The Basics of Customer Churn and How to Manage It
Losing some customers is completely normal, however excessive loss is detrimental to a business. Simply getting new customers is not enough, a business must also focus on retaining the ones that they already have.
So how can businesses increase retention for the long haul? Understanding customer churn is the beginning. Reducing churn increases customer loyalty, which makes attracting new customers easier.
The Concept of Customer Churn:
Customer churn (or customer attrition) refers to the number of customers who no longer consume your company’s services and products.
Let’s say you have 1000 customers and during the year you lose 100. This would put your churn rate at 10%. This metric is important for businesses as it allows them to gauge the volume of customers expelled and the steps needed to be undertaken in order to improve the situation.
Methods to Minimize Customer Churn:
Business owners have all the reasons to decrease their customer churn rates. Retained customers have a minimum profit impact of at least 25% for the company. Here is how you can make sure they remain with you.
- Enhance Customer Service
Maintaining a good relationship with the client requires providing excellent customer service. Consequently, if clients feel that their needs are being addressed, they are more likely to remain loyal to your business.
- Reduce Friction in the Customer Journey
Clearly, with the growth of your business, a clear guide on how to use your product or service appropriately needs to be catered to new customers. Giving them a good first impression will make them feel at ease for further steps.
Make a basic outline of the customer journey to identify where people may be disengaging. Then, use this data to refine their journey through webinars, video tutorials, product demonstrations, and email campaigns. When customers believe that they are taken care of, they are more likely to stick around.
- Thank Your Customers for Their Loyalty
Optimizing customer retention is the best practice of focusing on existing customers which any business should implement. These customers are far more inclined both to test other products, and equally they will promote your business.
Express gratitude by providing rewards, discounts, and loyalty schemes. As an example, Sephora Beauty Insider program grants special offers, gifts, and free entry to events. This program contributed to a 5% increase in customer retention and an increase in profits of up to 95%.
- Recovery of ex-customers
If you’ve invested money in advertising, worrying about having no customers should be the least of your concerns. Alternatively, in the event that you realize that customers are churning, you need to source out why that has happened. Some common reasons could be unsatisfactory service, expensive pricing, or even high expectations.
You could deploy some surveys to drill down their pain points and fix those. If you find customers on the verge on leaving, engage them with some special offers or discounts.
This happened to Baremetrics when customers started abandoning them due to lack of features. Instead of waiting for features to be built, the company moved their prices down in the meantime. Doing this helped save 15% of their at-risk accounts.
Importance of Retaining Customers:
Retention of customers contributes towards business growth and is therefore crucial for success. Incognito Mystery Shopping Consultancy aims to support businesses facing challenges with customer retention. We utilize mystery shopping and customer feedback tools that furnish companies with insightful reports about customer experience.
In the UAE and GCC region, we work along with healthcare retailers, real-estate agencies, airline companies, hotels, and dining facilities to improve customer touchpoints and foster enduring relationships with the customers.