Do You Know What Your Customer Churn Rate Is?Posted on 11/18/2015 in Customer Service & Support
Customer churn is the loss of customers. Also known as customer attrition, customer defection, or customer turnover – they all mean the same thing to your bottom line.
Companies have always paid great emphasis on customer acquisition, but are more recently realizing that customer retention should have equal or higher importance in the overall business strategy for customer relationship management.
Measuring your customer churn rate is something you should be doing. Your customer churn rate is the percentage of customers who leave you in any given time period. Various methods are used to calculate customer churn rates. Some methods involve revenue, but the simplest churn rate calculation method measures the number of customers compared to customers lost in a given period. A simple example is 100 existing customers at the beginning of the month, 3 customers left during the month which equates to a 3% churn rate.
There is plenty of research to support how critically important it is for every company to thoroughly understand why your customers decide to leave you. Superior customer retention strategies will involve watching out for which customers may be at risk of defection and what steps should be taken to reduce or eliminate that risk.
Identify reasons why customers leave so you can change your service strategy in order to:
1) Identify customers who are at risk before they leave
2) Prevent customers from departing by implementing changes
3) Implement service recovery strategies
4) And, ultimately “wow” your customers and reduce customer churn
On the other side of the customer churn story is the customer retention story. What makes your customers stick to you? Analyzing your best customer success stories, why the client loves you and what makes the relationship so successful for both parties. Another piece of the customer retention story is the service recovery paradox. How you handle a problem or a mistake made with a customer can turn the customer into a huge fan. In other words a service failure can be turned into a customer retention story when handled correctly.