Customer churn - what's your take?

SenseiSteve

SenseiSteve

HD Moderator
Staff member
I've thought about this many times even on things not web hosting industry related. Other than poor customer service or repeated outages, I think high customer churn results from continuing to charge long term clients higher prices than you're offering to new prospects. When I see commercials run on TV offering services with lower prices than what I'm paying, my first impulse is to get the deal they're getting, and more than once, I've heard from my vendors that those are just promotional prices and existing customers don't qualify. Plus, even if you don't advertise, and let's say, your client has been with you for years, and your competition is offering better pricing for the same service, some clients will just opt to move on without complaining. The current host thinks their clients are happy until they get that, 'I want to terminate my service' notice. Is this complacency on the part of the host, or is that just the nature of a competitive marketplace? I think it's a bit of both. Hosts can hardly afford customer churn in today's marketplace.

What's your take on avoiding customer churn along these lines?
 
First I must say moving on is a reality of life and the day a client signs with you be ready they will leave at some point. Yes we do our best to keep them but their needs are not static.

Because client's needs are dynamic today you are the best host for them but tomorrow I may be the best choice. Because the client has moved on MAY not necessarily mean that you are providing a much worse service than you did when the client signed up, it might just be that their needs have changed.

Many times I have clients that terminated and two three months back signed back. In my opinion that would mean they did not leave because they thought you were offering a very bad service BUT they thought they could change their priority and realized NO I would rather pay for what I need than save on what I dont.
 
SenseiSteve said:
I've thought about this many times even on things not web hosting industry related. Other than poor customer service or repeated outages, I think high customer churn results from continuing to charge long term clients higher prices than you're offering to new prospects.
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I agree. when my vehicle insurance was due for renewal it had risen 20% and that was without claims.
so i went to a comparison site and placed exactly the same details i had on expiring insurance and the top quote was £100 less than what i paid for the last year with the exact insurance company i was with. so naturally i took this out as a new customer when my other one expired
 
First I looked up the term churn and got a machine or container in which butter is made by agitating milk or cream.

I'm pretty sure we are not talking about butter.

From the posts I gather customers moving? In which case I can say as a host we want the customer to be happy if it's with us or not. Some leave and come back and some don't so we have to assume they are happy. My best effort in keeping customers is simply keeping them happy, some need to talk to us a lot, some need a fast network, some need a low price. We do what they need and try to blanket it all before hand.
 
I worked with a hosting company before who promote hard on advertising, but such promo only for new people not for existing clients. We get numorous calls for this and supervisors always have to give "exception" to people when complaining hard.

Personally, if a company decides to give good offers, both existing and new clients should have it.
 
Lincxu said:
I worked with a hosting company before who promote hard on advertising, but such promo only for new people not for existing clients. We get numorous calls for this and supervisors always have to give "exception" to people when complaining hard.

Personally, if a company decides to give good offers, both existing and new clients should have it.
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I agree totally on this one, we always offer the newer rates to our current customers when they come out. If we didn't I'm sure they may see a cheaper rate somwhere else and decide to try them for the savings.
 
First I looked up the term churn and got a machine or container in which butter is made by agitating milk or cream.

I'm pretty sure we are not talking about butter.
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You made me smile after a long day at work. :)
 
We no longer give out recurring discounts.

We set our pricing at the levels we need to provide the service we want to provide.

Our discount codes are for the duration you pay for, until renewal.

It sweetens the deal when you know for instance that you will be hosting 50 or so users with us, but it's going to take time to get them onboard, and so you are not using all of the resources that you will in the end. So why pay all of the cost?

Now if you have a fully loaded account at renewal and you want the same prices, chances are we are not making any money from you, so whilst we are sad to see customers leave, as word of mouth is how we get most of our customers, business wise it doesn't make sense to lose money to keep a customer.

We run "fully loaded" feature wise and hope this stops customers from going elsewhere, although there is always the danger of charging for things people aren't using.

