Finding real and workable ways to lower customer churn is a major challenge for all companies. Customer churn impacts business performance through revenue loss. It also reduces profitability and triggers greater marketing and re-acquisition costs. For high-churn companies, customer retention programs are an even bigger challenge. Churn rate shows how the business does with customers by your side.
It costs a lot to lose customers. When thinking of churn impact, consider these statistics by Forrester. It costs 5 times more to acquire new customers than to retain existing ones. The Harvard Business School reports, on an average, that 5% increase in customer retention rates results in 25 to 95% increase in profits. KPMG found customer retention is the main driver of a company’s revenue. As per Gartner, a massive 80% of future corporate revenue is netted from just 20% of the existing customers. Marketing Metrics claim the probability of selling to existing customers is 60 to 70% and only 5-20% for a new prospect. So, how do high-customer churn industries turn around their outcomes?
- Analyse When Churn Occurs
One needs to find out why customers leave. The easiest way to understand this is to really listen to your customers, actively looking for what went wrong. Instead of opting for customer exit surveys, you need feedback on how the product solves the customer’s problem by connecting deeply. Communicating with customers helps in analysis of churn. One needs to actively use channels for this, ranging across email, website and social media. The feedback works well for serving customers and understanding it can make all the difference to churn rates.
- Engage With Customers
The only thing that helps eliminate churn is to engage customers with interesting and innovative marketing messages. Give customers the motivation to come back by showing them everyday values in using your products. Making oneself a part of the customer’s daily workflow can offer your brand more benefits than you can imagine. Engagement is all about providing clear messages in the age of Big Data. Key functional benefits of the product and regular updates such as deals, special offers or sales need to be shared.
While face-to-face communication is the strongest customer engagement method, IBM research found websites and social media channels enable companies to engage with customers. Customer retention programs for churn prevention focus on providing quality, educational or support materials to increase retention and lower churn. Offering free training, video tutorials, webinars and product demos make customers feel comfortable and informed. Tools that work tap the full potential of products and services.
- Define Valuable Customers
One needs to separate the most valuable customers from the rest and go the extra mile in making sure they receive what they have signed up for. There are customers one needs to retain. High-value customers bring in the biggest revenue. A history of the interaction with the customers shows how deeply involved a brand is at each stage, whether there are problems with the product and whether the issues are dealt with. Segmenting the customers on the basis of those yielding profits, those with the readiness to abandon your brand and the ones with the likelihood to positively react to offers to stay better predicts customer churn. Another advisable tip is offering incentives like special offers and discounts, to customers likely to defect.
- Target A Defined Audience
No matter how sophisticated the retention strategies they are, they cannot work if one is attracting the wrong audience. It is better to target those customers who look for the value you provide. Invest in customers who will invest in you.
- Work On Customer Service
The most common method of keeping customers loyal to your brand is exceptional customer service. Poor or inadequate customer service is a key catalyst for customer churn. As per the Customer Experience Impact Report by Oracle, the main reasons why customers leave the company are rude, incompetent staff. Churn on account of poor service stands at 70%, according to Forum Corporation research. Average customer experience is a trigger for the churn. Providing stellar customer service is the key to making customers happier.
- Heed Complaints
Complaints are the tip of the iceberg. The biggest part of the problem is the one hidden from view. Pathwwway ltd. finds that close to 96% of unhappy or dissatisfied customers don’t complain and 91% of those who do simply leave and never return. Typical businesses hear from only 4% of dissatisfied customers. Complaints need to be taken seriously and acted on, and to prevent customer churn, customer retention programs need to focus on dissatisfied customers as well.
- Work on Competitive Advantage
Finding out how different one is from competitors is important. Be clear about what makes your brand stand out. It is important to focus on being the brand that has staying power. Clearly see what customers want and what makes them stay instead of leaving. Prevent customer churn by creating conditions where customers can see the benefits of products and services on offer.
- Improve User Onboarding
High-churn industries also need to work on improving user onboarding. Clearly communicating with users is important. Users who leave are generally unable to perceive how the business could add value to them or their business. Clearly communicating the brand story with users through each stage of the sales funnel is important, as one onboards users.
Customers leave a website if they cannot navigate the page or find information regarding the products. This boosts churn rate. For handling situations, customer support teams need to have a proactive approach, where agents proactively ask customers for insights and inputs. Customers need to get their solutions to queries immediately and this reduces the churn rate and makes the customer experience better. A strong customer base and a low churn rate are the results of a more proactive approach.
- Create a Sense of Community Around the Product
Individuals need to feel like they are part of a community. This holds true when it comes to reducing customer churn. Building an active and engaged community around products and services is important. Your customer retention programs need to anticipate what the customer wants, even before they realize it themselves.
In a competitive world, customers get plenty of options and getting the most value out of a brand is important. With a proper marketing strategy, the focus needs to be on customer satisfaction and retention. Increase engagement with customers, leading to long-term relationships. With proper planning and specific retention programs, customers can appreciate the benefits of products and services, as well as your brand, especially for high-churn industries.