It’s natural for a company to occasionally lose some of its customers. It’s a natural part of business. What’s more important, however, is that you keep an eye on how much customers or value you lose over time. It’s not going to take a sales consultant for small business for you to find this out, it’s just a matter of calculating your customer churn.
What is churn? Simply put, customer churn is the percentage of customers that stop availing of your company’s product or service during a certain time frame. You can calculate churn rate by dividing the number of customers you lost during a certain time period by the number of customers you had at the beginning of that same time period.
For example, you started the month with 100 customers and end with 90. You lost 10 customers, or 10%. Therefore your churn rate would be 10%
Aside from the number of customers you lost, churn rate can also be presented in the value of business lost or the percentage of recurring value lost.
Understanding customer churn and why it’s important
Obviously, every business aims for 0% churn rate, but that’s unrealistic. For many reasons, some out of our control, businesses lose some of its customers all the time. It’s important to keep an eye on your churn rate, to help you measure your progress overtime. It’s also important to keep watch of this and prevent customer churn because acquiring new customers almost always costs more than retaining current ones. You don’t need to spend time and resources convincing current customers to choose your brand because they’ve already made that decision. You also want to prevent customer churn as dissatisfied customers can spread negative word-of-mouth that will impact your brand. Before this happens, you should reach out to customers who are in danger of churning to try and repair the relationship.Some causes of customer churn include:
- Your service isn’t up to par
- Your product fit or market fit might be lacking
- You don’t understand your audience well enough
- Pricing isn’t right
- Competition offers better alternatives
- Your market is seasonal
- Renewal offers aren’t attractive enough
Tips for preventing customer churn
There are many ways for you to prevent customer churn. We’ve gathered a few things you can try to help get your churn rate as close to zero as possible.Analyze churn as it occurs and investigate why it happens
This is the most important step in reducing churn. When you understand why customers leave, you can get a better idea on how you can help current customers stay. Contact churned customers as soon as you can and have a robust feedback system for customers to air their complaints and concerns. Most importantly: listen.Continual product, service, and CX improvement
With the feedback you get from both churned customers and current supporters, use the information to help make your products and services better. When customers feel that they are being listened to, not only will they enjoy your product more, but they’ll also be more inclined to keep availing your products, knowing their opinions go into making the product better. Improving customer experience is also a huge help. From browsing products, placing orders, shipping, and ordering again, having a smooth process that makes it hassle free for your patrons will facilitate their continued patronage.Nurture customer loyalty
Loyalty programs and discounts give your customers more incentive to keep coming back. Having a points or rewards system also gives you an edge over the competitor that will only get larger the more a customer buys from you.Recognize and focus on your best customers
Some customers are more valuable than others, providing more revenue per capita over the entire lifetime of the business relationship. It can be more cost-effective pooling your resources into loyal customers to make sure they’re not the ones who churn.Let Shawn Tiberio help you get to 0% churn rate
Innate but manageable, that’s what churn is. While customer churn is something that every business must deal with, it is something that can be predicted, studied, and managed. With the help of an inbound marketing consultant for small business, like Shawn Tiberio, you too can keep your churn rate low and even reach 0% at times. Benefit from years of marketing experience by contacting Shawn today!
