Common Causes of Customer Churn

Identify and address the key factors driving customer churn to improve retention and satisfaction.
Common Causes of Customer Churn Lesson

Customer churn often results from a variety of preventable factors that erode trust and satisfaction over time. Key drivers of churn include poor onboarding that fails to show customers value early, product misalignment that leaves customer needs unmet, and insufficient engagement that causes users to lose interest. Pricing issues, whether perceived as too high or not transparent, also push customers to leave, as does the lack of product updates that signal stagnation.

Weak customer support, unaddressed technical issues, and unmet expectations can further frustrate users, while competitor influence can lure them away with better offerings. By understanding these causes and recognizing the early warning signs, businesses can address pain points, improve customer experiences, and take strategic steps to retain their users before churn occurs.

Poor onboarding and early churn

Poor onboarding is a major reason for early churn. When new customers don’t quickly understand how to use a product or see its value, they are more likely to leave. If the onboarding process is confusing or lacks support, customers may get frustrated and stop using the service. Snapchat's 2018 redesign confused users by drastically changing the app's navigation without proper onboarding, resulting in a significant user drop.

Good onboarding should guide users clearly, showing them the key features and benefits right away. If customers don’t see immediate value, they often abandon the product early in their experience.

LinkedIn's mobile app onboarding, though comprehensive, could benefit from a more gradual approach. While some profile information is essential for networking, not everything needs to be collected upfront. For example, letting users explore the platform after basic sign-up, then prompting for additional details like education history or profile photos later, could create a smoother entry experience while still collecting necessary information.

Product misalignment occurs when a product doesn't meet the needs or expectations of its customers. This often happens when there is a mismatch between the product's features and what customers expect or need. Misalignment can lead to frustration, dissatisfaction, and eventually, churn, as customers may feel that the product isn't solving their problems or delivering promised value.

Product misalignment can result from unclear product messaging, overselling, or failing to address the right market segment. Businesses can reduce churn by ensuring that product development aligns with customer needs and setting realistic expectations.

Google Stadia's 2023 shutdown exemplifies product misalignment. Despite promising high-quality gaming without expensive hardware, Stadia required excellent internet connectivity many users lacked, had confusing pricing combining subscriptions with full-price games, and offered a limited game library. By focusing on streaming technology over core gamer needs, Stadia misread its market. After 3 years, Google shut down the service and refunded all purchases, demonstrating how even technically impressive products fail when misaligned with user expectations.

Pro Tip! Ensure that your product matches customer needs by clearly communicating its features and benefits.

Lack of engagement

A lack of customer engagement is a common cause of churn. When customers stop interacting with a product regularly, they are more likely to lose interest and eventually leave. Low engagement often indicates that customers do not see ongoing value in the product or are not being encouraged to use it consistently. Duolingo effectively demonstrates how strong engagement features prevent churn. The language learning app maintains user interest through daily streak tracking, personalized practice reminders, and a gamified league system that rewards consistent usage. By combining achievable daily goals with competitive elements and progress visualization, Duolingo successfully creates sustainable engagement habits that keep users returning to the platform.

Businesses can prevent churn by keeping customers engaged through regular communication, personalized recommendations, or incentives that encourage active use. Engagement can be measured through metrics such as usage frequency, feature adoption, or time spent using the product.

Weak customer support Bad Practice
Weak customer support Best Practice

Weak or unresponsive customer support is a major contributor to churn. When customers encounter problems or have questions, they expect timely and helpful assistance. If support teams are slow to respond, offer incomplete solutions, or fail to resolve issues, customers can become frustrated and lose trust in the product or service. This frustration can push customers to look for alternatives, ultimately increasing churn.

Businesses can reduce churn by investing in strong customer support teams, offering multiple channels for help, and ensuring that issues are resolved quickly and effectively. Providing excellent support is not only about resolving problems but also about creating positive interactions that build loyalty and trust.

Revolut demonstrates effective support practices by offering 24/7 assistance prominently displayed in their chat interface. Their chat assistant provides immediate response and clear identification, setting proper expectations for the support interaction

Unmet expectations

Unmet expectations are a key reason why customers leave. When customers buy a product expecting certain results, and those results don't happen, they often get frustrated and leave. This commonly occurs when marketing makes big promises, or when customers don't fully understand what the product can actually do.

