The Fintech industry is one of the fastest-growing industries due to the competition. Almost by default, all of the big players in the Fintech industry are well-funded and backed by investors with deep pockets. As a result, startups in Fintech are battling over every customer and are not afraid to pay top dollars for customer acquisition.
For Fintech startups, the cost of acquiring a customer is between $5 and $300. There are even some startups that spend as much as $800 per acquisition. That speaks volumes about why Fintech companies are doing all that is in their power to retain their existing customers.
Customer churn is one of the key metrics used by investors to evaluate the health of a Fintech business. It is one of those things that can attract or drive away investors. It is the difference between surviving until the next series of funding or going bankrupt. As a result, Fintech companies are always searching for ways to reduce their customer churn.
The following strategies are not exclusive to Fintech companies but are recognized as helpful to the businesses and startups in that sector. So, if you are interested in reducing your company’s customer churn, keep on reading.
How to Reduce Customer Churn for Your Fintech Startup?
#1 Soliciting feedback from customers
In the early stages, it is pretty significant to listen to what your customers have to say. Find channels through which you can reach out to your customers and ask about anything they don’t like, their main concerns regarding the product, any features missing on your platform, and so on.
That’s the best path to optimizing your services/product and reducing customer churn. Identify problems, respond, and solve. That is the easiest way to retain your customers and make sure that your startup thrives.
#2 Identifying at-risk customers
Identifying at-risk customers is a tactic used initially by B2B companies. According to various data sources from B2B businesses and startups, that tactic helped them reduce as much as 35% of their customer churn.
Spotting at-risk customers are not that difficult. Sometimes they are customers that ask for a quote. Other times those that asked for some additional information, and somehow along the way, you didn’t follow up on that.
You should analyze and try to understand what drives them away from your company. If you are meticulous enough, then there is a pretty good chance that you can see things from their angle. By doing so, you identify potential flaws within your product/service. By knowing that, you can take a more proactive role in stopping future churn.
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#3 Make big data work for You
The financial services industry generates vast amounts of data on credit transactions, credit scores, financial flows, and all sorts of other information. Streamlining all that data into your business model is vital to keep your Fintech startup stay competitive. Creating new programs to process big data effectively can help you get more acquainted with your customer spending habits, learn more about potential fraud risks, and develop new customer-oriented products. When summed up, all that will also have a profound impact on your customer churn.
#4 Reliable customer support
One of the most essential and unwritten rules says that if you want a customer to stay with you, care for them. According to a recent survey, customer support problems can spell bad news for your startup. Putting people on hold over a long period, having customers repeat the same information a couple of times to multiple representatives, automated systems that make it hard to reach a human agent are just some of the problems users face when trying to solve a problem through customer service support.
On the other hand, reliable and competent customer support can go a long way in keeping your users happy. Keeping the customer support representatives up-to-date regarding all the current problems, getting them familiar with every new feature or product that comes out of your company, hiring enough representatives to decrease the average waiting time are some steps to improve your customer support.
#5 Pay close attention to complaints
Research conducted by Esteban Kolsky suggests that 13% of all unhappy customers will share their negative experiences with fifteen more other people. Furthermore, only one out of twenty-five unsatisfied customers will bring their complaint to you.
Another study says 96% of all unhappy clients will never complain, while 91% of them will stop using your services/product without ever hearing from them again.
Therefore, you start paying attention to customer complaints and do everything possible to resolve them as fast as possible. A Harvard study suggests that customers that had their complaints resolved in five minutes or less tend to spend even more in the future.
The point is simple- don’t let a complaint be unsolved. Instead, please get to the root of the issue and solve it. It may sound silly, but customers whose complaints are resolved may remain loyal to the company. Plus, a simple complaint can easily be the tip of the iceberg. There might be a bigger problem under it all that is hidden from view. After all, it is practically impossible to have eyes everywhere and predict any possible problem. So, awake your inner Sherlock Holmes and let no stone unturned when a complaint emerges. You never know what can come out of that, no matter how trivial it seems at first.
Customer churn is one of those things that are easy to ignore, yet it can drain your business and put you out of work. The consequences of customer churn can be severe, especially in the Fintech sector, where customer acquisition is super-expensive. The point is, either you take the appropriate steps to reduce churn rates at an acceptable level, or you will be out of business in a while. Hopefully, some of the strategies we’ve mentioned above will help you and your Fintech startup head towards unicorn valuation instead of going out of business.
SEO & Content Specialist
Douglas Liantonio has been a strong SEO Specialist and content writer since 2015. Being an expert in marketing and reducing B2B customer churn. While not working on strategies and advising tactics, he enjoys calisthenics fitness and retro gaming.
The information and views set out in this publication are those of the author(s) and do not necessarily reflect the official opinion of Magnimetrics. Neither Magnimetrics nor any person acting on their behalf may be held responsible for the use which may be made of the information contained herein. The information in this article is for educational purposes only and should not be treated as professional advice. Magnimetrics and the author of this publication accept no responsibility for any damages or losses sustained in the result of using the information presented in the publication.