If customer churn is a major concern for your business, you are not alone. At Summa Media, generating new business is top of mind for our clients, but followed closely behind new business is customer retention. The modern day consumer is an extremely empowered consumer and with more purchasing options than ever before, the modern day consumer can easily cease doing business with any brands they do not feel are up to par.
While a customer may not think twice about switching from one brand to another, brands are all too aware of the effect that customer retention has on the overall financial health of a business. Studies show that a 5% reduction in customer attrition can increase profits anywhere from 25 to 95%, that is a huge financial impact for any organization.
Today, the Summa Media team is going to walk you through our top five tips for improving customer retention and decreasing churn. We will start by addressing the two main reasons customers leave and then share our insider advice with you. Keep reading below to learn more.
Why Do Customers Leave?
In order to appropriately address reducing customer churn, we must first understand why customers leave. Although there could be hundreds of reasons a customer chooses to take their business else where, price and customer experience are the two that we see most often.
Price has always and will always be one of the biggest reasons for customer churn. If a customer finds another brand that can meet their needs in a more cost-effective manner, they will likely take their business to the less expensive vendor. In order to mitigate this reason for customer churn, focus on clearly communicating the value of your product or service over your competition, price your goods and services fairly, and offer your loyal customers financial incentive to stick around.
Customer experience is the single most important factor in customer retention. Consumers want to do business with brands they feel connected to, that they trust, and that they believe in. At Summa Media we like to tell our clients to pretend that each one of their customers is their only customer. Deliver each of your customers a top-notch experience every time and not only will they continue to do business with you, they will likely refer their friends to your brand as well.
Summa Media’s Top Five Tips for Reducing Customer Churn
Being proactive in customer communication is key. By regularly checking in with your customers you are showing them that they are your first priority. Tailor communication to the specific products and services that your customers have purchased to make them feel like the communication is custom to them.
In addition to being proactive about communication, make it easy for your customers to communicate with you. Make contact information easy to find and respond to all customer inquiries within one business day for best results.
Reward customer loyalty by offering incentives on future purchases. These rewards will look different depending on the nature of your business, but it is important to incentivize customers to return. Consider implementing loyalty programs, referral discounts, repeat customer exclusive sales, or quarterly promos.
Offering incentives throughout the customer lifecycle is a best practice, but you can also use financial incentives as a last ditch effort to keep a current customer around. For example, if a customer is considering canceling a recurring subscription offer them a discount on their next billing cycle and use that time to improve their experience and increase the chances of them staying on.
Invest in Customer Support
As we mentioned above when discussing why customers leave, customer experience is one of the main factors in customer churn and one that you can easily address. Invest in customer support, provide customers the resources they need to be successful using your goods or services, make it easy for customers to contact you, and always respond to customer complaints in a timely manner.
Ask for Feedback Regularly
If you don’t know how your current customers feel about your brand, how can you expect to prevent customer attrition? Consider implementing a regular feedback loop such as a customer survey or online feedback form for your customers to provide their honest opinions. Use the data to make improvements, identify high-risk customers, and ultimately increase customer retention.
Analyze Churn When It Occurs
We can implement all of the above best practices in order to reduce churn, but unfortunately customer attrition is inevitable. When attrition occurs it is important to use it as a learning experience. Analyze churn data to see if there is a common theme among customers who leave. Are they leaving at a specific point in the customer lifecycle, a specific time of the month or year? Are they looking elsewhere for the goods and services you were providing or are they simply no longer in need of your goods and services?
Don’t be afraid to ask customers who are leaving for feedback as mentioned above. The more data you have to analyze, the more likely you are to prevent future churn and even get previous customers back.
If improving customer retention and increasing overall profits is at the top of your priority list, the Summa Media team is here to help. Contact us today to learn more about our churn reduction philosophy and discuss how it may apply to your business.