Our biggest churn issue was when customers decided not to upgrade their installations for months leaving their sites wide open with vulnerabilities and then blaming our security when they inevitably get hacked/compromised (I'm sure this is the same for other hosts).

We've recently implemented an automated vulnerability patching system, which doesn't force an an upgrade (often breaking sites), but patches the vulnerability, making the site safe once again.

It's very early days, but we've had no complaints so far.

We're hoping this will reduce our churn
 
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We do our best to minimize churn. We have no problem offering the current promos to existing customers assuming they are using comparable services. We even will price match competitors if it makes sense to do so.

It seems hosting is an ever race to the bottom price wise. So we make sure we aren't in that race. Like someone else mentioned - we price ourselves in such a way that we can provide the level of service we want to provide.

Just my two cents.
 
In all industries, there will surely be customer churn, how to reduce it will depend on your company strategy, but most of the time loyalty rewards and discounts.
 
For me the churn isnt the problem but rather what causes it. If clients leave you because you offer less than you promise then you are in a big problem and imminent danger of running out of business.
 
Just be better with your hosting, I have found it great when everything is static, charges per site running time (spin up a site for a day for testing only pay for a day). When we have coupons and codes that are in the wild even current users can use them. Thats just good business.
 
anthonyrossbach said:
Just be better with your hosting, I have found it great when everything is static, charges per site running time (spin up a site for a day for testing only pay for a day). When we have coupons and codes that are in the wild even current users can use them. Thats just good business.
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Regardless of the service sometimes clients just move on because they need a dedicated environment for example. But where the churn is caused by bad service then you need to tie the loose ends and provide a better hosting environment.
 
What do you think about offering current clients upgrades to their existing hosting package at prices listed below what is on your website? Let's say they're paying $40 for two cores on a VPS and your listed price for 4 cores is $75. Would offering them an upgrade to 4 cores for $70 make sense. They're getting a deal if they're even thinking about upgrading and you're keeping an existing client.
 
SenseiSteve said:
What do you think about offering current clients upgrades to their existing hosting package at prices listed below what is on your website? Let's say they're paying $40 for two cores on a VPS and your listed price for 4 cores is $75. Would offering them an upgrade to 4 cores for $70 make sense. They're getting a deal if they're even thinking about upgrading and you're keeping an existing client.
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You could do that indeed but it makes more sense just to keep the prices the same to new and current in that case.

Now if you were offering them in the past cheaper pricing then yes you do not want to "annoy" them at your new pricing and just apply the increased pricing change to new signups/additional orders.

That what I at least think is "fair".
 
SenseiSteve said:
What do you think about offering current clients upgrades to their existing hosting package at prices listed below what is on your website? Let's say they're paying $40 for two cores on a VPS and your listed price for 4 cores is $75. Would offering them an upgrade to 4 cores for $70 make sense. They're getting a deal if they're even thinking about upgrading and you're keeping an existing client.
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I think it could if the offer is a lifetime offer and assuming that your $75 plan was fairly priced in the first place so that your discounted price does not actually end up still higher than competition.

If the offer is not a lifetime offer then you may need to offer a relatively higher discount on the first month to make it realistic for the clients to upgrade
 
It certainly does pay to look after your existing clients. As with most people I have experienced the good and the bad or company attitudes towards existing clients. The worst I've seen is with insurance companies. I had one in the past that kept increasing the yearly premium by a considerable amount at the same time removing features from my policy. It annoyed me enough that I would go in and renegotiate face to face and get a drastically reduced price. I have since changed companies.

My ISP while never discounting my service has continually upgraded it. Just before Christmas they doubled my usage allowance out of the blue. Curiously I was starting to reach the limits each month and was considering looking around. I have spoken to another customer of the same provider who is very happy due to being rewarded for loyalty to the provider. Interestingly I was at a seminar where the founder of the same provider was talking about customer retention and mentioned that it takes at least 2 years for an ISP to return a profit from a customer.
 
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