No one likes to talk about losing customers. However, it’s an essential part of running any business. It’s necessary to look at the ways we’re succeeding and the ways we’re failing our clients and customers. Customer churn is the rate by which customers are leaving.
Why is it important that we look at customer churn? There are several reasons. For one, it’s undisputed that customer retention is a critical component of thriving companies. In fact, increasing retention rates by five percent can boost a company’s return on investment by around twenty-five percent on average.
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In order to understand retention, though, and what we’re doing to keep customers on board, we also have to look at what we’re doing to lose them. If we want to reduce churn, it merely means that we want to reduce the number of customers we’re losing.
So, what’s the best methods for reducing customer churn? While every business has its own unique set of issues and strategies, there are some universal tips that every company should try. Here are seven tips to reduce customer churn.
Tip #1: Start with Analysis.
To really reduce churn, you must begin collecting and analyzing customer churn data. Churn analysis is about looking at that data and analyzing the ins and outs of what’s making your customers jump ship. It should give you a clear picture of the types of customers who stick around and those who leave and more. The single most important tip for reducing customer churn is to start analyzing and understanding why it’s happening in your organization.
Tip #2: Talk to Your Customers.
While data is powerful, numbers are just numbers, and they’re no substitute for actual human feedback. Talk to your customers regularly and ask them how they feel about your products and services. Have surveys and actively seek feedback. If customers aren’t biting at the heels to tell you how they think, offer a small discount for their insight.
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Tip #3: Segment Your Customers (and Market to Them Accordingly).
After analyzing the data and talking to customers, you should have a concrete idea of the different types of customers and clients you have. Segment all your customers into different buckets and market to them directly. The more focused you are with your marketing message, the more effective it will be. If you’re able to market effectively, it could be the difference between a customer staying on board and jumping ship over to one of your competitors.
Tip #4: Improve First Experiences.
That very first experience shopping at your store, navigating your website, or talking to an agent should be a positive one. From very first interaction until the sale has closed, the first experience with your company must be overwhelmingly positive. You don’t need data or customers to tell you that. Work on improving and perfecting that first experience to ensure that more first-time customers become returning customers.
Tip #5: Focus on Service.
This one should go without saying. However, it’s critical enough to be worthy of being mentioned. Nothing matters more than customer service and customer experience. If your customers or clients don’t feel appreciated or taken care of, they will go somewhere else. Customer experience and customer service alone can make or break a business, and it could be the single most important factor impacting your churn rate.
Tip #6: Offer Incentives, Promotions, and Deals.
On customer experience, be sure to offer your customers regular incentives and deals. Also, once your customers are segmented, you should be able to easily identify which customers are close to leaving. Offer enticing promotions right before a customer churns to keep them on board. Use discounts to your advantage and as a tool to minimize churn.
Tip #7: Watch Your Competition.
Keep an eye on your competition. You might be doing everything right, but then your competitor swoops in with a better offer or superior product. Decreasing churn can be all about ensuring that you stay ahead of the competition and that you don’t allow your competitors to get the upper hand.
Start Reducing Your Customer Churn Today
Don’t let not wanting to focus on the negative keep you from figuring out why your customers are leaving. Sometimes it’s as simple as adjusting the price or replacing a problematic customer service agent. You don’t want to be losing tons of revenue simply because you aren’t analyzing and working to reduce churn.
These are just a few tips to get you started. Remember, it all starts with analyzing your company’s individual needs. You could really excel at customer service, but the issue is your website speed. Or, you could have an amazing product, but your shipping takes too long. You need to analyze your data and talk to your customers and figure out what you’re succeeding in and what you can improve upon.
The most important thing is to get started.