Transforming The Customer Experience

8 Ways to Reduce Customer Churn

Posted May 25, 2017 9:50:00 AM

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Most businesses spend a lot of time and resources on acquiring new customers. So, it’s a disappointing situation when and those new customers visit once or twice and then fail to return again. That’s why businesses must do everything they can to prevent and decrease customer churn.

Customer churn is the rate at which people leave a business’s customer base. It’s the number of new shoppers and clients who fail to become repeat customers.

High customer churn has a negative impact on a business for a variety of reasons.

  • Customer acquisition costs are high, so it’s expensive to get a new client and fail to hold on to them. According to Forrester research, it can cost up to five times more to acquire a new customer than to keep an existing one.
  • It’s easier to sell to existing customers. According to Marketing Metrics, you have a 60-70% chance of selling to an existing customer and only a 5-20% chance of selling to a new customer.
  • Existing customers usually spend more than new customers. A study by Bain found that existing customers may spend up to 67% more than new customers.

When you have a low customer churn rate and keep selling to existing customers, it’s cheap and easier to make more sales and sell more during single transactions. So, you must work on decreasing customer churn.   

This is especially true if you have a business that has the potential to create lifetime customers and clients as in:

  • Auto shops
  • Private healthcare offices
  • Restaurants
  • Professional services
  • Hotels

So, how do you decrease and prevent customer churn? Here are nine strategies to employ.

1. Ensure that you are targeting the right audience.

Customer churn is often the result of a business or customer being a wrong fit for each other. If a family seeking a new dentist arrives as an upscale office that is designed more for business professionals than kids, the customer probably isn’t going to come back again.

To decrease customer churn, make sure that you are attracting the right people from the start. Focus on identifying your ideal customer base and presenting your marketing materials to make your position in the industry clear so only the right customers and clients find you.

2. Make exceptional first impressions.

There is a popular statement, “You only have one chance to make a first impression.” This is an especially important concept as you aim to decrease customer churn. One of the fastest ways to turn off a new customer is by providing a less than exceptional first impression. You must deliver a positive experience at four important initial touch points.

  • Online first impressions. Set up your online presence, website, and social media profiles to wow audiences. Provide engaging and useful content and explainer videos that educate and entertain digital audiences.  
  • Calling first impressions. When people call your business for the first time, make sure they have a great customer calling experience. Use hold messaging that helps them find what they need, and set up auto attendant responses that quickly direct their calls.
  • In-store first impressions. When customers or clients walk into your store, you want them to be impressed. Set up your show room, waiting areas, and lobby to serve your guests and provide a great experience rather that just show off your products and provide a seating area.
  • Staff first impressions. Train your staff to provide exceptional customer service. The way your staff interacts with a customer during their first visit could be the factor that creates a lifetime customer or a one-time visitor.

3. Provide loyalty incentives.

To keep customers around, give them a reason to stay with your business. Offer loyalty and reward systems that prompt customers and clients to revisit your business instead of going to a competitor. You could set up:

  • Points rewards systems
  • VIP Clubs
  • Birthday and anniversary promotions
  • Loyalty punch cards or apps

4. Offer long-term contracts or discounts.

Another incentive that gets customers to stick with your business is a long-term contract. For a long-term contract to work, it must benefit both the customer and the business. The customers must receive some sort of discount or reward as a trade-off for committing to remain with a business over a certain period of time.

5. Stay in touch with previous customers and clients.

To get customers to return to your business, make sure they don’t forget about you. Set up a system that allows your brand to remain in the top-of-mind of customers. Utilize the following communication tools and methods to stay in touch with your previous customers.

  • Email newsletter
  • Mailers and reminder post cards
  • Social media posts
  • In-store events

Want more ideas about where to seed marketing messages? Check out this list of 41 marketing channels you should be using.

6. Make it impossible for customers to go somewhere else.

You can ensure that customers and clients will continue to choose you and decrease your customer churn by creating products or services that people can’t get anywhere else. Provide what your competitors can’t by developing your own intellectual property, custom program, or special services.

7. Ask customers for feedback.

If your business is struggling with a high rate of customer churn, the best way to find out what it causing the problem is to come right out and ask. Reach out to customers who are no longer doing business with you and ask them for feedback about their experience. Scour online customer reviews, and consider offering incentives such as coupons or discounts to encourage past customers to offer feedback.

8. Reflect, respond, and resolve.

When you collect feedback or discover problems that are driving customers away, make it a priority to fix the issues. Reflect on what you could do better. Respond and reach out to customers who may have had bad experiences and try to resolve the situations that caused them to leave.

9. Provide exceptional customer experiences.

Of course, the best way to lower customer churn rates will always be a basic strategy -- provide exceptional experiences that drive customers to come back. Offer great experiences at every touch point to create lasting relationships with your shoppers, customers, and clients.

Learn how to provide the high-end touch points and experiences that keep customers coming back for more in our new ebook.

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