Companies like to talk about customer loyalty, referring to those who do repeat business, either buying its products or using its services regularly. Customer loyalty is good because it suggests that companies are doing enough right to earn that loyalty.
Discovering new clients is more costly than maintaining existing ones. It provides stability in an ever-more competitive landscape.
The opposite of earning customer loyalty is a company with a high churn rate. Customer churn, also referred to as attrition rate, refers to the rate at which people stop being customers of a particular business over a set period.
A low customer churn rate means high levels of customer loyalty. A high churn rate means that most customers don’t stick around for the long haul.
While every business will have different levels of customer turnover, no company wants high levels of churn for all sorts of reasons. But how can you reduce it? From improving first impressions to customer churn prediction, here are five ways that can help.
You nevermore get another chance to make a first impression. Whether you’re running a hotel or a food subscription service, the first interaction your customer (or prospective customer) has with you is crucial. You might be able to claw back the reaction to a bad first impression with a lot of work and effort, but that initial response is all-important.
If a customer is bowled over by the service they receive right away, that will earn plenty of goodwill that, in turn, will make them less likely to go elsewhere.
It could also increase their likelihood to spend more. Customers typically become more valuable over time as they get to trust a brand. If you can earn that trust right away, that journey will be considerably shorter.
Your core product is the most important part of a business. But the way you treat customers — whether it’s answering questions and complaints, onboarding for new services, or whatever else — is essential too.
Finding ways to answer queries rapidly, letting customers contact you through various platforms, and empowering employees to “surprise and delight” will all help build up a rapport and trust between you and your customers.
Good customer service can make a potentially negative experience positive (such as highlighting how much you care and are prepared to listen). It will make a good experience into a great one.
Particularly if you’re a heavily sales-focused business (which, for obvious reasons, many are), not overselling your business to customers can be difficult since it sounds a whole lot like talking down what you’re selling.
Setting realistic expectations for customers will avoid disappointment. It will also be far more likely to breed long-term loyalty than making promises that you’ll never be able to keep.
Of course, if you want to be successful, you don’t just want to meet customers’ expectations but exceed them as well. Delivering what you’ve promised — and then some — is a recipe for maximizing customer loyalty and lowering churn.
This is a tricky one. Dismissing valid criticism under the assumption that the customer was just a bad fit for you can create a blinkered sense of whatever you’re doing wrong. After all, the customer was enough of a fit that, at some point, they expressed some form of interest in what you had to offer.
However, at the same time, it’s essential to realize that every business will have a percentage of customer churn — and that sometimes the calculus needed to get them to stay isn’t worth it.
Look at how much that customer spends and how much the lost revenue will cost you. This isn’t a simple equation (customers typically spend more longer with you as their confidence in your products increases).
But focusing on maximizing profits while working to reduce churn is a far more sensible investment than trying to keep every customer at all costs. This brings us to.
As noted above, some customers are going to churn. But that doesn’t mean you can’t learn anything from experience — and use that information to stop other customers from churning.
Utilizing customer churn prediction tools involving statistical models fitted to historical data will enable organizations to uncover patterns that can help predict churn. Spotting these patterns can help identify areas of your business you might want to change to improve the customer experience.
It can additionally help you to identify behavior that typically acts as a precursor to a customer leaving. You can then step in and rectify the situation to stop the customer from going.
Customer churn is a complex topic. There’s no easy, one-size-fits-all answer that will immediately reverse a high churn rate to zero. But by following some of the suggestions outlined above, you can certainly take proactive steps in doing so. Your customers will thank you for it.
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