You already know it’s more expensive to attract new customers than to retain current ones, which is why understanding customer churn is critical to your business. Simply put, customer churn occurs when customers or subscribers stop doing business with you, and it has the potential to seriously hamper business growth. While some amount of customer churn is simply a part of doing business, there are things you can do to minimize it. In fact, the most successful, fastest-growing businesses understand customer churn and have strategies in place to minimize it.
One of the most commonly used methods for calculating customer churn is to divide the total number of customers you have at the beginning of a specified time period by the number of customers lost during the same period. There are many benefits to tracking your customer churn rate, including:
- By retaining customers, you can recoup marketing costs.
- By knowing your customer churn rate, you can calculate your customer lifetime value.
- Tracking changes in churn rate lets you identify if what you’re doing is improving customer churn or having a negative impact.
The following 3 tactics can help you decrease churn by increasing customer satisfaction to create happy customers who are loyal for years to come.
Set Customer Expectations
Research has shown that as many as 67 percent of consumers list bad customer experience as one of the primary reasons for churning (Kolsky). According to NewVoice, 58 percent of consumers will never use a company again after a negative experience. One of the best ways to deliver great customer service (and thus reduce churn) is to set customers’ expectations by being clear with them from the start.
- If you have an onboarding process for new clients, the first email needs to inform them what they are going to get and what they can expect from you.
- Don’t make promises you can’t keep. If you promise your customers something and you don’t deliver on that promise, your churn rate will skyrocket.
- Today’s consumers have very high expectations for businesses and products. According to eMarketer, 47 percent of consumers want more personalized experiences with brands, and 38 percent of consumers want more transparency from brands. One of the best ways to reduce churn, then, is to exceed these high expectations.
- Do something that makes customers feel special, such as a personal note in their first shipment or a message on their birthday.
The only thing customers really want from you is value, so to improve customer churn, improve your value. This doesn’t necessarily mean adding new features or services, and it doesn’t mean giving a free gift or discount. You can add value by:
- Improving your existing offerings
- Letting customers know you are available to help and you value their business
- By NOT offering the mundane solutions that anyone can replicate, which is an invitation for churn.
Listen to Your Customers
As a business, your goal is to deliver an outstanding product and service that keeps customers happy and engaged so that they will tell everyone they know about their great experience with you. You can’t do this unless you know what customers like and don’t like about your product and service. Here are some ways to get valuable information that can help you decrease churn:
- If you’re not doing so already, use customer satisfaction surveys. They are easy to implement, and if done correctly, can provide actionable insight you can use to proactively prevent customer churn.
- Customer surveys aren’t the only way to get customer feedback. Make sure you are listening to what they are saying about you on social media and discussion forums. Also, engage with customers at live events or pick up the phone and call them.
- Most customers will let you know when they are dissatisfied, but what they won’t tell you is when they are about to leave for your competitor. Intelligent customer satisfaction tools can help identify ‘at risk’ customers before they defect.
- Invite customers to answer your email by asking a simple question such as what would they like to get out of your product? Do they need help getting started? Do they have ideas for new developments?
While all of these work well for getting customer feedback, none of them are valuable if you don’t actually listen to what your customers are saying. More often than not, simply by listening to customer feedback, you can identify problems that affect customer experience and can then proactively make changes before customers churn.
At Optimum CX, we know it costs far less to keep a customer than to win one back. We believe that the level of care a customer receives is often the most important part of earning their trust and loyalty. To learn more about how we can help you decrease churn by providing exceptional customer experience, contact Optimum CX today.