Understanding why a customer stops purchasing your products or services can help you retain future customers. So we decided it’s time to learn about the term customer churn. (Say that ten times fast) What is it and what can we do to prevent it?
What Is Customer Churn?
It could be a canceled subscription. It could be that they no longer log in to your website. It could be that they stop buying your products or paying for your service. Churn is essentially when a current customer decides to stop giving you money, for whatever reason. A high customer churn is a bad sign, even if you have a lot of new customers coming in. We hate to see them go and we do not like to watch them leave.
Measuring churn is important because it says a lot about the long-term satisfaction of your customers and, as you probably know, retaining current customers is a lot cheaper than attracting new ones. If your customers aren’t sticking with your product or service long-term, it usually means there’s room for improvement on your end. Measuring churn isn’t as simple as busting out your trusty ruler though.
You’ll need to start by choosing a timeframe. For example, how many people unsubscribed or failed to renew their subscription in the month of June? Take that number and divide it by your total number of subscribers at the beginning of the month. That’s your churn rate.
Causes Of Customer Churn
There are a lot of reasons why customers churn and we have some good news about that: not all of them are your fault. Here are a few reasons why a customer might churn:
- Found a cheaper alternative
- Money is tight
- They no longer need/want your product or service
- They aren’t satisfied with your product or service
- They aren’t satisfied with your customer service
As you can see, sometimes there’s not much we can do to hold on to an existing customer, but the only way to find out if we can is to find out why customers churn. There a variety of ways to do that. When people unsubscribe, direct them to a survey that asks them why they’ve decided to unsubscribe. If they haven’t purchased for a longer period of time than normal, send them an email to ask them why and maybe offer some sort of promotion.
How Can We Reduce Customer Churn?
Listen. Listen to the bad and listen to the good. It’s easy to look at a negative review and simply dismiss it. The truth is that sometimes there is nothing that can be done to please a customer who is upset. But most of the time there is some grain of truth to their review. Look at it as a chance to get better and avoid more negative reviews in the future. Trust us, we hate reading negative reviews too. We’ve found that the best way to avoid that uncomfortable situation is to go above and beyond for our clients as much as we can. On the flip side, look at positive reviews and think about ways to take advantage of your strengths in the future.
Set up systems that send out surveys for customer satisfaction after they’ve purchased from you. What are some things they really like about your product or service and what are some things they wish were better? It’s always nice to get out ahead of things and fix what people dislike before they’re gone.
In the end, customer churn is just a part of doing business. It is rare to find a product or company that maintains a relationship with a customer for their entire lives. That doesn’t mean we just sit back and accept it though. If you can identify the reasons why your customers are churning, you can retain more of your existing customers.
That’s your customers talking about their relationship with your company after you implement the following:
Happy Birthday! 
Start a birthday club! Who doesn’t like receiving gifts on their birthday? This strategy is super simple to implement and it really sets you apart from your competition. When you’re the only company that sends them a package with a card and some sort of treat on their birthday, they’ll remember it. Use this gifting program to design some boxes and get to sending.
Don’t have any of your customers’ birth dates? No problem! There are a variety of ways to get this information. You can ask for it in your next newsletter or email campaign. You can add a newsletter sign-up form on your website that requires this information. You can ask for it on social media with some sort of incentives like a discount on your product or service. Don’t skip on this just because you don’t have your customers’ birth dates yet. This is a game-winning strategy that you should definitely implement! It’s a touchdown. Or a home run. Or a goal… whatever, you get the point.
Greeting/Holiday Cards
You’re probably sending out some sort of email or newsletter in a digital format but you should also be getting into your customers’ physical mailbox. Send them a nice card whenever you can. You might not realize it, but there are so many different opportunities to do so. Just to name a few:
Thank you for your business
Thank you for your referral
Thank you for your generous review
It was a pleasure to meet you
Any and every major holiday
We don’t just mean Valentine’s Day and Christmas. Get creative! Use St. Patrick’s Day to send a “We’re lucky to have you as a customer!” card. Send them a gift card to a burrito place on National Burrito Day. There’s a “Day” for literally everything, find one that is relevant to your industry and use it! Maybe you’re in Real Estate. Send them a happy housiversary card every year. The possibilities are quite literally endless.
You Get The Gist
Taking some time to thank your customers personally or even just making them feel important to you boosts customer retention. Although the term “customer retention” is a bit blah, so we like to call it showing your customers/clients some love. Show them some love regularly and they will become regulars!
If you’re thinking, “Great, another marketing strategy that probably works but I simply don’t have time to implement and manage it” don’t worry! We understand. Running a business isn’t easy. If it were, everyone would do it. That’s why we offer a tried and true relationship marketing program for businesses like yours! Give us a call and we’ll start showing your customers just how much you care about them for you.
