The Link Between Customer Renewals and Education

Customer renewal is a critical metric for any business, and your customer renewal rate directly reflects the strength of your customer relationships. With acquisition costs at an all-time high, retaining your existing customers has never been more important. Well-designed customer renewal strategies ensure that your customers remain engaged, see value in your offering, and choose to renew repeatedly.

In this blog article, we’ll explore the link between renewals and education, why customers renew or churn, and 12 actionable strategies to boost your customer renewal rate and foster long-term loyalty. 

Let’s dive in!

Skip ahead: 

What is customer retention?

Customer retention refers to the amount of customers your company keeps over a specified period of time. It’s often used to gauge customer loyalty, predict recurring revenue, and assess overall business health. 

While customer retention may be used interchangeably with customer renewal, the two should not be confused. 

Customer retention vs. customer renewal

Customer retention specifically describes the rate at which customers choose not to cancel their subscriptions, whether actively or passively. 

In contrast, renewal rates capture the amount of customers who actively choose to resign an agreement. 

For example, in an apartment lease, tenants must actively choose to renew, making each lease renewal a distinct customer renewal.

Netflix, on the other hand, likely measures customer retention, as their subscribers are on an automatic subscription model. Here, customers renew month-to-month or year-to-year without needing to decide actively; instead, the choice is to actively decide to cancel.

How to calculate your customer retention rate

The formula for calculating your customer retention rate is as follows:

Whether or not 80% is a positive number for your business relies on your industry. SaaS companies typically aim for around 85% or higher while a fitness club may aim for 70% or higher. 

Additionally, you also have your own history of performance to consider. If the last three quarters saw retention rates of 50-60%, then a retention rate of 68% is a positive thing, even if it’s not quite as high as your industry benchmarks. 

But why care? Let’s look at that next. 

The importance of strong customer renewals 

Strong customer renewals are one of the most important supporting pillars in sustainable business growth. Not only do customer renewals stabilize revenue streams, they also bolster company financials by decreasing reliance on costly new customer acquisition. 

Recent research shows that customer acquisition costs can range anywhere from $50 to hundreds, even thousands. First Page Sage found that the average for ecommerce was $86, $239 in B2B SaaS, and $533 in business consulting. And with costs like these, high churn rates means the only thing dependable is your continuous steam of expenses in customer acquisition efforts. 

So, let’s take a look at 6 of the top reasons why customers renew. 

6 Reasons why customers renew

1. Clear product value – When customers see the value in your product or service, they’re more likely to renew or maintain their subscription. What’s critical here is that the value must be recognized through measurable outcomes. This could include increased revenue, savings on labor, an increase in employee satisfaction, and more.
2. Consistent and relevant support – Accessible, helpful, educational resources make your customers feel supported and reach success quicker. These resources can include 24/7 chat bots, an online academy, and dedicated customer success managers.
   
   Customer support is your first line of defense when customers face challenges with your product or service. Without effective support, customers may struggle to find success and fail to see the value your offering provides.
3. Ongoing customer education and resources – Unlike a support chatbot, customer education is a proactive approach to customer support. Instead of addressing problems as they arise, education seeks to prevent them entirely by equipping customers with the knowledge they need to navigate potential challenges.
   
   Webinars, tutorials, and online courses are a few of many tools companies can leverage to educate customers on their products and services or new features.
4. Understanding features and benefits – For customers to recognize the full value of your offering, they need a clear understanding of its features and how to use them to achieve measurable results.
   
   If customers successfully utilize your product or service, they’ll see this high usage as evidence of a strong fit between your offering and their needs, increasing the likelihood of renewal.
5. Positive and proactive product evolution – A renewal is, in a way, your customers’ investment in your offering. In exchange for their subscription, they expect to see a positive return. To deliver that return, your offering must evolve to meet the ever-changing demands of shifting markets, changing demographics, or other variables.
   
   For customers, meaningful improvements to your offering demonstrate a proactive commitment to their success. This builds trust and encourages them to continue investing in your product or service.
6. Perceived investment in customer success – In addition to regular improvements, forging genuine, meaningful, and reciprocal relationships with your customers allows you to periodically check in on their success.
   
