5% Churn Reduction That Worked - Even with a 30% Price Hike

Our client had to raise prices by 30%+ due to market conditions. Coupled with very low switching costs for customers in their industry, this risked large-scale customer churn.

Insight: Over-explanation can decrease trust

Our client’s first instinct was to dedicate a lot of space to explaining and justifying the price increase in detail. This backfired, giving customers the feeling that they were being tricked, as no justification was enough to explain the substantial size of the increase.

The Solution: A redesigned renewal communications journey

We transformed the renewal communications journey to address the price increase more fairly, concisely and confidently. A move that became the core of our churn reduction strategy:

• Value framing: positioning renewal as securing unique value, not just paying a bill
• Radical transparency: clear, upfront explanations of price changes built trust
• Timing: providing a well-timed heads-up a specific period before the renewal date

The Results

5% churn reduction, against a forecast of considerable increases

Big Takeaway

Price increases must be addressed fairly, and the precise wording of this explanation strongly affects customers’ likelihood of accepting the increase or churning. Churn reduction is possible with the right communication approach.