Customer churn is the statistic showing the rate at which you lose existing business. This is an important stat and one that companies should seek to continually improve. Before you can begin improving customer churn, you must find out why your customers are leaving you. You can use surveys to discover why customers churn and discover the underlying reasons that you might not have considered. Here are the main reasons why customers churn and how you can avoid it;
1. Poor customer service
It’s probably unsurprising that one of the top causes of churn is poor customer service. Why should a customer stay with you when they haven’t had a positive experience? A study by Microsoft found that 96% of customers rate customer service as an important factor in loyalty to a brand. These days there’s plenty of other businesses out there, and if your competitors’ customer service is better than yours, then you’re in big trouble.
Consider how you can improve your customer service. You might think about having a dedicated customer support team or offering a live chat or chatbot facility on your website. This will make it even easier for your customers to contact you. Every bit of extra effort you make will help to show consumers that you care, and by providing instant (or near-instant) replies to their queries, you’ll create a great customer experience.
2. Bugs or issues with your product
If your product doesn’t perform as well as a consumer thinks it should, it can cause them to churn. If it breaks easily or is glitchy, then this is going to have a negative impact on your customer’s perspective of your brand. It can be difficult to win customers back when this happens, but all is not lost. If you are aware that your product is faulty, then the best thing you can do is be honest and transparent with your customers. We all understand that people can make mistakes, it’s what we do to fix the errors which is often the key. You should work hard at retaining your current customers – just a 5% increase in customer retention can produce 25% more profit.
Contact your customers to let them know that you’re working hard on a solution and keep them updated on your progress. This is the best way of trying to retain them after such a setback. If you’re honest with them and try to rectify the problem they’re much more likely to give you another chance.
3. Your product is deemed too expensive
The pricing of your product is another crucial factor to consider in customer churn. If your consumers think your product is too expensive, they will likely find a cheaper competitor. You should always keep a close eye on your competitors to track their pricing and see where you stand in comparison. And, more importantly, whether or not your product reflects the price you’re charging.
However, you should also consider what you do that sets you apart from anyone else in the market. For example, if your product is ethically sourced, produced using more environmentally-friendly methods and delivered in eco-friendly packaging, then it’s more likely that your overall costs will be higher. However, a growing trend shows that consumers are willing to pay more for ethical products, so you need to highlight this as a USP of your brand to justify higher prices.
Considering the main reasons customers churn, it’s essential that you first discover why your customers decide to leave. It’s generally different for every business, so finding out why will help you to combat your rate of attrition. Whether that be by improving your customer service, refining your products, or analyzing your pricing. Once you know what you’re looking to build on, you can focus on the process of reducing your customer churn.