Did you know that retaining customers can help you grow your business in a more sustainable fashion than regularly onboarding new customers? Acquiring and onboarding new customers can be costly, so fostering relationships with current customers can help you grow your revenue.
That’s why it is so important to pay close attention to your customer churn rate, or the percent of customers that drop off in a set amount of time.
In this post, we’re going to discuss everything you need to know about customer churn. We are going to break down the concept and discuss why it is so important. We will then discuss 15 ways to stop customer churn in order to help you retain customers and save money.
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Customer churn refers to the percentage of customers who stop buying from your business within a set time frame. This concept is also known as “customer attrition.”
Customer churn is relevant in situations where you’re offering a subscription to a service or fostering long-term relationships with a client. Customer churn is commonly associated with SaaS companies but it could be applied to any company that offers subscriptions or subscription-like services.
For example, as a wholesaler, your clients are retailers who need to restock their inventories as they sell out or new items become available. Although your customers don’t necessarily subscribe to your services, they do place orders on a relatively regular basis.
To calculate your customer churn, choose a period of time, determine how many customers you started with at the start of the time, and determine how many of those customers left during that period. Divide the number of customers who left by the number of customers you started with. Convert it to a percentage by multiplying it by 100.
There are many reasons why costumes churn. Some of these reasons are directly related to your services, and others just happen naturally.
Let’s take a look at 6 reasons why customers churn.
The biggest reason for customer churn is that customers feel like you don’t care about them. For large B2B transactions, many buyers want to feel like more than just a number or an order.
Failing to make your customers feel valued and cherished can push them to find another business to purchase from.
Dissatisfaction with your product or service will surely send your customers searching for an alternative. If your business isn’t getting the job done, your churn rate will rise.
Some customer churn is caused by customers leaving the market. This simply means that a customer may not need your service or comparable alternatives anymore.
Although many believe that poaching is distasteful or unethical, some businesses acquire clients by poaching other service provider’s customers. When competitors swoop in and poach your customers, that also contributes to customer churn.
Connections are everything when you’re running a business. Sometimes, your clients’ connections may be able to offer the same service as you, and a “friends and family” discount may make the competing offer more attractive.
You may have clients leave to take advantage of the friends and family discounts from other service providers.
One reason that customers churn is because of death. Obviously, a customer can no longer purchase from you if they have passed away.
This applies more so to businesses that are working with consumers or small businesses. Even if your point of contact at a company passes away, you may be able to retain the company’s business.
As you can see, some instances of customer churn are out of your control. However, the majority of the customer churn comes down to your inability to give your customers the quality of service they need.
It is important to keep tabs on your customer churn rate because an excessive loss of customers will cost you money.
Onboarding new customers can be quite costly since they require an investment of precious time and resources. Maintaining customers, on the other hand, is much less costly, which means reducing your customer churn rate can help you grow your company more quickly.
As you can see, it is very important to keep your customer churn at bay. Reducing the unnecessary loss of business will help you to succeed.
Let’s take a look at 15 things that you can do to reduce customer churn for your business.
Knowing how your customers feel about your business’s service is essential to making sure their needs are met. Make it easy for your customers to let you know how you’re doing. Send out surveys and questionnaires.
To make it more personal, call your customers and ask how things are going. If you are a wholesaler, for example, call after every order shipment and make sure that it everything was delivered as expected.
Make sure that your customers always feel heard, and they see that their feelings and opinions are valued. Be receptive of negative feedback because that will help you see where you’re the weakest.
What’s the point of getting feedback from your customers if you’re not going to put it into action?
If your customers express even the slightest discontentment with your products or service, do what you can to improve it. Strive to improve your customer’s all-around experience.
This goes beyond the items listed on their invoice. Make every interaction with your client a pleasant one. Doing so will make them feel valued and cared for.
For example, train your customer service and sales team to be eager to help however they can. Eliminate any behavior that indicates that a member of your team is bored or annoyed because this will make your customers feel like a burden.
