One cannot find a business that has never lost a customer. This problem is called customer attrition (customer churn), which refers to the number of customers leaving a company during a given period of time.
Every business, however, handles it differently: some immediately start searching for new consumers to replace the loss, while others focus all of their resources on trying to figure out what went wrong and how to prevent similar situations from happening in the future.
In this article, we’ll discuss ways to thrive in a high churn rate industry.
What Is Customer Churn Rate?
A churn rate, sometimes called attrition or turnover, is a calculation that tells the business how many customers they are losing during a specific period. This figure expresses the number of lost customers as a proportion of the total customer base.
For example, if your company has 100 customers and 5 of them decided to stop doing business with you after one year – your churn rate would be 5% (5 out of 100).
Why Is Churn Rate Important?
Did you know that getting new customers costs five times more than maintaining an existing one?
Customer retention provides several benefits for businesses: it saves time on recruiting new clients; enables more accurate demand forecasts for the product; enhances the value of existing client’s lifetime value (LTV); helps to decrease expenses on marketing and sales; makes planning more straightforward because you know how many clients are at risk.
If your business does not precisely know how many customers it loses during a given period, it cannot take steps toward resolving the problem. If possible, try to find out what caused them to leave. Answering this question will help you find weaknesses within your company and increase the chances of correcting them in the future.
5 Simple Strategies To Thrive In A High Churn Rate Industry
1. Keep Customers Satisfied
There are several ways to provide higher quality products, lower prices, or outstanding customer service. The idea is to ensure that your clients receive more benefits than they expect from the business. It also helps you avoid situations when customers make unreasonable demands without offering anything in return.
2. Do Not Take Your Clients For Granted
Many businesses assume that once a client becomes their regular buyer, they will remain loyal forever. Unfortunately, this may not be true because people change their preferences over time and start demanding something different from what you’re offering now.
Therefore, monitor their behavior, find out what they like and dislike about your product or service, and try to adjust according to these insights. By doing so, you will score some points and keep your clients happy while servicing them better.
3. Establish Customer Loyalty Programs
It is never too early to begin building customer loyalty. The earlier you start, the higher the chances of gaining a lifelong client.
The best way to do this is to offer special rewards that only existing customers can benefit from. For example, let them have extra discounts or access to exclusive offers not available in public.
If done right, such activities will maintain strong relationships with most of your consumers and increase their level of satisfaction over time.
4. Use Customer Retention Tools To Measure Churn Rate
It is highly beneficial for companies to pay close attention to their clients’ behavior, find out why people leave, and use this information to improve their business. You can start by using tools like Retention 360 that will help you calculate the number of customers who leave and the reasons.
5. Fight Churn Rate With The Help Of Data
Once you have established the leading causes that influence your churn rate, it is time to find out what contributes to this outcome. You can do this by conducting surveys to your existing clients or analyzing their online behavior (e.g., via social media, product reviews, and feedback).
This information is vital because it provides insights into how much effort should be put into resolving this problem and bringing down customer turnover.
Once you have understood what causes your churn rate and how to prevent it, you need to be ready and willing to put in the effort. Unfortunately, many companies precisely know what they should do but fail to implement their knowledge due to a lack of resources or outright unwillingness.
This is why you must create a culture within the company that encourages employees to embrace this new mindset. Make them realize how much it benefits all of them if your clients stay with you and share this information through presentations and training.
Use these insights as a starting point, then dig deeper into every issue by conducting surveys or using customer retention tools like Retention 360. Once you understand the root cause of this problem, it will be easier to find a solution and bring the churn rate down.