what is customer churn?
It is the number/percentage of customers stopped using your service /product in a particular timeframe.
Why does customer churn?
There are a lot of reasons for customer churn depending upon the businesses. Below are the few common reasons for customer churn.
- Poor customer service/support
- Bad user experience
- Not meeting expectations of the customers
- No engagement with customers
- High price and low value
Customer churn rate by industry
Problems and solution for customer churn
The growth of any business depends on the LTV(Lifetime Value) of customers. The growth rate of business goes down as much as the churn rate grow high.
You might be strong in marketing and generating as many leads as possible but remember, the cost of acquiring a new customer is always higher than the cost of retaining the old customer.
Now, how to reduce customer churn?
The first step is to calculate the churn rate of your business.
Formula for customer churn calculation :
Churn rate = (No of customers at the beginning of the month – No of customers at the end of the month)/No of customers at the beginning of the month
In the current cut-throat and intensely competitive market environment, effective customer support is the surest way to have the extra edge over your competitors.
Your products or services should be cost-effective and always guarantee total customer satisfaction. Moreover, effective support can be immensely useful in lowering your customer churn rate.
Once you calculate churn rate then follow below steps to reduce customer churn.
- Give the maximum priority to your most loyal customer base
- Actively engage your customers
- Design a specific process for effective customer guidance
- Reward your customers
- Know your customer’s perceptions and requirements
- Have that X-factor over your competitors
- Make judicious use of the latest cutting-edge technology
Give the maximum priority to your most loyal customer base
Many organizations make a mistake by placing the most emphasis on those customers who show the least interest in their services and are extremely likely to opt out.
Too much precious time and valuable resources are spent on retaining these customers resulting in decreased profits for the organization. So the correct game plan should be to focus on your most loyal customers in order to maximize your revenues first as only then will you be able to commence the process of reducing customer churn rate.
Actively engage your customers
The onus is always on you to connect with your customers even before they require your products or services. By this, you are giving out a clear indication of your utmost commitment in providing them with the maximum possible value through your products and services.
But always make sure that you never connect with them by sending irrelevant information and all your interactions must be directly related to their interests and requirements.
Like for instance, if a certain customer happens to show interest in your services by signing up on your company’s website but they are not fully aware of the benefits that they will get by using your services, then you should politely contact them by sending a message and provide them with the necessary information.
Suggested Read: 5 customer engagement techniques you must try
Design a specific process for effective customer guidance
When your customers first start using your company’s products or services, the maximum chances are that they do not know how to use it properly. This can lead to drastic disinterest and in turn, increase the churn rate.
To avoid this, you have to chalk out a user-specific onboarding design which can help your customers to properly understand the various attributes of your product or service and make them aware of what to expect from the same and the ways in which it can benefit them.
Always remember to regularly evaluate your design-oriented approach for any modifications which might be required due to the ever-changing customer requirements in today’s market scenario.
If you can execute this approach properly, then it will instill a sense of confidence and reliability in the minds of your customers about your company’s products and services. This can definitely prevent them from discontinuing their usage.
Reward your customers
Incentivizing your customers through discounts etc is a small step that will enable you to take a giant leap forward in reducing the user churn rate in the long run as it will remind your customers of your unmatched and unwavering support and dedication towards them.
But there are certain aspects which you have to keep in mind when giving out these rewards. Like for example, if a particular customer is on the brink of terminating their contract with your organization, then an effective way of retaining them is by providing substantial amounts of discounts on their renewal rates.
Also, if a customer is on the verge of leaving your company since your products or services were not able to match their individual requirements, then you can prevent them from opting out by doling out generous incentives to make them continue a little longer.
In the meantime, you can formulate an effective plan which will enable your products and services to match all your customer requirements so that they are satisfied with the same and decide against leaving your company.
Know your customer’s perceptions and requirements
When your customers are not satisfied with the quality of your products or services.
And do not receive adequate support due to lack of proper interaction and feedback, then the churn rate is very much likely to go up.
So, establish a proper platform such as by installing various apps on your company’s website for collecting their feedbacks.
This will help you in initiating the necessary measures to remove the blockages that are hindering customer satisfaction i.e. through effective customer feedback you can become aware of the areas which need improvement and work on these until all the negative customer reviews are replaced by positive ones.
Have that X-factor over your competitors
The market scenario of today is changing all the time as with new technological innovations that are coming up every now and then. The customer preferences are varying quite rapidly. Every organization is struggling to keep up with these changes and how successfully you are able to do this will determine the fate of your business.
To have the competitive advantage over them, you not only have to come up with products and services that are of the highest quality and in accordance with the market trends and customer tastes at that specific point of time, but also outperform your competitors in all other areas as well.
For this, you need to study their strategies for attracting, supporting and retaining customers and design your own ones in a much superior manner. For example, you have to gauge whether your competitor firms are getting user feedback through social media platforms etc and the extent of their knowledge levels. Then you have to use these to enhance your own strategic effectiveness in terms of customer retention.
Make judicious use of the latest cutting-edge technology
An example of this may be analytics which many top organizations are now using to take the experience of the customers to the next level, gather useful information regarding customer perceptions across the organization and keep a track of the communication which takes place between the company and its customers.
New analytics technologies have now arrived on the scene which can easily analyze complex information inventories and provide extremely accurate results concerning the mindsets of the customers. This will enable the company to upgrade its products and services accordingly.
They can also assist you in studying the various parameters of customer experience and satisfaction and your company’s progress in that direction like up-sell rates etc. This will arm you with the necessary tactical know-how that you can use to maximize your customer satisfaction and thereby minimize your user churn rates.
If you do not take the right measures in time, then user churn can prove to be detrimental to your organization’s future prospects.
But this can be easily circumvented if you have the adequate foresight to promote your products and services in such a way that can easily convince even the most skeptic customer to give your products or services a try and then back up your extensive marketing efforts with your products and service quality and top notch customer support.
Overall, your main aim should be to provide your customer with such a unique and mind-blowing experience that they do not even think of leaving or switching over to an alternative brand.
For this, you must be absolutely clear about the exact vision and objectives of your business and what you want from it. Then, you have to formulate your strategy by keeping the customer experience and satisfaction aspect at the forefront. Then and only then will your business be able to outperform its competitors and scale new heights.
Bonus > Customer churn prediction model
Never forget the fact that effective customer support initiatives that keep your user churn to a bare minimum are the key determinant factor of the long-term success of your organization. Always play your cards right. So go ahead and give it your best shot!
At Kommunicate, we are envisioning a world-beating customer support solution to empower the new era of customer support. We are currently in Beta and releasing the polished product by the end of December. We would love to have you onboard to have a first-hand experience of Kommunicate. You can signup here.