There are many roadblocks that every business will have to face in its lifespan. However, one such phenomenon that can drastically decrease overall business and revenue is customer churn.
Basically, customer churning refers to an event where many customers cease to do business with an organization within a certain time frame. In order to calculate the specific churn rate, all you have to do is divide the number of people that leave the organization by the number of people who did business at the start of the quarter.
Churn can be difficult for a business to deal with due to the potential financial implications that high churn rates might bring. Fortunately, there are ways for a business to circumvent customer churn rates and retain as many customers as possible. Here is how any organization should respond to customer churn.
Ask For Feedback
One of the first priorities of any organization’s strategy to deal with churning is to discover the reason why people are leaving to begin with. This entails asking the customers themselves for feedback and constructive criticism.
The most common way that businesses go about accomplishing this is by sending out satisfaction surveys or rating requests. Here, you will have a great indication of how customers view the organization and what changes need to be implemented in order to ensure the customer is satisfied.
In other situations, live chats are administered in order to give the customer a chance to personally communicate with members of the team to fully voice their opinions in a way a survey may not.
Incentivize
One of the easiest approaches to take when it comes to offsetting the damage that customer churning can cause is to incentivize the customer to stay. Typically, these incentives come in the form of access to loyalty programs, special discounts, promotions and other sweet deals to offer the customer.
There is one major factor to consider when choosing to incentivize customers. The first factor is what it would cost the company to implement these incentive programs. Careful calculations should be performed in order to deduce whether or not the cost of retaining customers that can be salvaged is greater than the cost of special promotions. If the promotions are too expensive, think of other alternatives that won’t hurt the company’s bottom line as much.
Analyze High-Risk Customers
In order to prevent a vast number of churning, you will also have to understand who has the greatest risk of abandoning the company. These are most likely people who haven’t made purchases or service subscriptions for an extended period of time.
Once you establish a benchmark of who has not engaged with your product or service, create a proper strategy to convince them to stay. While certain customers inevitably leave for certain reasons of their own, there are many things that you can affect. The priority should be to get after the customers who essentially already have one foot out of the door.
Address Churn As It Happens
The churning also has to be addressed while it is taking place. This will help you get to the root cause of what is going on. It could be an unpopular decision made by the company or a recent product with many defects. Whatever the case, do not take a reactive approach