Every day, companies lose customers. The average business loses about 20% of its customer base each year. However, there are effective ways to reduce customer churn and retain as many valuable customers as possible. Here’s a look at the benefits of managing churn.
Increase Customer Lifetime Value (CLV)
A company’s CLV is the amount of money a business expects to earn from each customer throughout their relationship together. If you can increase your average customer lifetime, then you are increasing your chance for revenue growth.
According to Harvard Business Review, you should aim for an average customer lifetime that exceeds the industry average by at least 50%.
Retain Customers with Great Customer Service
When you offer customer service that leaves your customers feeling happy, then they are more likely to buy from you again in the future. Unfortunately, many businesses focus on attracting new customers rather than retaining their existing ones, who provide them steady revenue.
Fortunately, there are many ways to offer excellent customer service. For example, you could include questions about product satisfaction on your company website or your company blog.
Stay in Touch with Customers with Automated Emails
You should remain in touch with each customer who has purchased from you, especially true for long-term customers. Emails are a great way to keep in touch with your customers, mainly if they have already purchased from you. You can use automated emails to send coupons or thank you messages.
Offer Incentives for Your Customers to Return
For loyalty programs to work, companies need to offer incentives that meet customer needs. Customers want to receive discounts and deals for their loyalty. For example, you could offer a 10% discount on a future purchase when the customer makes five purchases over six months.
Measure Customer Churn
To understand the benefits of managing churn, it is essential to measure it accurately. You should measure the percentage of customers who purchase from your company and then stop buying within a certain period. You should also track customers who continue to make purchases after their initial start with your company.
Communicate with Customers Regarding Their Experience
When businesses contact them regarding their experiences, customers appreciate it, particularly if they have good or bad things to say. Frequently businesses outsource this type of customer feedback to third-party companies, which ends up being a waste of time and money since the customers typically don’t speak with a company representative.
Instead, try to communicate directly with them yourself or ask an actual employee to handle it for you.
Minimize Complaints through Product Reviews
If you can manage your company’s product reviews, you can minimize the number of complaints that you receive. Sometimes negative product reviews are well deserved; however, sometimes they are written by competitors or other parties who want to damage your company’s reputation.
You should respond to all product reviews to maintain a positive image for your customers.
Track the Churn Rate for Each Customer Segment
You should know which customers are at risk of churning to take preventative measures before it’s too late. The way you define customer segments will depend upon your company and what works best for you. However, some common examples include new vs. returning customers, free vs. paid customers, etc.
Offer Exclusive Deals for Your Most Valuable Customers
Offer exclusive deals to your highest value customers to keep them around for longer periods. These types of offers will provide an incentive for customers who may have considered churning but were hesitant to do so because they wouldn’t be able to receive these types of offers as quickly as any other customer.
Train Customer Service Staff to Deal with Customers Who want to Quit
If you offer your customers against quitting, then they are more likely to stay around. You should work to convince them that there is something worth staying for; perhaps the incentives that you offer aren’t available elsewhere, or your product is more in-depth than your competitors’.
Develop a strategy that works within the confines of your business to manage churn successfully.