{"id":14694,"date":"2021-01-08T13:07:43","date_gmt":"2021-01-08T13:07:43","guid":{"rendered":"https:\/\/www.acefone.com\/blog\/?p=14694"},"modified":"2024-10-09T10:37:04","modified_gmt":"2024-10-09T10:37:04","slug":"reduce-customer-churn","status":"publish","type":"post","link":"https:\/\/www.acefone.com\/blog\/reduce-customer-churn\/","title":{"rendered":"What is Customer Churn and Why Does it Need More Attention?"},"content":{"rendered":"

Can you name a single company that hasn\u2019t ever lost a customer till date?<\/p>\n

Probably not, right? The truth is, no business owner likes to think about losing customers. But, in order to handle the rate of customer churn (a.k.a. the rate at which you lose customers over a given period of time), you need to know your numbers.<\/p>\n

Customer churn rates will help you understand what is going on in your business. Getting a sense of how customer retention and churn fit into the bigger picture massively helps in the formulation of various strategies.<\/p>\n

Now, it\u2019s a no brainer\u2014the struggle to generate and\u00a0retain new customers<\/a>\u00a0can be easily tied back to the struggle to keep existing customers around. In fact, most business owners we speak to have an \u201coh no\u201d moment when they calculate the accurate cost of customer churn.<\/p>\n

In fact, it could amount to that huge of a revenue loss.<\/p>\n

Customer churn\u2014in its essence\u2014is inversely related to revenues and customer satisfaction.<\/p>\n

Let\u2019s understand what customer churn actually means.<\/p>\n

As per HubSpot<\/a>, customer churn is like customer attrition\u2014the rate at which your clients end their relationship with you and stop generating revenue for your business.<\/p>\n

For example, let\u2019s assume that you started your business with 500 customers and lost 25, that leaves you with a customer churn rate of 5%.<\/p>\n

But why does it matter so much for businesses, you might wonder?<\/p>\n

Well, to answer it shortly\u2014because the cost of losing clients is pretty high for businesses. Customer churn shows how good or bad companies are at keeping consumers on their side.<\/p>\n

According to a\u00a0study by Accenture<\/a>, companies can lose up to $1.6 trillion per year due to customer loss.<\/p>\n

Not convinced yet? According to the same study, it can cost you 16 times more to bring a new customer at the same level as an existing customer.<\/p>\n

Causes of Customer Churn<\/strong><\/h2>\n

Reasons for turnover can be personal or specific to each customer. Let\u2019s try to put them in a few categories.<\/p>\n

Price of Your Offerings<\/strong><\/h3>\n

Price has been a negotiation point between customers and salespeople since time immemorial. It is a tough nut to crack for customer sales managers as well. If your clients can find more cost-effective options, there are higher chances of churn. This is why it is important for your product to\u00a0add value to their customers\u2019 lives<\/a>\u00a0and every penny they spend.<\/p>\n

Product Specifications<\/strong><\/h3>\n

A product that doesn\u2019t live up to market standards is also a reason enough for customers to switch. To avoid this, salespeople should be incentivized enough to sell good-fit products to good-fit customers. Otherwise, clients might come onboard at first, but not stay for the long haul. This happens when customers realize they can\u2019t solve their problems using your solutions and products.<\/p>\n

Experience With the Product<\/strong><\/h3>\n

Having a well-priced product with good features invites people in. But they\u2019ll only stay loyal if their experience with the purchase is pleasant. This means, there has to be a smooth and easy-to-use interface with minimal issues\u2014and easy troubleshooting in case issues do arise.<\/p>\n

If the user experience is anything but smooth, they will be less likely to use it after a few tries, and eventually, churn out of your customer \u2018basket\u2019.<\/p>\n

Customer Service and Experience<\/strong><\/h3>\n

Finally, the client\u2019s experience has to be great overall\u2014not just in terms of product use, but also in their correspondence with your brand. This includes business communication, marketing and branding content, social media strategies and interactions with salespeople and account managers\u2014all done seamlessly.<\/p>\n

Everyone likes to feel heard and cared for. But more importantly, they want to be always welcomed and valued by the communities they support. If clients won\u2019t have positive experiences with your brand, they will move towards a better-serving brand.<\/p>\n

How to Tackle Customer Churn?<\/strong><\/h2>\n

\"How<\/p>\n

\u2192 Focus on Your Best Customers<\/strong><\/h3>\n

For a lot of organizations, dealing with churn means identifying clientele as different categories of cold customers or those likely to cancel. This will help you refocus your time and efforts to keep them on board.<\/p>\n

\u2192\u00a0Communicate Proactively<\/strong><\/h3>\n

If you reach out to your clients even before they ask for you, you\u2019re displaying how valuable they are to you. It also shows that you\u2019re dedicated to helping them make the most out of your product or service.<\/p>\n

However, your old school communication techniques might not work. The type of message or template you send out should be direct and should depict the value added by your offering.<\/p>\n

For example, if someone signed up for your free trial, and you notice that they\u2019re not fully utilizing the features, you might want to send them a friendly nudge.<\/p>\n

\u2192\u00a0Incentivize Your Offerings<\/strong><\/h3>\n

Give your customers a reason to be around\u2014promotional discounts, offers, loyalty programs, etc. This small step from your end can go a long way to express how considerate you are towards customers.<\/p>\n

While designing incentive strategies, however, there are a few things that you should never forget, like:<\/p>\n