Few industries nowadays do not offer a competitive market where it is difficult to retain consumers. Customers' loyalty to companies depends much more on who can offer a solution to their problem and on who can create a memorable experience. If you can't do that, you face what we refer to in the trade as a high churn rate.
Churn is a technical term that means customer departure. It indicates the number of regular customers who leave your business over a certain period, giving you an indication of how good you are at retaining your customers.
Regardless of the size of your business or the industry you operate in, it is relevant to be aware of possible churns and to quantify your customer loyalty. This way, you have the opportunity to prevent and avoid potential churns - they are costly on the bottom line.
Churns are impossible to avoid, but if you understand why customers leave, you have the opportunity to focus on how to retain them. To help you on your way, we've compiled five common reasons why your regular customers turn into churns:
To work with churns as a KPI, you can calculate your churn rate, which indicates the percentage of your customers who replace you as a supplier of a product or service in a given period. You can then compare the percentage with other periods to assess whether any actions have had an impact. Your churn rate will of course depend on the industry you operate in - for example, a general churn rate is higher in the clothing industry than in the banking sector, as people rarely change banks.
Number of customers lost over a given period / the total number of customers at the start of the period*100
For example, if you have 1,000 paying customers and 100 of those customers leave you during the period, the formula looks like this:
100 / 1.000*100 = 10%.
You will thus have a churn rate of 10%.
As we've been through, it's most beneficial to have a low churn rate, as it indicates that you're good at retaining your customers. If you can already see that a number of customers are leaving you, we've put together seven tips that you can use to avoid churn:
It is, as I said, virtually impossible to avoid churns. However, if you can identify possible churns, you have the opportunity to reduce the number and still keep your churn rate low. If you're curious to learn more about how you can identify potential churns and avoid repeat customers leaving your business, don't hesitate to get in touch.
Webamp is a digital marketing agency - both a SEO agency, PPC agency and a social media marketing agency. Not only do we know how to work with customer loyalty and avoid churn - we are experts in targeting both through Google Advertising, Facebook Advertising, SEO and SoMe marketing.
Whether you're a generalist or a marketing specialist, our specialists have put together some great advice for you on our blog.
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