As badbrew suggested, fill your freezer with as many full kegs as you have or will fit. If you don't have beer to fill them with, use water. Just be sure they are filled. This increased mass will go a long way towards stabilizing the internal temperature of your freezer.
The differential setting of 5 degrees is going to cause a fluctuation of 5 degrees at the very least. If you decrease the differential setting you should decrease the amount fluctuation. However, you will also increase the frequency of cooling cycles (to the extent that the anti-short cycle setting will allow). In a day or two the temperature will stabilize and cycling will be minimized. A chest freezer will allow you to use a lower differential value with less impact on the cooling cycle frequency than an upright freezer.
The best way to stabilize the temperature in your freezer is to set the controller with your preferred values, keep the freezer filled with as many full kegs as possible and keep the lid closed.
Edit:
The water in beer freezes at 32 degrees fahrenheit.
Set the built in temp control to the highest (coldest) setting to ensure the external controller is doing the controlling.