   Adding customer feedback loops to an already proactive improvement plan can create airtight customer  renewal strategies. In the likely event that you aren’t able to anticipate your customers’ needs preemptively, their feedback will give you a chance to recover and address those unsatisfied needs.

If the above are six top reasons why customers renew, then let’s pivot and also look at why customers may churn too. 

4 Reasons why customers churn

1. Complex or unintuitive experience – One of the many factors that can create a longer time to value is an overly complicated user experience. If your product or service is naturally complex, tools like customer education can help support customers throughout their journey. Your goal is to save the customer as much time as possible—because the more they have to dig through resource libraries or search Google and Reddit for answers, the less likely they are to renew.
2. Poor adaptability in regard to change – Just like those jeans from freshman year, if your business doesn’t adapt to the changing environment your customers face, they’ll soon find themselves in an ill-fitting relationship—only this time, it’s your business that doesn’t fit, not the jeans.
   Your company must adapt its products and services to the evolving needs of your customers. Not only does this demonstrate an ongoing commitment to the customers’ success, but it also ensures your offering remains relevant and valuable over time.
3. Irrelevant or poorly timed communication – A lack of personalization in emails or check-ins can leave customers feeling undervalued. This can happen in two key ways: 1) Generic, impersonal contact points may make the relationship feel purely transactional, and 2) the absence of personalization can signal to customers that a misalignment between their needs and your offering may be on the horizon.
4. Weak alignment with strategic goals – If your customers aren’t sure how the product will continue to deliver value as their needs change, whether from a changing market or business growth, they may start to consider alternatives. 

12 Proven customer renewal strategies to drive retention

Understanding why customers may renew or churn is a great first step in improving your customer renewal rate. But in order to make meaningful changes to your plan moving forward, you need to dive deeper and explore actionable strategies you can implement to move the needle on those rates. 

To get you started, we compiled 12 of the best customer renewal strategies. They’re sorted into three categories: 

• Customer success focuses on helping customers accomplish their goals as they relate to your product or service. This is done by proactively addressing their needs and providing continuous support, ultimately building trust and fostering loyalty. 
• Customer nurturing is the process of building healthy, long-term relationships with current and potential customers through personalized communication and comprehensive support.
• Customer education involves providing customers with the knowledge, tools, and resources they need to successfully use your product or service, accomplish their goals, and overcome any challenges that may arise. 
  

While some strategies, like implementing feedback-driven improvements, could easily fit under more than one category, thinking about these strategies within this framework can help your teams understand what implementing each strategy can look like for them. 

Customer success

1. Develop a customer renewal strategy

First and foremost, is your customer renewal strategy. This is the overall business plan that guides your approach to engaging with customers in the post-purchase stages of the buyer’s journey (loyalty and advocacy). 

The goal of your customer renewal strategy is to decrease customer churn and increase your customer renewal rate.  

While this strategy will look different based on your target customer, industry, and niche, it should aim to create a seamless customer experience, deliver personalized touch points, and support customer success and satisfaction. 

2. Offer value-added services

Offering additional products or services that enhance the customer experience or help them accomplish their goals can strengthen your relationship and increase trust. 

For example, adding a dedicated customer success support contact to a complex onboarding process can help your customers reach value quicker, saving them time, labor, and the potential for a lengthy and troublesome onboarding experience. 

3. Implement feedback-driven product improvements

One of the best ways to offer relevant support is by listening to your customers. Create a consistent feedback loop, wherein you make a change, you actively gather customer feedback, and then use that feedback to inform the next round of changes.

Feedback-driven product improvements are an excellent way of showing customers you’re listening and that you care about their success enough to improve based on their constructive criticism. 

4. Create or enhance your onboarding experience

If you don’t already have a comprehensive onboarding process, it’s never too late to start. An effective onboarding process might include multiple touchpoints, such as automated emails, follow-up messaging, a self-serve library, celebratory messaging, progress reminders, an online course, and more.

For larger companies, onboarding can be segmented by target audience, with learning content personalized to each segment’s unique use case. Similarly, complex onboarding materials can be broken into smaller, digestible components delivered through various educational tools.

