Let’s face it, customer churn is very costly and adds more pressure to sales to help close the gap. So, in order for the business to continue to grow, sales must not only hit operating plan growth numbers, they also need to account for lower revenue caused by customer churn and find a way to close this gap as well. Churn is typically calculated by dividing the number of customers you lost in a quarter by the number of customers you started with in the quarter. When it comes to acquisition versus retention, acquisition costs are always much higher than customer retention. Hence, customer churn risk needs to be continuously monitored and reduced in order to improve your bottom line and achieve the growth goals for the company. To begin with, you need to identify what’s causing your customers to churn. Some of the common reasons could be poor customer service, a disappointing onboarding process, subpar or no customer engagement, or perceived lack of value or appreciation. Customers need to see real value for their money and this is precisely why customer retention should always be a key priority. The best way to predict churn and increase customer lifetime value (CLTV) of a customer is to have a firm grasp on customer behavior at all times. According to a study, companies with a designated customer success team experience a 24% lower churn rate than those without it. Thus it’s important to constantly monitor churn, so that you can pivot on initiatives to improve your retention metric.
Separate your customer into groups based on their user behavior to analyze, anticipate and reduce customer churn and then identify the similarities in their behavior and see how to engage with them:
Ask yourself some tough questions once you are an established brand:
How is reducing customer churn beneficial for your company?
Here are some early warning signs regarding customer churn. Empathizing with the customer goes a long way:
This is how you can reduce customer churn: