate based on Revenue. This is because subscription rates of different types of users may differ based on the complexity of your business model and hence the user based Churn rate calculation may not give you an accurate view.

Churn Rate based on Revenue can be calculated similarly. If your Monthly Recurring Revenue (MRR) was 100,000 USD at the beginning of the month and by the end of the month you lost some 5 users who contributed 20,000 USD to your MRR. Then your Churn Rate would be 20%.

Why is it Important?

Churn Rate directly impacts your revenue and financials and is also an indicator of how dissatisfied are your customers. If you observe a series of increasing Churn Rate month over month, then it should definitely raise a flag and you need to accept that there is something definitely wrong which is leading to a spike in number of users opting out of your subscription or rental service.

Also, in order to stay in the game, your business should sustain for long.

What would happen if you fill a bucket with 1 mug of water every second but the bucket has a hole which keeps leaking 1.1 mug of water every second?


Leaking bucket of Water

You would never reach your goal of filling your bucket completely. Similarly, for your business to stay sustainable, its Customer Acquisition Rate should more than the Churn Rate. Otherwise you know what would happen.

Hope you liked reading this post. In the next post, I shall bring to you some tips to reduce your Churn Rate. Stay tuned and do subscribe us our Social Media Channels.

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Calculate your budget for buying a Sales CRM Software
Have you been lately trying to finalize a CRM software for your team but unable to figure out how much should you be spending for CRM?

As Businesses differ in size and type of deal value they deal in, It is complex for you to figure out the exact numeric estimate of how much of your allocated budget you must spend for taking up a CRM. Market is filled with CRM which charges from 9 USD per month per user to 500 USD per month per user based on the feature complexity of the Software and Value add provided by the service as per the needs of the Sales Team.

But How much should you as a Sales Manager be allocating your budget for CRM Implementation within your organization?

The answer is difficult and complex! 



But Let us try to find a simple solution to it.

Get an Estimate of Cost incurred by Sales Executive doing Non-revenue generating task:

  • Get an estimated figure of the amount you spend paying your Sales Executive's Annual Salary.
  • With that, try to find your hourly cost rate of your executives.
  • Guess the average amount of time each Sales team member spends in a day doing manual entry of his sales figures into an Excel file to be shared to his Manager or to Reporting analyst who will consolidate it further for the whole team. This could be roughly around 30 minutes a day out of 8 working hours of the resource.
  • Guess the average amount of time each Sales team member spends in a day trying to search or recall or figure out some of the past conversation history with some Client documented in some random email or document which is important for his follow up call. This could again be roughly around 30 minutes to 1 hour per day.
  • Sum up both the time.

Get an Estimate of Cost incurred by Reporting Analysts doing Non-revenue generating tasks:

  • Sales Reporting Analysts doing the task of Reporting and Measurement Analyst is redundant and detrimental for their career. Most of the time these resources are over burdened with the dirty work of following up with each sales executive and getting the sales figures, plugging it in spreadsheet application and drawing pivot tables, bar charts, pie charts, line chart etc and prepare a dashboard for the Senior Management. 
  • By the time Analysts complete this task for a particular week, the next week very soon arrives and his task keeps repeating week over week without an end. This is unproductive since Sales Analysts should be spending time trying to get important insights from Sales numbers which can help them beat revenue targets instead of trying to become a data gathering guy of the Sales Team.
  • Now get an estimated figure of the Salary you pay to your Sales Reporting Analyst annually.
  • Note: Do this step only if your team's sales analyst is involved with the above non-revenue generating activities. If your Sales Analyst is involved with other productive work, you may skip this step, or try to find the hours spent by him doing these non-productive tasks and get estimated Salary getting spend on that part.

Get the Total Estimate:

Total Yearly CRM Budget (Annual Salary of Sales Executive * (Total Time Spent per day doing Unproductive work/ 8 hours per day) *  Total Number of Sales Executives in team) (Annual Salary of Reporting Analysts * Total Number of Reporting Analysts in your team)


The above amount would be the yearly estimate of how much should you be spending on your CRM which is going waste in the Salary of resources doing non-revenue generating tasks.

How much should you be spending monthly per sales staff?

CRM Budget per User per Month = Total Yearly CRM Budget / (12 Months * Total Number of Sales Executives) 

This figure would give you a rough estimate of how much should you be ideally spending per team member on a CRM.

Let me know your thoughts on this.
What is Topline and Bottomline in Sales?
Hey friends, If you recently took up a role in Sales, then you would have frequently heard the two terms Topline and Bottomline from your executive level bosses. If you want know what are those, you have come to the right place.

These two Business Jargons have simpler meaning than they appear to be. Let me tell you what do they mean.

In any business, while you are doing sales, you would make revenue by selling something. Obviously, Once you sell the products or services, you cannot keep the whole revenue with yourself or organization. Major chunk of that revenue goes towards meeting the cost of making the product, income taxes, hr and administration costs involved in managing staff, etc. After deducting all these operating expenses and taxes, what we are left with is the net profit or net income which we can keep which belongs to shareholders and if they wish to, can be invested further into the business.

