Every expert marketer knows that retaining an existing customer is more profitable than acquiring a new one. The additional costs behind marketing campaigns, the onboarding process, and the extra resources consumed can take a toll on a business’ budget. The same principle applies to most business transactions. Just like retaining existing employees is more cost-beneficial than hiring new ones. Moreover, every business should have a strategy to retain existing clients at all costs, even if they are expanding and acquiring new clients rapidly. Firstly, it passes across a clear message to the client that the company actually values its business. More importantly, it adds to the profit.
Customer Churn and Ways to Prevent It
Customer churn is a term for businesses losing their clients. A high churn customer rate means that a business is on its way out. Every business has to keep a close eye on its customer churn rate, especially if it’s a big corporate giant, in order to predict costs and plan a budget. It is also known as customer attrition. Customer churn rate is a piece of data. Just like any other piece of data, it can help managers make more informed decisions. The churn rate has to be actively monitored to ensure that the business stays afloat. Moreover, if there is a high churn rate, businesses can conduct interviews and surveys to identify the weak element that’s driving clients away. If used productively, customer churn rate can help a business expand at a rapid rate. Moreover, the customer churn rate determines the kind of customer retention strategy a business applies. For instance, many niche markets don’t have either high demand or supply. For companies that deal in those markets, customer retention becomes more important than customer acquisition. The potential leads are already easily identifiable and very few, to begin with. Thus, brands focus on reducing the churn rate to outmaneuver the competition. Whoever holds on to their clients the longest survives in such competitive markets. Thus, it’s safe to say that customer churn rate is a very important aspect of any business. So, to help your business stay afloat even in extraordinarily trying times, here are a few strategies to decrease it:
1: Prioritize Your Clients
It’s important to keep an eye on the numbers of your clients as well. Keep yourself informed on which client is about to be bankrupt and whose business is booming. Make your marketing decisions accordingly. Prioritize clients that are likely to do business with you again. Don’t allocate more resources than you have to clients that might be going out of business. However, if a client is considering the services of a competitor, it’s important to make efforts to retain them. Apart from the numbers, the reputation of a business is also of value in the market. It’s something that can determine whether investors get interested in that particular business or not. If one client is snatched, the chances are that more can potentially be lured away. Offer exciting discounts and incentives to your best customers/clients. That way, you will be able to build a loyal customer base that will stick with you through thick and thin. However, ensure that you don’t pamper them so much that it creates an imbalance in your customer retention approach in general. In other words, playing favorites is only acceptable up to a limit.
2: Real-time Customer Churn Analysis
If there is churn, it has to be analyzed. Businesses have to be quick to identify any mistake and eliminate it as soon as possible. From Samsung rolling back its Android 11 due to bugs to Microsoft discontinuing Internet Explorer, brands take corrective measures quite often. In fact, it’s a good sign that a brand or business can recognize its mistake and act on it. Real-time customer churn analysis often helps in identifying those mistakes and figuring out solutions to correct them. That’s why a lot of companies tend to have a R&D (Research and Development) department with good funding. Such analyses would involve behavioral analyticssoftware like WatchThemLive and data from visitor tracking software. But this is just the tip of the iceberg.
3: Guerilla Customer Retention Strategies
There are gestures you can make that will increase the goodwill of your business in the market. If you please a client, you can convince them to give you their whole business. In Scranton, a paper company accidentally sends out five coupons to their biggest client, which would result in a massive financial setback. However, the client decides to give them their whole business. Of course, this is a fictional scenario borrowed from the popular American TV Series, “The Office”. However, such instances are pretty common in the business world. Any business can make it big if they keep their existing customers happy. That way, the churn rate doesn’t increase and a crazy witch hunt for new clients doesn’t have to hamper a business’ day-to-day operations.
4: Inverse the Ratio
In some cases, the customer acquisition rate can be greater than the customer churn rate. It might be an unorthodox suggestion. However, in certain cases, it can work. Especially if the market is quite new, this strategy becomes all the more feasible. This is where businesses get to be creative with their customer acquisition strategies. One can go for guerilla marketing tactics as well for large untapped markets. Increase your marketing efforts as much as you can and make your business known. From tapping a big influencer marketplace like Ainfluencerto organizing digital events, look into everything to acquire as many new clients as possible.
Conclusion
With an emphasis on keeping one’s best customers happy and having a reliable customer retention strategy in place, it’s quite easy to maintain business relationships. After all, human beings avoid change. It’s far easier to do business with an old client whom you know inside out than it is to please a newly acquired client.