Businesses today have a single-focused approach towards acquiring new customers. It seems to be a Holy Grail for, in fact, all types of companies.
New customers can be a blessing for startups with stringent budgets.
When you have limited funds, it is understandable to perceive that new customers will boost the revenue as quickly as by expanding their customer base.
The mistake that most businesses make is by staying in the “customer acquisition” mode forever.
While acquiring new customers is a critical aspect to grow any business, what most companies fail to recognize is that it is the preliminary step towards building a successful enterprise.
The thing that is even more important is perhaps the customer retention.
Failure to nurture new customers can quickly lead to an increase in the churn rate.
So, why should businesses focus on reducing the customer churn rate?
Let me give you a statistic that will reflect how losing existing customers can cost a lot more money than acquiring new ones.
According to Harvard Business Review research, acquiring a new customer can cost approximately 5 to 25 times than retaining an existing one.
Another study by Federick Reichheld of Bain & Company (the inventor of net promoter score) showcases that increasing customer retention by only 5% can generate more than a 25% percent increase in profit.
Unfortunately, most of the companies do not take the financial impact of a high churn rate seriously.
Their entire focus is on putting in more time and money towards generating new leads and sales. This makes them struggle to survive, much less to thrive merely.
These studies prove that putting the same time and effort towards keeping existing customers happy would be more advantageous for businesses.
Loyal customers bring in more profits with much less energy since they are already familiar with your products and services.
They trust you and are happy with your customer service.
While it is true that it is nearly impossible to reduce the customer churn rate to 0%, there are specific ways that can help you minimize it.
Here are some of the strategies which will help you reduce customer churn rates.
You might say, “Duh! Vivek, this seems to be quite obvious!” Believe me, I promise this section will prove to be quite insightful in answering all your doubts.
Unsatisfactory customer service is said to be the primary reason for customers to leave a company.
With so many alternatives available in recent times, today, customers refuse to compromise. And the fact is, why should they?
In case they are not happy with your service, they are well aware that there are ample options available to choose from.
Consider this - Every time you lose a customer, your competitor scores upon you. This ultimately makes them a bit stronger.
As they increase their loyal customer base with your ex-customers, there will come a time when your business will be left biting the dust.
The good news is providing consistently stellar customer services does not require a lot of effort. Here are the ones that I suggest you focus:
Always maintain communication with your existing customers regularly. Be proactive and initiate conversations.
This prevents small, manageable problems from becoming a big-scale disaster. Kick-off by sending a welcome newsletter with details of whom to get in touch if they need any help. Send follow-up emails reminding them that support is available at a click away.
Always use the first name of the customer. These small details, in the end, make a huge difference in fostering a strong relationship with customers. Ensure that you comprehend the channels that your customers prefer to receive communication from your brand.
In this digital era, with so many telemarketing calls and cold emails, 89% of customers prefer to use text messages to interact with businesses as a primary means of communication.
Think of every correspondence as an opportunity to showcase your products and services.
Explain to the customers how your offerings can continue to help them achieve their goals. This will create a win-win situation for both customers and your company.
Remember, today, bad news travels faster and can have a domino effect on your brand. Losing a single customer not only translates into losing the business that one customer can bring. It can also mean losing potential customers that the existing one can get through positive word of mouth.
It has been proven that 67% of customer churn can be prevented if companies resolve issues in the very first instance of their occurrence.
Hence, always assign your best customer service representatives to handle customer complaints to ensure efficient resolution of customer issues on an immediate basis.
Always take a follow up once you resolve the concern of the customers. Certain customers simply give up after one unsatisfactory experience. Instead of raising another complaint, they prefer to take their business somewhere else.
While deciphering your customer’s journey, pay special attention to the customer onboarding process.
Whenever a customer signs up for your product or service, they are likely to be full of excitement and anticipation.
Your onboarding process is probably the very first experience that the customer has with your products and services. This means that it needs to be spectacular.
In case your onboarding process is very intricate wherein you make lots of errors and bugs or you do something to hurt the user experience (UX), your recently acquired customers can easily get perturbed about their recent purchases from your company.
You must have already anticipated this tip.
This is perhaps the most powerful mechanism to keep customers by your side. In any industry and for any brand, poor customer service is a major reason for customer churn.
According to a report published by Oracle on the impact of customer experience, it says that “The two key reasons for customers to leave a brand are incompetent and rude staff members and unbearable slow service.”
The same report showcases that 58% of customers will never use a brand again after a single negative experience, and 48% who had a negative experience will tell more than ten people about it.
Hence, it is essential to pay special attention to customer complaints.
Now that I have given you ample reasons that showcase why you cannot afford to lose customers, it is better to concentrate on being a keeper.
In simple words, it means you need to tell your customers through your actions why it is better to keep you and stay in touch with you instead of moving to your competitors.
It is equally significant to keep this in mind that the main reasons for customer churn have nothing to do with your products & services. Instead, it mainly comes down to poor customer service!
In short, maintaining your customers is not rocket science! It merely caters to scrutinizing the reasons behind the customer churn and then trying to rectify them.
Always maintain communication with the existing customers and involve them in your products and services, improve your customer service levels, and ensure that they see what they gain by staying with you instead of moving to your competitor.
What more tips do you have to reduce the customer churn?
Please post your comments below and let me know.
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