Another example is improving the quality of any in-person experience. Let’s say you have a showroom or an office that customers visit in-person. Make sure this location is clean and comfortable. Offering complimentary snacks, water, or coffee can also help elevate the experience.
No matter what you do, make sure that your customers feel good about doing business with you.
As a business owner or operator, you likely understand that businesses have a lot of moving parts. If one thing experiences a hold-up, plans can be derailed and systems can be knocked out of order. You do not want your business to ever be the “hold up” for your customers, especially in avoidable situations.
In order to do that, you need to stay on top of things. Don’t let emails sit in your inbox. Fill orders as they come in. Stay attentive to your customers’ needs.
If there is a “silly mistake” that you find yourself making more than once, put a system in place to avoid it. You may even consider hiring someone who will help you stay on top of the thing that you tend to forget.
Your onboarding process sets the tone of the rest of a customer’s experience with your business. If getting started is even difficult, it may make a new customer think twice about building a professional relationship with you.
Optimize your onboarding process to make it seamless for the customer. Help them move through it quickly without making them feel rushed. Provide the resources that they need to move through the process confidently. Don’t let them get confused or overwhelmed.
Optimizing this process may take a bit of work, but it is important that you put your customer first throughout the process.
In order to keep your customers coming back, you need to stay present and involved. Keep regular contact through social media to start.
You could even have reps that are in charge of maintaining client relationships. This could be the same person that reaches out for surveys, but they could also check in regularly just to stay in contact.
Another way to do this is to use automated email systems to create informational newsletters that are full of resources that will come in handy to your customers. The key to this is making sure that every email is value-packed and not spammy. You can segment your emails so that you’re not spamming existing customers with marketing materials.
A great way to build a long-term professional relationship with your customers is to create a community around your brand. This helps them feel less like a transaction and more like a part of a group.
You can leverage social media to make this happen. For example, create an exclusive group on LinkedIn or Facebook for your customers to join. Promote it as a place to connect with other industry experts.
You can use this group to share special offers and educational information. You can incorporate Q&A threads and live streams. Live chat tools also can help with this because it gives your customers a way to connect. This will provide free value to your clients and help to build a more tight-knit community around your brand.
You’ve likely heard the saying “You’re only as strong as your weakest link.” If you knew you had a weak link, wouldn’t you reinforce and strengthen it?
Identifying the roots of your customer churn will help you see where you can improve and prevent future churn.
For example, if your customers are dropping off because they are dissatisfied with your service, pay attention to their specific complaints and make an effort to remedy those issues.
Signing longer contracts helps you to reduce customer churn because it keeps customers locked in for longer periods of time. With longer contracts, you don’t have to negotiate sales as often.
In order to close these long-term deals, offer special pricing or promotions for longer contracts. For example, if you offer a one-month supply of a product for $100, offer a six-month supply for $500 or a year supply for $900.
These kinds of deals will motivate customers to stick with you for a longer time period.
Some B2B businesses find success in offering one main product or service with additional supportive services. This allows you to find the sweet spot between a niched-down authority and an end-to-end service provider.
Determine what sort of products or services support your main offer and build from there. An example of this would be an auto repair shop that also offers car cleaning services. The staff is primarily trained to fix the cars but giving customers the ability to opt for a car wash after their service makes your business a one-stop-shop.
The idea here is to provide as much convenience as possible for your customers. Additionally, you can offer deals for bundling services that are also attractive to customers.
Regularly remind your current customers of the value of your service. Consider generating individualized reports to showcase your customers’ wins with your company. Creating and sending these out routinely will help your customers associate your brand with success.
Pull any analytics and insights you have access to in order to create these reports. If you don’t have access to any analytics, incorporate quantitative results questions in your customer surveys.
