The key to the success of any business is balance. A balance between customer acquisition and customer churn. Although a fine line, but really crucial. Most business owners focus on customer acquisition rather than retention. This can harm any business greatly. Listening to your customers can really help you improve all aspects of your business. There are many customer feedback systems and Applications that can help you obtain feedback from customers. It is imperative for success, that you listen to your customers and what they need and think. Reducing Customer churn can be the first step in gaining loyal customers. Many businesses fail to see what customer churn can do to their business. Therefore they ignore it. To avoid that we will now try to understand what is customer churn and how to reduce it.
What is Customer Churn?
Customer churn is the percentage of customers that stop doing business with you over a specific period of time. As it is a percentage, it has a numerical value. You can calculate customer churn to determine where does your business stand.
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How to Calculate Customer Churn?
Churn rate is calculated over a specific period of time. Therefore to calculate the churn rate you need to specify a period of time. Once you have determined a specific period you can calculate the churn rate. The Formula is quite basic.
Churn Rate = No of customers lost at the end of time period/ No of customers at the beginning of the time period.
No of customers at the end of the time period = A
No of customers at the beginning of the time period = B
Churn Rate = (A/B) x 100
For Example: If at the start of your time frame you had 250 customers and by the end, you lost 30 customers. So,
= 30/250 = 0.12
Churn Rate = 0.12 x 100 = 12%
Now we know what is churn rate and how to calculate it. Now the next big question is how to reduce the churn rate. There are several methods to do that. But the most effective and the one we are discussing here is customer feedback. We will discuss how customers can help you reduce the churn rate.
What causes customer churn?
A multitude of reasons can cause customer churn. The first step in eradicating the problem is identifying what is causing the problem. Therefore before we discuss how to reduce customer churn, we will find why does it happen in the first place.
Price is often considered the biggest reason behind customer churn. As customers, we tend to pay as little as possible. So whenever the customer feels they are paying extra they will complain about it. Sometimes they don’t complain but just stop doing business. That is even worse.
No Customer Engagement:
It is a known fact now that customer engagement is way important than people think. When you ignore your customers or don’t engage them, they will leave you eventually. You have to be aware of what your customers want. You can use different Customer Satisfaction Survey Apps, Social Media, and other methods to connect with your customers.
More inclined towards your competitors:
Customers only want the best for one person, that is themselves.
In your opinion maybe you have the best product in the whole world. The moment your customers start thinking that you are not providing them the best, they will switch. With so many choices to turn to, it is hard to keep customers intact.
How Customer Feedback can reduce Customer Churn:
Business is all about customers. Today it’s not the quality of your product that matters it’s the connection between you and your customer. Most customers complain or churn when they feel they are not getting the attention they deserve. Now we will discuss how customer feedback can help reduce the churn rate.
Customers feel Important:
When you ask customers what they want or think, they get involved in the whole process. They feel like their opinion matters and they can trust you. Once you have developed a relationship with your customers based on trust and respect you can turn them into loyal customers. This way you can focus on your business without worrying about finding new customers or retaining the previous ones. As your customers would be doing that for you.
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Improved product less churn rate:
As discussed earlier, it’s not important what you believe of your product or service. It’s only the customers whose opinion matters. When designing a product or service you consider every aspect. You and your team try your best to create something that stands out. But this is where the problem lies. You only consider your perspective, not the customers’. When you ask customers what they think of your product. They will provide you intel that you didn’t have before. You can use customer feedback to improve your product or service. This will appeal to a wide audience and increase revenue.
Better Customer Support and lower Customer churn:
Another reason customers leave doing business is substandard customer support services. There is a good chance that you may be unaware of how satisfied customers are with your services. With too many choices, customers don’t complain they just switch their business partner. When you get feedback from customers you can identify the areas that require improvement. You can take steps to improve your services and support. When customers realize that you are doing what they want, they stick with you. They remain loyal to you as long you provide them with what they want.
Customer Churn can be really harmful to any business. It is imperative to take steps to reduce it. When your customers realize their feedback is important to you. They gather that they are important to you. They endorse your brand in their circles. Customer feedback makes it easy to understand what is it that you lack. And how to overcome the shortcomings. Hope now you know how to deal with customer churn.