Customers are the greatest assets of any business organization. They directly impact your button line since they are your primary source of revenues and profits.
Customer management is a highly critical yet tricky business area. In fact, one of the major challenges business owners face is high customer churn, which refers to the percentage of customers who stopped patronizing your products or services during a certain period. You can compute the customer churn rate by taking the number of clients you lost during a particular time frame, then dividing it by the total number of customers you had at the beginning of the period, and finally multiplying it by 100.
For instance, if you started your financial year with 1,000 customers and lost 200 during the year, your churn rate will be calculated as follows:
(200/1,000) * 100 = 20%
No churn rate is considered good. Aim at achieving a churn rate of 0%. In other words, strive to retain all your customers.
Ways To Prevent Customer Churn And Increase Retentions
You can employ several strategies to reduce customer churn in your business and improve retention. They include the following:
1. Know Why You Lost Customers
One of the best ways to reduce customer churn in your business is to know why it occurred in the first place. No customer will stop using your products or services without a valid reason. For this reason, analyze why the customer churn occurred. The most logical approach to this problem is by talking to the customers.
Call or email the lost customers and ask why they no longer buy from you. This allows you to hear from the customers themselves, and therefore, you’ll be able to know the source of the problem. From there, you can implement the right strategies to increase your retention. For example, if you conclude that most customers left because you offer low-quality products, you’ll need to assess the areas where your product falls short on and find ways to improve on them.
2. Manage Customer Interactions
There’s no better way of reducing churn rate and boosting retention than managing customer interactions. It allows you to provide the best solutions to customers’ needs. As such, you can improve customer experience and satisfaction.
Managing customer interactions can be overwhelming, especially if done manually. Fortunately, you can invest in customer relationship management (CRM) technology to streamline the process.
But you may ask, what is CRM meaning? CRM is a system that allows you to engage with existing and potential customers from a centralized location. Also, you can use the technology to collect customers’ data about their needs. As such, you can better understand who your target customers are. Once you understand your target audience, you can personalize your products and services to address specific clients’ needs. This helps build a loyal customer base, thus increasing your retention. However, ensure you find the best CRM solution for your business, which you can achieve through online research or asking for recommendations from other business owners.
3. Offer Customer Incentives
Today, companies operate in a very competitive business environment. There are thousands of businesses in all sectors, all competing for attention. So how can you ensure you overcome the competition? You can achieve this by giving your customers a reason to stick with your brand. This is where offering incentives becomes necessary.
When you offer incentives to customers, they’ll feel valued. Everyone likes being appreciated. Therefore, offering customers something small like a discount or loyalty program can encourage them to stick around.
There are several factors to consider when offering customers incentives. One is the season of the year. If it’s the rainy season, give them something like umbrellas. And if it’s a hot season, give away bottled water.
Another thing to consider is the period remaining for the customer contract to end. For example, if a client has only three months left before the contract expires, you can start offering services at discounted prices. This way, you can encourage them to renew the contract.
4. Provide Premium Customer Service
Customers expect the best from you. Hence, a great way to minimize customer churn is to provide premium customer services. Poor customer service will turn away potential clients.
There are many ways of improving customer service in your business. One is to invest in live chat technology. This refers to software you can install to help communicate with web visitors in real time. More often than not, customers will have questions they need answers to once they visit your website. However, not many will patiently wait several hours to get answers. Live chat technology allows you to engage with customers in real time and address their issues without delay.
Additionally, it’ll be beneficial to leverage chatbot tools. Sometimes, customers may visit your website outside of business hours. And if they find you aren’t responsive, they may consider finding assistance elsewhere. Chatbots can simulate human conversion; you can install them to help answer basic questions about your products or services. All these help improve customer experience.
5. Focus On Attracting The Right Audience
Reducing churn and boosting retention can be easier if you focus on attracting the right customers. One of the causes of churn is exposing your business to the wrong people. Do market research and build buyer personas so you have a clear understanding of your target customers.
During the marketing planning, ensure you know your target customers, their needs, and preferences. This will help identify the right marketing method and promotional messages to reach them. You can only reduce customer churn and increase retention by attracting the right people to your business.
One of the best ways to grow your business is to reduce customer churn. This way, you can reduce the cost of customer turnover and marketing. Also, note that existing customers are more likely to increase their shopping baskets with time. Therefore, rating customers can be a great way to grow your revenue. Implement the strategies in this article to reduce customer churn and increase your retention.