Reduce Customer Churn & Keep People Coming Back to Your Business
Most business owners work night and day to keep their companies in order. They pour over financial statements and make sure every dime is accounted for and spent wisely. However, there may be one metric that they’re not keeping an eye on or don’t know how to calculate -- customer churn.
As you learn in this post, this can be an expensive mistake to make.
Here are a few reasons why your business needs to keep an eye on this number and some tips on how you can reduce customer churn rates at your business.
What Is Customer Churn?
Customer churn refers to the number of existing buyers, subscribers, or visitors who stop coming to your business. Most companies calculate this number monthly, but you can also track it quarterly or annually.
Customer churn is a normal part of business. The customers you have today won’t be your customers forever. People move away, grow out of your brand, or find other businesses to visit.
In some cases, customer churn isn’t a bad thing. For example, it’s natural for a pediatrician to have high patient churn when kids age out and start going to regular general practitioners. As long as the office receives new patients in the form of younger kids and toddlers who can grow up with their services, the churn levels are healthy. High churn rates mean your marketing teams have to work harder to bring in new customers.
Customer churn really becomes a problem when businesses start losing more customers than they bring in or suddenly start losing customers at larger rates.
And, it can be an expensive problem to have.
High customer churn rates can lead to you spending more on your marketing as we have recently outlined in another blog post.
- The probability of selling to an existing customer is higher than selling to a new customer. The probability of converting an existing customer is 60% to 70%, whereas the probability of converting a new customer is only 5% to 20%.
- Existing customers are more likely to spend more than new customers. Past customers may spend up to 67% more than new customers.
- It costs more money to acquire new customers than to retain current customers. It can cost up to five times more to get new customers.
Keeping your existing customers that you already exerted time, money, and resources to acquire helps you save and make money. So, you want to keep your customer churn rates low.
How Can You Calculate Customer Churn?
Customer churn refers to the number of customers that leave your business each year and the financial implications of that exit. Many businesses look at their buying cycle to monitor customer churn. If a customer typically visits the business monthly, and a month or two pass without the customer returning, they will consider that customer to be part of the churn.
However, there is an easier formula to calculate customer churn. Use the following formula.
(customers at the start of the month - customers at the end of the month) / customers at the beginning of the month
For example, if you have 200 customers at the start of the month and 180 customers at the end, then you have a 10% churn rate.
(200 customers - 180 customers) / 200 customers = 10% churn rate
Some companies focus on the numbers rather than the churn rate. For example, a company might bring in 30 new clients per month. If they lose 20 new clients per month, then they are still experiencing positive growth of 10 clients more than the previous month.
These are just basic ways of keeping an eye on churn. There are more complex ways to calculate the financial impact of customer churn by factoring customer lifetime value and new customer spend vs repeat spend, but these numbers above will give you a high-level idea for how your business is doing.
How Can You Reduce Customer Churn?
Some owners understand that churn is a part of business and are happy with their current rates (like the pediatrician mentioned earlier). However, others realize that churn actively hurts their bottom line and they see it as a direct loss of revenue.
If you fall into the latter category, there are multiple steps you can take to reduce customer churn and make loyalty part of your brand strategy and vision.
Improve Your Customer Service
Almost 90% of customers leave because of poor customer service. They might think one of your staff members is rude or that service is slow. Either way, poor service and poor customer experiences drive people out the door to the point where they never return.
Training and evaluating your staff on the latest customer care models, and reaching out to customers who have poor experiences, can increase the number of positive interactions with your brand and reduce customer churn in your organization.
Take Steps to Address Complaints
For every 4% of customers who complain, there are 96% of customers who are dissatisfied and 91% who will never come back. The vast majority of people who are churning out of your business never let you know that they are leaving or why. This means you need to listen to the four percent who do, as they could show signs of why others are leaving.
Along with addressing complaints and taking steps to make improvements, look for ways to solicit feedback from more people. If you can increase the number of suggestions or complaints to six or eight percent, then you have more advice to work with to improve your brand.
Implement Retargeting & Remarketing Plans
To increase the odds that a customer will return to your business, you have to stay at the top of their mind. You need to launch campaigns that put your brand back in front of customers who have already done business with you.
To get your brand back in front of audiences, launch retargeting strategies that seed digital content in the places where your target audience will be likely to see it, such as through targeting ads on social media. Also, run remarketing strategies using customer data to reconnect with one-time customers and give them incentives to return to your business.
Additional Reading -- Remarketing 101: How to Bring Existing Customers Back to Your Business
Reward Customers For Their Loyalty
People like to feel appreciated and recognized by the brands they interact with. Consider developing a customer loyalty plan to reward people for visiting your business. You can also celebrate milestones like anniversary visits or number of engagements with a brand. For example, a gym could celebrate when a member visits 100, 200, and even 500 times.
Offer Seasonal Specials and Offers
Sometimes local customers leave because of burnout. They might not see the value of your services or feel bored by the products your offer. You can counter this with seasonal offerings and specials that customers can only get for a limited time. The time limits on the products lure people in, while the seasonal offers make the services unique and can bring back people who might have grown bored with your brand.
Let MyArea Network Decrease Your Customer Churn
MyArea Network has proven strategies for getting customers to return to businesses again and again. So if you are struggling with high customer churn rates and losing too many customers, let's talk.
We can help you use data and analytics to set up smart remarketing systems, targeted promotions, and personalized offerings that will bring customers back to your business over and over.
Contact us today to set up a free consultation to talk to one of our local marketing specialists.