The fitness app shown sets unrealistic expectations by promising visible body changes "in just 3 weeks." While this bold promise might attract new users, it's likely to disappoint them when such dramatic changes don't happen in such a short time. These users will probably leave once they realize the timeline isn't realistic.

To keep customers longer, businesses should be honest about what their product can deliver. Clear communication about what the product does, what it can't do, and what results to expect helps customers make informed decisions. When customers know exactly what they're getting, they're more likely to stay and be satisfied with the product.

Competitor influence is a common cause of customer churn. Customers may leave if they perceive a competitor’s product as offering better value, more features, or superior customer service. The availability of competing products makes it easy for customers to switch when they feel they are not getting enough from their current service.

Businesses can reduce churn caused by competitor influence by regularly analyzing the competitive landscape, staying updated on industry trends, and ensuring their product continues to meet customer needs. Offering unique features, providing excellent support, and building strong customer relationships can help prevent customers from jumping ship.

Pro Tip! Regularly monitor competitors and focus on delivering consistent value to prevent customers from switching.

Pricing issues

Pricing issues are a frequent cause of customer churn, especially when customers feel that the product or service is too expensive for the value it delivers. If customers perceive that they are not getting enough value for the cost, or if competitors offer similar products at a lower price, they may choose to leave.

Pricing problems can also arise from unexpected fees, unclear billing practices, or frequent price increases. For example, DoorDash's DashPass subscription offers clear value propositions like zero delivery fees and reduced service fees on eligible orders. However, placing auto-renewal terms in small print at the bottom of the subscription page might lead to customer frustration when unexpected charges appear.

To reduce churn caused by pricing, businesses need to ensure that their pricing is transparent, fair, and aligned with the value the customer receives. Offering tiered pricing or flexible payment options can help customers find the right balance between cost and value.

Pro Tip! Offer flexible payment options and provide a free trial so customers can test your product before committing.

Lack of product updates Bad Practice
Lack of product updates Best Practice

A lack of regular product updates can lead to customer churn, especially in industries where innovation and feature improvements are expected. When customers feel that a product is stagnating, they may switch to competitors who offer more frequent updates and new features. Regular updates not only keep the product relevant but also show that the business is committed to improving the user experience.

By providing consistent updates and enhancements, businesses can keep customers engaged and satisfied, reducing the likelihood of churn. This can include feature improvements, performance upgrades, or even new services that align with customer needs.

Lack of customer feedback

A lack of customer feedback can lead to churn, as businesses may miss critical insights about what their customers want or need. Without regular feedback, companies may fail to address pain points or improve areas that are driving dissatisfaction. This disconnect between the business and its customers can result in customers feeling unheard and eventually leaving for a competitor that listens more actively.

Collecting and acting on customer feedback helps businesses stay aligned with customer expectations. Feedback loops through surveys, reviews, or direct interactions allow companies to continuously improve their products and customer experiences. Addressing customer concerns based on feedback is a key strategy to prevent churn and maintain customer satisfaction.

Pro Tip! Start with simple post-purchase surveys or quick feedback forms to regain customer insights.

Unaddressed technical issues

Unaddressed technical issues, such as bugs or performance problems, are a major cause of customer churn. When customers encounter ongoing technical issues that are not fixed promptly, their frustration grows, and they may lose trust in the product. Over time, unresolved technical problems can push customers to seek more reliable alternatives.

The error message shown demonstrates good practice by clearly explaining what's happening and what users can do about it. Instead of showing a confusing technical error code, it uses simple language to acknowledge the problem, confirm that the team is working on it, and suggest a quick solution users can try. This transparent approach helps reduce user frustration during technical issues.

To prevent churn, businesses should prioritize testing, identifying bugs, and ensuring that fixes are incorporated into the development backlog. Regular communication with customers is key—let them know when issues are being addressed and provide updates on progress. Timely communication reassures customers that their concerns are being taken seriously and that improvements are underway.

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