No one wants to lose customers. You work so hard to acquire each and every one. After they sign up for your product or service, you pour your energy into a meeting and attempt to exceed their expectations. So when you get that call or email, it can be financially and emotionally devastating.
In this article, we look at the importance of studying customer churn, how to respond to a customer who wants to cancel, and how to prevent them from taking their business elsewhere.
What is Customer Churn?
Customer churn is the percentage of customers that stopped using your company's product or service during a certain time frame. The churn rate is calculated by dividing the number of customers lost during a specific period by the number of customers you had at the beginning.
Customer Retention is Key for Profitability
A study by the Harvard Business Review states that a five percent reduction in customer defection has the potential to double profits. How could such a small decrease in cancellations result in a doubling of profits? Customers who stay with you make more purchases, take less of your time, and are a great source of referral business.
Top 6 Customer Retention Strategies
So, how do you stop customers from taking their business elsewhere?
Here are some customer retention strategies you can practice to ensure your customers stick with you for the long term– even after customer satisfaction issues.
1. Gather Information: Why Do They Want to Cancel?
When your customer contacts you to cancel their account make sure to ask why they want to end their relationship with your company and request as much information as they’re willing to give. For example, if they had a bad experience with your service, ask them to describe what happened in more detail. Let the customer know the reason you’re asking ahead of time so you can learn from the experience and make sure it doesn’t happen again.
2. Get Creative: What Can You Do to Save This Customer
After listening to your customer’s reasons for leaving, consider what you could do to resolve their concerns. Was the customer disappointed with a product that you could easily replace? Even if the solution isn’t obvious, just ask!
Start by, obviously, apologizing to the customer and reminding them that you value their business, and asking if there’s anything you can do to change their mind. The proposed solution may be something you hadn’t thought of and possibly less costly than losing a customer.
When offering concessions, be aware of the cost of your efforts to save the customer, but also remember another important measure of success: Customer Lifetime Value (CLV). If your CLV dwarfs the cost to save your customer, it is in your favor to do what’s necessary to keep them around.
3. Reduce Future Customer Churn: Determine How to Measure Success
If your customer accepts your offer and decides not to cancel, let them know you want to check in to make sure your product or service is meeting their needs. Keep the frequency at a reasonable rate to respect their time.
A brief, well-timed check-in takes only a minute or two of their time and shows customers that you really value their business.
So let’s say you use these efforts and retain your customer. That’s great — but don’t let this experience pass you by. Take proactive steps to limit customer cancellations in the future.
4. Measure What Matters: Regularly Review Customer Data
Purchase history, inbound call volume, chat logs, website interactions, and new customer referrals are all inputs that could be critical to your business. Evaluate the data you collect to determine the right metrics and create a dashboard that you can quickly review on a regular basis.
Look for signs that customers are disengaging or dissatisfied via drop-off in purchase history or site visits or an increase in customer service calls. Determine a proactive plan to reach out to customers who meet specific warning signs so you can get ahead of potential cancellations. This proactive data analysis can uncover issues with your service that can lead to customer dissatisfaction. s. Shore up this area to increase your customer retention and lifetime value.
5. Build Loyalty: Reward Your Customers
Customers make more repeat purchases when rewarded for their loyalty. According to the 2016 Bond Loyalty Report, 81% of consumers are more likely to continue doing business with brands that offer loyalty programs.
If creating a loyalty program doesn’t fit your business, create incentives for customers that are easy to manage. Rewards for customers can be as straightforward as receiving a discount after spending over a certain threshold or free two-day shipping.
6. Iterate: Add Customer Value
What’s the best way to support customers in your industry? Is it a constantly evolving product or service that requires new content to guide the customer, or so your customers prefer online chat to other communication channels?
Consider ways to give customers extras that make their relationship with your business more valuable. And don’t be afraid to ask — some of the best ideas can come directly from customers. Surveys are a great way to gather feedback.
Invoiced: Increase Customer Retention & Keep Clients Coming Back
Customer cancellations are an unfortunate side effect of doing business. You can’t eliminate them completely, but with the right strategies and quality tools, you can minimize their occurrence, increase customer retention, and improve your products and services in the process.
If you operate within the B2B space, you know that your accounts receivable processes can make or break your business relationships. That’s why Invoiced built our A/R automation software. Designed from the ground up with the end user in mind, we made everything simple for both you and your customers.
From e-invoicing with multiple payment methods to A/R analytics and simple integrations, everyone has exactly what they need (and none of what they don’t) right at their fingertips. We win when our customers win — and our customers win when they retain their client base!
Learn what our automated accounts receivable software, accounts payable software, and e-invoice business network can do for you.
Schedule a demo or create a free account today!
Don’t just take our word for it. See how iWave and Dexter Solutions improved their customer experience with Invoiced!
