How to Improve Customer Churn

Customer churn, as we reviewed in a post last week, is an important metric to watch. As marketers, it is in our power to improve customer churn, to keep more customers engaged and satisfied so that we don’t have to spend so much time and effort recruiting new customers.

To address customer churn, we first must understand the different things that can go wrong. Here is a list of several common reasons why your churn rate might be higher than normal:

  1. Your product does not meet their needs or solve their problem
     
  2. They had a bad shopping, sales, or service experience
     
  3. Your competitor poaches them with a special offer

The first step in fixing your churn rate problem is figuring out which of these factors is causing them to leave in the first place. It may be one or more of these reasons, or it may be something else entirely. Until you know what it is, there is little you can do to fix it.

Surveys and focus groups are the best way to diagnose the problem. You can look at data and analytics at your disposal and make educated guesses based on what you see in the marketplace, but nothing is as effective as going straight to the source.

Your frontline staff can also help here, since they are the ones closest to your customers. They might be able to share the things they hear from people who don’t become regular customers.

Now, let’s get to the answer. Below are several things you can do to improve customer churn for each of the potential issues mentioned above.

Your product does not meet their needs or solve their problem:

  1. Iterate – talk to customers and adjust your offering according to their needs
     
  2. Make sure you are targeting the right customers with your marketing
     
  3. Make sure you are not lying in your marketing copy, adjust the language and highlight the correct benefits

They had a bad shopping, sales, or service experience:

  1. Rethink service – processes, people, and technology
     
  2. Put customer relationships first and foremost in any new strategy
     
  3. Try a softer sales approach and a more hands-on, educational strategy

Your competitor poaches them with a special offer:

  1. Use marketing to highlight your unique value proposition to make it clearer why your price is what it is
     
  2. Offer discounts for loyal customers
     
  3. Continue to market to existing customers to make sure they feel the love