Why is My Customer Churn Rate So High?
When the ratio of new customers to returning customers is heavily weighted toward the former, you know you’ve got a problem on your hands. It’s certainly not an uncommon problem – not by any stretch of the imagination – but it is a problem – full stop.
New customers are expensive. They’re expensive to attract in the first place, and they’re infamously expensive to onboard. By contrast, returning customers are not only more economical, but they’re also more profitable. What’s more, they ensure your business grows on a healthy bedrock rather than a foundation of sand that is continually slipping away.
It’s unrealistic to think you’ll retain every customer that walks through the door, but, ideally, a business’s churn rate will never sit above 10%. However, there’s no quick and simple fix to a high churn rate – particularly if you’ve got no idea what’s causing it.
Are You Actioning – or Even Asking For – Feedback?
Customer feedback is one of the most valuable assets a business can acquire. Customers who are willing to give honest, frank feedback on what is and is not working for them – what could be driving them away, or compelling them to stay (for now, at least) – are virtually giving away the cheat codes to doing business well.
The trouble? So many businesses fail to recognise quite how pivotal customer feedback can be, despite the fact that getting it is relatively easy, quick, and low cost.
The trick is to keep things short and sweet – to cut straight to the chase. A detailed study conducted by Survey Monkey found that the shorter the survey, the more time (and, presumably, thought) customers put into answering it. A single-question survey saw an average of 75 seconds spent on answering that question, whereas that time dropped to 30 seconds for surveys featuring 3-10 questions.
Don’t just sit on that feedback. Actions speak a lot louder than words and, if you can demonstrate to customers that you really are listening, they are far more likely to recognise you as a business worth sticking with.
Are You Trying to Get By Without a Long-Term Strategy for Building Loyalty?
The opposite of churn is retention, and boosting retention depends on your ability to offer customers a strong, worthwhile, and memorable loyalty programme. Offering this platform incentivises return business, even at times when you aren’t able to compete with another company’s ‘flavour of the month’ deal or promotion.
Far too many businesses are still underestimating the power that incentive programmes for customers hold. These days, these schemes are commonplace – but not every business rewarding customers is doing it right.
A good B2B loyalty programme takes thought and research – something we know very well here at Incentivesmart. You need to be able to offer an appealing range of rewards for customers to aspire towards and remain interested in, and ensure that the ‘rules’ of rewarding are clear and consistent. If not, it won’t be long before customers grow confused and, ultimately, disinterested.
Are You Attracting the Right Customers?
This one seems basic – elementary, even. What business would go out of its way to attract the wrong customers?
While it’s never intentional – at least, we hope – it’s not out of the ordinary for businesses to inadvertently bring the wrong sort of customer through the doors. This isn’t necessarily as obvious a faux pas as a vegan restaurant bringing a voracious steak-lover through the doors, but even more subtle errors – say, a customer signing up for a product that just isn’t right for what they’re looking for – will cause the churn rate to increase.
But how do you attract the right customer? There are so many ways, but they all boil down to one thing: by knowing who your ideal customer is, asking the right questions upfront, and avoiding costly promotions that simply attract fickle deal-hunters. Utilising all the right marketing communication channels to convey who you are and what type of customer stands to benefit from your offering is key here.
Your Customers Needs Just Aren’t Being Satisfied
This is, perhaps, the most obvious answer to the question – and, frustratingly, the broadest. There are so many reasons why customers can feel unsatisfied, but ensuring customers are happy with their experiences largely stems back to ensuring your workforce has the resources and training it needs to thrive.
If once-promising customers are converting into a high churn rate, then, unless there is a glaring issue with the products you are offering – or the type of customer you are attempting to bring into the fold – you should look internally. Are your employees – or, in a broader sense, is your entire channel – trained and prepared to give the best customer experience, or do you need to invest more into that side of the business?
It's an important question to ask yourself, even if your churn rate seems low. Don’t let yourself get complacent – and, once you’ve got a strong enough hold on your customer experience, don’t just settle for satisfaction. Think about excelling beyond ‘the right offering’, into ‘the best offering’ that leaves customers wanting for nothing.
Want to find out more?
Thank you for taking the time to read our blog, we hope that you found the tips and strategies helpful in retaining your valuable customers. Remember, building a loyal customer base takes time, effort and a willingness to understand their needs and concerns.
If you have any further questions or would like to discuss how to reduce churn in your business, book a chat with Matt below to see Incentivesmart in action and learn how we can help create a loyal customer base that will benefit your business for years to come.
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