Along with increasing profits every business endeavors to increase its number of customers as well. However, at the same time, it also has to retain its existing customers. It’s because, if a company keeps losing its existing customers, resulting in high churn rate, then it would find it difficult to grow, even after adding a considerable number of new customers every month.
On the other hand, by keeping the churn rate down, the business can still achieve substantial growth along with a decent ROI from its Marketing expenditure. This is the reason why managing churn rate can be crucial for an organization’s growth and success.
The churn rate can be represented in various ways, such as – the Percent of customers lost or the Number of customers lost. It can also be shown in terms of the Percentage of recurring value lost or the value of recurring business lost.
In the simplest way, it can be calculated dividing the number of customers at the beginning of the month by the number of customers lost in the month. For instance, if there where 100 customers as of November 1stand 15 were lost till November 30th, then the customer churn rate would be 15/100, which is 15%. (Source: http://blog.clientheartbeat.com/customer-churn-rate/)
It should be noted that even if 10 new customers were added in November, the churn rate would still be 15%, as new customers would be considered in the December’s account. Discussed below are some of the practical steps that can help in containing the churn rate.
One of the primary requirements for attracting customers is to invest in the credibility of the brand. For this, each customer should be handled with utmost diligence and their issues should be resolved quickly. Everything that has been promised to them must be delivered and within the stipulated time. When companies under-promise and over deliver, customers start trusting them automatically.
Brands that get established in their respective markets can start taking the customers for granted. Eventually, they will face a new competitor who would be offering superior product supported by better after-sales service. Once that happens, the established brands could face a situation when customers start leaving them in hordes.
To avoid such a situation, enterprises have to constantly innovate; they should also never take their customers lightly. By upgrading their products regularly and offering them to the existing customers for free as a token for their loyalty, will enable companies to keep them happy. Moreover, it would also make the customers think twice before switching for the competing products in the market.
One of the ideal ways to make the customers get emotional about your brand is to create an emotional connection with them, which is known as customer engagement. Also, engagement can help businesses enhance the recall value of their brands among the potential customers.
It can be crucial while making a purchase decision through search mechanism, as people would specifically search for the brands which they find easy to recall.
When it comes to existing customers, a personalized engagement with individual customers will make them feel privileged, which could induce a sense of loyalty among them. Some of the ideal methods of engagement include social networking, email newsletters along with reminder tweets or text messages.
It could also include a feedback form on new launches. Moreover, asking them for their response on a certain product would ensure they would buy the product.
Also, providing an exceptional service as well as quick response to queries from both the prospects and customers is a form of engagement that can enhance their overall experience.
Clarity & Consistency
New marketing campaigns bring in fresh customers. Hence, marketers need to be careful with their claims about the product. They should also refrain from making false promises about an offer or a discount during these campaigns. Usually, prospects who find out about the false claims and dubious promises would never turn into customers.
Moreover, they could also spread negativity about the brand, which could prove fatal in the long run. Hence, enterprises should ensure to be clear and consistent in all forms of communication with the customers.
These are some of the key tips that can help reduce the customer churn rate. While these can be implemented with ease, they also form the basis for many complex tasks that could be required to maximize customer retention.
- A company with high churn rate would find it difficult to grow, even after adding a considerable number of new customers every month.
- Managing churn rate can be a crucial for an organization’s growth and success
- Customer churn rate is calculated by dividing the number of customers at the beginning of the month by the number of customers lost in the same month.