In this era of cut-throat market competition, it is important that your customers remain customers, for your survival in the business world.
But customers do leave and move on to other businesses, which is why companies are losing out on a considerable amount of revenue.
This churn rate quantifies the customers that you’ve lost by calculating the percentage of customers who leave your product or service.
Statistics suggest that there is 5 - 20 percent probability of selling to a new prospect, while there is a 60 – 70 percent probability of selling to an existing customer, which is why loyal customers are important to a business.
In order to retain the customer loyalty, the businesses must look forward to various aspects of their business.
According to a recent market research, companies that offer poor customer service are losing an estimated $ 41 billion each year.
The research also suggested that there is a 15 percent increase in the churn rate for existing customers when companies fail to respond to customers via social channels.
Also, engaging to customer service requests on the social media leads to 20 to 40 percent more revenue per customer.
Image source: Zuora
Walt Disney once said that “do what you do so well they will want to see it again and bring their friends”.
So, in this competition of retaining customers and presenting the best side of your company to your customers, here is how you can reduce the customer churn rate by learning from your own customers:
1. Consider your first impression
We often hear people saying that the first impression is the last impression. This statement seems justified, especially in a customer business relationship.
The First impression is an important consideration for businesses because that’s when the customers get a feeling of wow. Your first impression tells a customer a lot about your brand and products.
This is why it is advised that the customer representatives must be of a jovial nature, so that they are able to address the customers in a satisfactory manner. First impression has much impact on the customer churn rate.
By creating a good first impression you can tell customers about your business values right from the start. This helps by creating a more lasting or sticky relationship with the customer, ultimately reducing the churn rate.
According to Josh Ledgard, Co-founder at Kickofflabs, “When someone starts using a new product, they want to see immediate results. This gives them the impression that they could be even more successful as time goes on. If the first 5 minutes are painful, the rest of the experience will be colored by a bad first.”
So don’t leave your customers half-heartedly interested, as they will be the first ones to churn out of your business.
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2. Meet customer expectations
Not meeting customer expectations is one of the biggest reasons why the customer churn rate increases for a business. These expectations might be in any form such as not delivering the made promises, not answering to customer queries in time etc.
Setting customer expectations is a big task for companies. The more promises you make to the customer; the more they have expectations from your business. This is why it is usually advised to keep your promises simpler and basic.
Try not to get overwhelmed and promise something that you might not be able to deliver in the future. Most of the leaving customers say that they were initially attracted to a business due to the promises made by them.
But soon as the company was not able to deliver the satisfaction at the right time, they preferred moving on.
Shira Abel says, “Engagement is mindshare. If the customer is not engaging with your product, the churn rate will eventually go up.” So, engagement is important and so is delivering the promise made in the engagement. Learn it from your customers.
3. Talk to your customer
Communication is one of the most influential powerful tools in the world that have the power to solve even the biggest of conflicts. There are very few chances that the customer will leave your business without trying to make a contact with you.
This is where you can learn from your customers and try to work out a two way communication that is essentially critical for your business. If a customer comes to you with a query, respond to them before they lose interest in you.
Statistics reveal that customers that usually come up with complaints or issues, would continue to do business with the company if their issues are resolved timely. Don’t just talk to your customer only when you have to make a sale or they have a problem.
If you want to reduce your customer churn rate, you need to have a good relationship with the customer. And needless to mention, the recipe for any good relationship is communication. Have a friendly communication with your customer or send them appreciation notes on some occasions.
Remember that it takes much more investment to get a new customer than to keep an existing one.
4. Know the real reasons
Another one of the useful ways to reduce your customer churn rate is by asking the customer why they decided to move out of your business. This is important because if you don’t ask you will never know the real reason and will never be able to work hard in order to improve it.
Ask your customer about such reasons and draw conclusions for improvement based on them. For example, if a customer says that they could not get sufficient use of your product, you can draw conclusions such that your product might not be able to deliver the required value or your customers don’t know enough about your product.
Either way you can work out on these factors and reduce your customer churn rate by learning from your customers.
"What's missing from traditional methods is that they focus only on a customer's likelihood to churn, but not on the overall profitability of that customer," illustrates Gupta, who co-wrote the working paper Managing Churn to Maximize Profits with Aurélie Lemmens who is an associate professor at the Tilburg School of Economics and Management.
Reducing the churn rate is one of the growing essentials of businesses since the market presents never like before options to the customer. If you don’t deliver the required promises, someone else in the market will.
So, you need to constantly learn from what your customers want and adopt practices to meet their expectations. In other words, learn from the customer, for the customer.