The key here is to demonstrate how your company has helped each customer make more money, save time, or achieve some other form of measurable success. Use the metrics that matter most to your customers in order for it to better resonate with them.
Part of reducing customer churn is working with the right audience from the start. If you’re not laser focused on who you serve, you may end up closing deals that don’t make sense in the long run. Although you have that one-off win, that is going to transform into a churn.
In order to target the right audience, become very clear on who your service is geared towards and what problem you’re solving. Build a profile of who your ideal client is and list out what pain points they may have.
Use that profile to market your services. When you’re directing your offer towards that specific group, it will be easier to generate qualified leads. Another thing to note here is to be very intentional with the channels that you use for marketing and advertisements.
For example, social media marketing may be cheap, but is that where high-ticket customers are looking for your services? You may find more qualified leads by tapping into your network, attending trade shows, and leveraging your influence in your industry.
Depending on the nature of your business, it may be appropriate to turn down customers that are not a good match. Having a list of referrals that offer similar or parallel services may be beneficial so that you maintain relationships with the prospects in the event that you can help them in the future.
As we mentioned, many customers churn because they feel uncared for or unsupported. Dedicated account managers can help you to provide individualized attention and support for each and every customer. In fact, you can build an entire customer success team that is dedicated to offering this personalized support.
Dedicated account managers can serve as a reliable point of contact and they can build more personal relationships. Of course, providing this kind of support may require hiring additional staff, but this investment can truly elevate your brand. The goal is to make your customers feel supported by providing them with the proper guidance.
We’d also like to point out that when you build a team of account managers, you have to make sure that they are highly trained in customer service and knowledge of your product. They will be the “face” of your brand to the customers they care for, so they need to represent your company well.
Although some may find this solution controversial, there is value in focusing on your best customers. Going the extra mile to keep these customers satisfied with your service can help keep them around for the long run.
Keep in mind that “best” doesn’t have to mean the ones that are making you the most money. This could mean the customers who have been loyal to your company for many years and you can rely on to place regular orders like clockwork. “Best” could mean the customers that refer you often and have brought a ton of business to you. It could even mean that a particular customer has been easy to work with and your team values their interactions.
Of course, you do not want to put all of your eggs in one basket, and you should definitely care for all of your customers. However, it is worth going the extra mile for a client who has been great for your business in the past.
Offer your customers incentives that they will not be able to turn down. Earlier, we mentioned offering discounts for long-term commitments, and the same concept can be applied to large orders.
If you sell a physical product, it may be wise to offer incentives like free shipping, expedited delivery, and other offers that will provide real value for your customers.
These incentives may require a bit of an investment from you, but when done right, they could pay off exponentially. You can’t go wrong with rewarding customer loyalty.
Poor customer service is a major turn-off for many customers. Although you may be selling to another business entity, there is a human deciding whether or not to purchase from you. You need to recognize the human emotions that are worth fostering and tapping into.
One way to show how much you appreciate your customers is to go above and beyond the call of duty. You might bill them for one service, but it is worth putting in extra effort to ensure their success even if it means offering some complimentary support.
This tactic could be something as simple as sending a “Thank You” note any time they place an order, or it could be as grand as offering bonuses, rewards, and discounts as a token of appreciation. Another example would be throwing in some free products or services that could provide a more well-rounded experience.
Even the smallest gestures will help to show your customers that you value them and that you truly care about their success.
Reducing your customer churn rate will help you keep your profit margins up and help you continue to grow your business.
The biggest takeaways here are to prioritize your customers’ needs and listen to their feedback. Continuously work to improve your internal processes to enhance the customer experience. Recognize that optimizing process is an ongoing task.
Many of the tips we’ve mentioned above can be easily applied when selling on B2B eCommerce marketplace, such as Alibaba.com. Selling on this sort of platform will help you streamline onboarding and stay in touch with your customers. It will also help you continue to generate qualified leads.
Explore more about Alibaba.com to start selling to millions of customers from around the world.