Customer nurturing

5. Schedule personalized renewal check-ins

Part of developing long-term relationships is ensuring customers renew in the first place. An easy way to do this is to simply remind them when it’s time to renew. But rather than sending a generic reminder email, we recommend personalizing your outreach and reminding them of the value your product or service offers. 

For example, an audio book platform might remind highly engaged listeners of how many books, series, or words they’ve read over the last subscription period. 

6. Invest in loyalty and advocacy programs

Strengthen your customer relationships post-purchase by incentivizing customers to recommit to your business and share your products or services with close friends and family. You can do this by offering renewal bonuses, renewal-based value-added services, and rewards programs. 

7. Use value-based communication

Send regular, personalized updates and resources that reflect each customer’s unique needs. These updates and resources should be informed by usage engagement patterns. 

For example, a project management platform might send an email to customers about the task comment feature after noticing it is rarely used while platform chat is being overutilized. Personalized communication will only strengthen your customer relationship by helping you to align with customer-specific goals. In this case, that was workflow optimization. 

8. Reward and recognize customer engagement

Similar to loyalty and advocacy-focused programs, rewarding and recognizing customer engagement is another effective way to nurture your customers.

You can acknowledge engagement by producing resources like case studies, sharing customer success stories on social media, or creating automated recognition campaigns triggered by engagement-based milestones.

The takeaway: Show your customers appreciation in a meaningful way. Your success depends on theirs, so make sure they know how much they matter.

9. Create community around your offering

Creating a community around your brand and offering fosters a sense of belonging, promotes networking and shared learning, and encourages long-term relationships.

Platforms like Thinkific provide spaces to host online communities, live events, discussion boards, and more. These platforms help facilitate connections among your customers, giving them a compelling reason to remain loyal to your brand over competitors who may lack a similar sense of community.

Customer education

10. Build a self-serve knowledge library

Digital libraries are often the first line of support when customers run into trouble. That’s why it’s critical that you have an up-to-date, SEO-optimized, self-serve support library customers can easily access. 

This knowledge base will empower customers with the knowledge they need to accomplish their goals independently, freeing your teams up for personalized outreach elsewhere in your strategy. 

11. Establish a beta testing group

Beta testing groups operate somewhat differently from support libraries but complement feedback loops. The goal of a beta test is to gather actionable insights from customer responses to a new product or service.

An added benefit is that customers feel their feedback is valued while they’re also gaining early access to new offerings. This process can boost engagement and provide educational opportunities, helping customers become more familiar with your product.

12. Provide ongoing customer education

Your commitment to ongoing customer education demonstrates a long-term investment in the customer’s education and overall success, building trust and loyalty. 

Offer relevant resources like webinars, tutorials, how-to guides, and online courses to help with major launches and the rollout of new features. 

Final thoughts

There you have it! Let’s recap:

6 reasons customers choose to renew are:

• Your offerings value and ROI is clear.
• You provide consistent and relevant customer support. 
• You invest in updated, relevant customer education and resources. 
• Customers understand your offerings, features, and benefits. 
• Your product or service evolves with the dynamic needs of your customers and the changing marketing. 
• Customers observe your noticeable and genuine interest in their own success. 

4 reasons customers churn are:

• Customers lack the resources to navigate onboarding, the interface, or some other component of your offering. 
• Your offering doesn’t adapt to changing customer needs or competition. 
• Company-customer touchpoints feel inauthentic and lack personalization. 
• Customers can envision a workflow and accomplish their goals without your offering. 

Remember, the first strategy for boosting your customer renewal rate is to develop a customer strategy. While we segmented the remaining strategies into nurturing, education, and success, your customer retention plan can help guide it all. 

Nurturing, success, and education all work together to support healthy customer renewals and retention by fostering customer loyalty and advocacy at different stages of the customer journey. 

Transform Your Customers into Product Champions: Launch Your Education Academy with Confidence

Take the next step in your own business journey and download our free Guide To Build A Customer Education Academy. 

Delve into the best practices for launching a successful Customer Education Academy, designed to empower your customers, enhance product adoption, and drive long-term business growth.