First of all, what is meant by churn rate?
The churn rate or, customer churn, as it is also commonly known, refers to the rate with which consumers stop purchasing or end subscriptions with a business. Churn rate is usually used to refer to the rate of service subscribers who terminate their subscription within a set period. Sometimes it can be used to refer to the percentage of employees who resign from their jobs within a given period. Businesses often use the churn rate as a way of measuring growth; when the growth rate is greater than the churn rate then you know that you are gaining more customers than you are losing.
A company’s churn rate can be an accurate indicator of the expected lifespan of the business. And it makes sense, if more customers are lost than gained then it can be a strong indication that the business is failing.
According to a study by PwC entitled Experience is everything: Here’s how to get it right, customer experience plays a crucial part in keeping the churn rate down.
‘Even if people love your company or product, in the U.S. 59% will walk away after several bad experiences, 17% after just one bad experience. 32% of all customers would stop doing business with a brand they loved after one bad experience. In Latin America, 49% say they’d walk away from a brand after one bad experience.’
If you’re wondering how to minimize your churn rate, look no further as we’ll dive into the best tips and tricks to keep your business in the safe zone.
First impressions count
Customer churn is affected by the first impressions your target audience and potential clients get from your business. The majority of customers usually judge your business on first impressions. Therefore, it is vital that you work towards maintaining and cultivating a positive customer experience so that potential clients will want to come back to your business.
Some of the best ways to keep your customers satisfied and maintain a professional first impression include dealing with any potential customer issues from the start. If for example, your customers encounter a recurring issue with your business offering you should work on it straight away to resolve the issue.
Include tutorials and educational material explaining your business offering
When you create and present a service or product to potential customers you should never assume that all clients will understand or know everything, they need to use whatever it is they are buying or subscribing to. If customers keep encountering obstacles when using your product or service, most people would stop using it rather than lose face and ask for customer support.
For this reason, you should ensure that you provide tutorials and explainers that make it easy for your customers to use your products and services.
What are some of the ways to better educate your customers?
- Develop the help desk and customer support area.
- Introduce tutorials in the form of recorded videos or live webinars with Q&A sessions.
- Engage with customers to ensure they understand how to use your product or service.
- Actively seeking customer feedback.
- Implement a designated social proof area where customers and potential customers can read and write reviews.
Timing is very important when it comes to first impressions; why? Well nobody wants to be sent push notifications at 3 a.m. You need to make sure you pay attention to time zones and the geolocations of your customers.
Security, security and more security
Customer churn rate is influenced by security. If your site doesn’t display or offer a high level of security then you should expect high bounce rates.
How do you build trust between a business and its customers?
- Ensure that user data is protected.
- Make it clear that by using your services and site that they are safe.
- Where appropriate use trusted and well-known third-party services for sensitive data such as card payments and online transactions.
- Again, make sure you display customer reviews and social proof so that other potential customers can see that other customers have bought or subscribed to your business.
Don’t neglect customer communication
In most cases, if there is no communication between a business and its customers, churn rates are often high.
When you fail to communicate with your customers, whether it be via email, SMS or push notifications, they start losing interest. You ought to be working towards making whatever your business offering is worthwhile for your customers. Relevance and value are two important words to keep in mind when communicating with existing and potential customers. It’s all good communicating with your clients but you need to have relevant and engaging content to communicate.
Using incentives to keep customers keen
Take a look at these statistics by strategicincentives.com:
- ‘82 percent of the respondents use merchandise and/or incentive travel as sales incentives.’
- ‘66 percent of respondents in the consumer/user promotions category use merchandise and/or travel incentives.’
- ‘61 percent of respondents in the non-sales recognition/motivation category use merchandise and or travel incentives to motivate.’
- ‘48 percent report using merchandise or travel in dealer incentive programs.’
The best way to incentivize customers is to set up feedback so you can find out the reasons that former customers stopped doing business with you. Once you know why then you can try and rectify the issue turning it into an incentive for customers to renew their subscriptions or continue buying products from you.
So, bare these simple tips in mind and watch your customer churn rate decrease.