There can be many reasons why a customer might stop buying products from a brand or lessen the number of products that they used to buy from a particular brand. The number of customers that leave your brand over a specific period of time is known as the churn rate. Higher churn rates indicate that more people are leaving your brand! This is why churn rate is an important metric for every retailer. Today, we will discuss how you can reduce this churn rate and turn the tables around in your favor.
Let’s start with some important statistics about the churn rate that will widen your eyes!
Churn rate refers to the percentage of customers reduced/decremented over a specific period of time. Some customers' involuntary churn may be due to billing issues or they may move out of the town or due to some tragedy. Some customers churn voluntarily means they stop buying products from a company. Some customers churn partially which means they decrease the number of products they used to buy from a brand.
Most brands focus on voluntary churn as it affects their business the most. Moreover, it is less expensive to retain a customer than to find a new customer all over again and go through their customer lifecycle. Decreasing the churn rate even by a few percent can bring immense changes in your profits.
Customer churn rate is generally calculated by dividing the number of customers lost in a given period by the total number of customers at the beginning of that period. For example, if a company began 2021 with 80,000 customers, lost 4,500 but also acquired 1,500 over that same year, the churn rate would be 3.75%.
By now you must have known why we are stressing over the churn rate metric. If not then these points will make things more clear.
Now comes the most important part of the blog. How can you reduce the churn rate and enhance your business?
If you really want to enhance your customer churn rate, be prepared to create outstanding customer service. Customer service is one of the main reasons why customers leave a brand. There are many ways to enhance your customer service like:
When someone is getting to know your brand, it is the best time to strengthen your relations. After all, we know that the first impression is the last. Generally, you will have not more than 20 seconds before a visitor decides to switch back from your Instagram profile or leave your website. So make those 20 seconds count!
A customer signed up for your brand or bought something from you once does not mean that they are going to remember you always. It is your duty to keep reminding them of your awesomeness so that they keep buying products from you.
Improving the churn rate can be regarded as finding ways to retain customers. What’s better than rewarding loyal customers and making them feel special? If you want customers to keep coming back, you need to invest in building a relationship with them. There are many ways to do that, like:
Do not let the customers go. Find why they are leaving you and whether there is still some hope left. This can be done in three ways. First, you can send them an exit survey where the customer will provide their feedback. Second, you can call the customer and try to find out what they did not like. Third, you can send them a personalized email.
Creating a strong community can help you create a better reputation with your customers and competitors. Building community means connecting your loyal customers together, say through email interaction, surveys, Facebook groups, etc.
Many businesses lose customers because they do not evolve. In other words, they do nothing to stay in the competition. One must understand that with time the demand of the market will change and you must change yourself accordingly.
This was all about churn rate, its importance, and different ways how you can decrease the customer churn rate for your business. Retaining customers is the key to the success of a business and that can be done only if you make your customers find value from what you are offering to them. Personalizing their journey, giving them incentives, building a community, and staying competitive are some of the best ways to reduce customer churn rates. Start incorporating these tips to enhance your business for the better.