In this case, the revenue which you generate on making sales is called Topline and the net profit or net income which you generated after deducting all operating expenses and taxes from the revenue is what is known as Bottomline.

Whenever business executives discuss their financials, they monitor these two numbers very closely. Increasing Topline is one of the priority for them to increase the organization growth. However, with this they cannot ignore Bottomline growth because, if they are not left with enough cash after selling products and services, the business cannot survive for long and is not sustainable for long. 

Hence both the metrics should be monitored together since both go hand in hand for a sustainable growth of business.
3 Sales Tips to get response from C-suite executives
Getting a meeting from a C-suite executive of a mid or large corporation is one of the most daunting task for a sales person. This is because unlike other prospects who are in the lower hierarchy of an organization where sales person can pitch in multiple times and try out different ways to approach the prospect, with a C-suite executive, the sales person stands just one shot.


That's the reason why sales professionals should have a fool proof strategy while approaching a C-suite executive while trying to get him for a sales meeting.

Here are 3 tips from my experience which can help you get a reply from CXOs while trying to get their response for a sales meeting:



1. Try asking for a referral within the organization.

Most of the time, top level executives especially CEO, CMO, CFO or COO would be involved with multiple internal tasks that they would hardly get any time for an external sales person which is you. Even if they find your short sales pitch to be interesting, they would hardly have bandwidth for a meeting. This is the reason they would try to defer it. But most of the time, CXOs would be ready to delegate it to their Subordinates or Executive Assistants. 

A few of the executives would refer you to another person in their organization on their own, but not the case with everyone until you ask them for that. So, next time you send a cold email, try asking them for a referral in their organization whom you can talk for discovery interviews or sales meetings.



2. KISS - Keep It Short & Simple

Almost every CXO of an organization is a busy person hardly having any time even for self. During these moments, if you get a chance to talk to him on phone, don't waste his time asking long discovery questions which you can ask others within the same organization. Try to keep your talk short, crisp and to the point instead of trying to blabber round and round about a concept just to gain his attention. Instead of getting his attention, chances are there that you would lose his interest which is lethal in sales.

Hence, the next time you get to talk to a C level executive, try presenting key benefits for him which you can offer via your products, instead of asking him his 5 year vision of his organization and asking generic time consuming questions as to what are their challenges. Ideally you should ask these questions, only if you have a longer meeting planned with the executive especially for discovery interview.



3. Follow Up

Following up is the key to sales success. But it takes a key precedence if you are trying to sell to busy C-suite executives. Often CXOs would be travelling a lot, meeting people around the world. This means he would stay away from his base office often. Chances are there that in his run up to catch up his own work, he would forget about your last meeting. This necessitates that you follow up with the executive by cut-off date before any competitor pitch in and grab the deal.

So, the next time you finish off a meeting with an executive, make sure you ask him when he shall be available for a next meeting and make sure to add that date to your CRM so that it can remind you for another meet up.


I hope you enjoyed reading the post. Do let me know your thoughts on this.

3 Traits of Successful Sales Managers
Often you would observe the best salesperson when promoted to Sales Manager would sometimes fail to become a good at it and sometimes you might also find few instances where an average sales person went on to become a good Sales Manager.

Why is that so?

This is because of certain fundamental differences in the work performed by Sales Person and Sales Manager. The former is a individual contributor role while the later is the management role where the sales manager has to take the whole team into picture and think of every team member's growth in order to achieve the sales targets of the whole sales team.

Leading Sales teams towards team goals



Let us look at 3 key traits every Sales Manager should possess to be super successful in his profession.

1. He looks at the bigger picture instead of focusing on a few team members.

Often Sales Manager's tend to focus on a few top performing sales persons for achieving the team's sales quota rather than working with all the team members. This behavior usually leads to unhappiness among the other team members, who would start feeling alienated. This impacts their performance and ultimately makes it difficult for sales managers to achieve team's goals with a handful of top performers. Top performers should be given preference in giving costly and big deals, but it shouldn't become the case that a sales manager start becoming over dependent on those team members to cover his complete team's quota.


2. Sales Manager should mentor and guide the newer folks.

The Manager should not look only at the short term picture where his only goal is to extract out revenue from his folks. Often sales team would have a range of members with varied sales experience each having his own strengths and weakness. The Manager should identify those gaps and try to mentor the team members and help them overcome their shortcomings which in turn would help the team achieve revenue targets. This would also help boost self esteem of the team member and hence he would like to work within your organization for longer rather than planning for a job switch.


3. He should be a team contributor instead of Individual contributor.

Third and most important as I already wrote in the beginning, an individual contributor sales person is not a good fit for becoming a sales manager. This is where I mentioned if a top performer sales person is given a responsibility of becoming a sales manager, he should also start working with the whole team for their development in addition to his own individual performance in sales closures. Individual contributor should start empathizing with other folks and work with them to achieve the whole team's sales quota. If this is not the case, then manager would sometime get frustrated and would think that he himself can complete the quota alone rather than guiding the team members. This would ultimately lead to disaster because the ultimate purpose of sales management is actually to manage bigger sales teams, not doing everything alone. Sales Manager's job is to focus on bigger things rather than doing the sale himself.

Hope you would have liked this post. Do comment your opinions and let me know.