Strategies for Marketers to Eliminate Customer Churn Once and For All

If you’re anything like me, chances are you’ve encountered Alex Hormozi’s “$100M Offers” countless times over the last year. It seems every business coach is chanting, “To sell anything, you must craft an irresistible offer; otherwise, you’ll end up broke and forgotten.”

I must admit, it irks me each time I hear this sentiment. It’s not due to any disrespect toward Hormozi or his work. Instead, it brings to mind a well-known investing principle: the barbershop fallacy. The idea here is to avoid accepting stock recommendations from your barber, as they often dispense advice that is overly simplistic, generic, or wrong-headed.

The Pitfalls of Obvious Solutions in Business

The barbershop fallacy extends beyond taking advice from questionable sources; it also encompasses the alluring but hazardous nature of oversimplified answers. For instance, your barber might give you investment advice without a clear understanding of your personal objectives, risk appetite, or investment strategy. They’re only presenting what seems obvious, not necessarily what aligns with your unique situation. Following such guidance can lead to significant missteps.

A specific case illustrating this occurred with the fitness startup ClassPass in 2013. They rolled out what appeared to be a surefire hit—unlimited access to boutique fitness classes for a mere $99 per month. Given that single sessions typically cost between $20 and $35, this felt like a bargain to fitness enthusiasts in urban areas who dreamed of such access to premium studios.

The value proposition was crystal clear, and the target audience was well-defined. Initially, it felt genuinely “irresistible,” leading to rapid growth. Yet, this approach proved to be utterly unsustainable.

ClassPass attracted a group of “super users”—customers who utilized the service for over 20 classes a month. While they appeared to be the ideal consumers initially, they ultimately drained resources, as ClassPass had to compensate studios for each usage. The situation was exacerbated by marketing strategies that prioritized value and variety, appealing mainly to bargain hunters rather than cultivating a loyal customer base that truly valued the fitness exploration aspect.

The Price of Targeting the Wrong Audience

What seemed like a clear marketing triumph spiraled into considerable instability, nearly pushing the company to the brink. Within just three years, the reckless marketing tactics and unsustainable business strategy compelled ClassPass to increase prices, shift to a tiered pricing model, and remove the “unlimited” class option, leading to severe customer turnover and significant public outrage.

Though ClassPass managed to bounce back, partly due to its size and adaptability, how many other businesses have fallen into a similar marketing quagmire with no way out?

Explore more: Why Retaining Customers is More Valuable Than Acquiring New Ones

How Marketing Can Initiate Customer Churn

In the marketing domain, we often say things like, “I just bring in leads; it’s up to sales to qualify and close them, while operations and support ensure customer satisfaction.” But take a look at how this mindset led to ClassPass’s troubles. It’s akin to a chef claiming, “I merely place food on plates.” This disregards the need to serve appropriate food to the correct clientele, avoid ingredient waste, and uphold food quality, all essential to maintaining the restaurant’s reputation and long-term success.

Business is a cohesive, interdependent system. Each department’s actions impact the others. As marketers, we may unknowingly contribute to our company’s churn rate by neglecting our responsibilities.

So, how do we prevent becoming another warning tale? It begins with targeting the right leads. Attracting the wrong audience is as detrimental as having no leads at all. Promoting anything other than the right fit can exacerbate customer churn, including discrepancies between your promises and actual delivery. Ultimately, this trajectory is a recipe for failure.

Three Strategies to Combat Customer Churn in Marketing

There are three actionable steps you can take to mitigate marketing-related customer churn.

1. Define Your Customer More Clearly

This may sound straightforward, but mastering the fundamentals is crucial. Unfortunately, many marketing teams overlook the need to deeply understand their actual customers. Instead, they rely on the assumptions of upper management—those least familiar with customer realities. This is a classic case of the blind leading the blind.

As discussed in a previous post, illustrating significant common mistakes marketing teams make regarding ideal customer profiles—and how to correct them—starts with transcending vague demographics. It’s vital to analyze your customer base’s profitability, differentiate between payers, users, and decision-makers, and understand their respective roles.

2. Allow Customers to Determine Value

Within organizations, there’s a tendency to draw insights from the development or operations teams when showcasing our product’s merits. However, your customers don’t care if your pocket knife includes a corkscrew unless they need to open wine bottles. Your business thrives on satisfying their needs—it’s all about them.

To grasp why your offerings matter, stop listening solely to development team fantasies of “what could be cool” and start paying attention to your customers’ desires and needs. This insight will guide what you should promote.

Ultimately, it’s not about crafting offers that elicit an enthusiastic “Absolutely!” from customers—the way ClassPass did before it backfired. It’s about developing solutions that make customers exclaim, “That’s precisely what I was looking for!”

3. Engage with Your Product

Marketers often peruse a website a couple of times, perform a brief exploration of the product, or watch someone else use it, then falsely believe they fully comprehend it. This is akin to thinking I can play Vivaldi’s “Summer” or Gershwin’s “Rhapsody in Blue” simply because I’ve seen a performance—it simply doesn’t work that way.

Instead, step into your customers’ shoes. Picture attempting to achieve a specific goal using your product or service. This immersive experience will shine a light on any frustrations, ambiguities, or meaningful features. This perspective will inform what your product truly offers and who should be your target audience.

Explore further: Identifying High-Churn Personas in B2B and How to Mitigate Their Risks

Churn is a Collective Concern

As marketers, we cannot limit our focus to merely generating leads and leave the rest to others. The ClassPass case demonstrates the dangers of missteps in this regard, regardless of intent. Customer churn is an organizational-wide issue, but it often initiates with our marketing decisions.

Are you appealing to the correct customers, or just the most apparent ones? Don’t leave it to chance—dig deeper. Engage your customers, and validate your assumptions through data. The answers are there, waiting for you to discover them.

Fortunately, the rewards of this effort can be substantial. By attracting the right customers—those who value your offerings and remain loyal—you can significantly decrease churn and fortify your entire organization. This approach transcends merely sound marketing; it’s sound business.