Churn is defined by how quickly customers who buy your products or services end their relationship with you. This can be important to contemplate because when you lose customer relationships, you lose revenue. Figuring your churn rate is simple. If you begin a quarter with 300 customers and lose 15 of them, your churn rate would be 5 percent. However, if these are your biggest spending customers, the impact would be much greater on your business. Causes of business churn include a change of price in your products, changing market fit for your offerings, the end-user experience, and customer experience.
There are several ways to combat business churn. The first way is to identify your customers likely to sever your business relationship and double your efforts to keep these customers. It may be advisable to focus attention on the highest revenue-producing customers and focus business attention on them. While traditionally the focus was on reducing churn, the goal should be to maximize profits instead of reducing churn. Minimizing churn because of a preconceived notion that X number of people are required to do the job is not a good idea.
Another way to fight business churn is to be proactive with your communication to the customers. Communication with your customers before they need help shows your interest in them. It shows you want to help them use your product or service. For instance, if a customer buys a product from you but you notice they are not using it to its fullest extent, you can call them or send them a friendly email. This helps the customer stay interested and active with you and/or the product.
A third way to prevent customer churn is to develop a new customer roadmap. Procedures with a new product or service can be overwhelming. If a customer cannot navigate your service or product from the beginning, he/she may not be a customer for long. An idea to help this transition is to develop a customer onboarding process to guide your customers in using their new product. Customer expectations can also be managed this way. It gives you/your company control over how much information they receive at one time (to overwhelm them).
A fourth way to combat customer churn is to solicit their feedback on your product or service. Customer frustration will occur when the roadmap mentioned earlier is confusing or there is little support for a product or service. Ways to get this feedback include surveys (online and off-line) and active listening. The surveys and active listening should be besides the roadmap mentioned earlier. Sometimes, it is difficult to make a perfect roadmap. However, actively listening to the customer physically or via email or a toll free number can reduce the customer’s need to go elsewhere.
A last way to fight customer churn is to analyze it when it happens. It is too late to save a customer if you are analyzing why they left as they are walking out the door. If you care about the customer’s opinion before they leave, chances are that they will not leave.