Retaining a loyal customer base can be among the most challenging things for new and flourishing businesses, keeping them on the edge as they assess and try to fix the reasons clients leave. Since technology has made it possible for anyone to take their business online, it has become even more challenging to stay ahead of others in the same field.
Essentially, people are a mere click away from leaving your online retail store and moving on to the next. Invariably, stopping customer churn is vital for any company, especially those that see a drastic drop in the number of people leaving their products or services for others.
The following points elaborate on the subject for new business owners to understand and take a step in the right direction.
What is customer churn rate?
Churn rate can be described as the phenomenon wherein existing users or customers leave a particular product or service for another. You can calculate it in several ways, such as by assessing the total number of people leaving over a specific period or measuring the recurring lost business value. In short, customers stop doing business with your company.
Customer attrition matters because the pivotal metric has more profound implications for your business’s long and short-term performance. It underlines the importance of customer satisfaction in various fields, helping you find the best ways to ensure it stays on the highest possible level.
Also, since acquiring new buyers is significantly more expensive than retaining the existing ones, it is a highly cost-effective technique.
Reports show that an average business loses about ten to twenty-five percent of its customers each year, making it essential for companies to keep targeting new customers to replace the lost ones from the loyal base.
But if you cannot identify the people leaving or understand why, how will you make the necessary changes to retain them? While conducting an in-depth analysis of the issue is vital, you can refer to the following points containing some common reasons customers leave a business.
- Poor support service is among the leading causes of a lost customer base for many businesses.
- Ineffective onboarding during sign-up can confuse new users and drive them to seek more convenient options.
- Inaccurate audience targeting can also be a significant cause, as it can lead to companies approaching those who have no actual use for their specific product.
- Failure to keep up with changing technology and market trends can cause buyers to drop your products for more advanced variants.
- Over-pricing is a significant contributor to high churn rates.
How AI-powered predictive analytics can help?
Sophisticated technology can go a long way in stopping customer churn effectively by providing actionable data based on reliable information. It can identify people at the brink of a churn, helping you reach the root cause and initiate requisite actions to address the issue efficiently.
Ideally, it is best to opt for a platform that automatically engineers new features to gauge which customers are likely to churn and the steps you should take in this regard. Good tools can segment demographic data to help you understand churn rates more clearly by differentiating between those unlikely to leave from those less likely or most likely to churn. Ultimately, it can make it possible for every client to have a likelihood churn rate or score, helping you keep tabs on them individually.