Why is churn so important?
What is Churn?
Churn is the percentage of customers that have stopped using a company’s product or service in a set time frame. Typically, churn rate is measured by companies on a monthly, quarterly, or yearly basis, depending on the industry or services being offered.
What is Negative Churn?
Net negative churn refers to when your expansion revenue from existing customers is more than the revenue lost from existing customers. Improving customer retention and in-turn reducing churn is one thing, but going beyond that and achieving negative churn is the most ideal scenario.
Churn informs you of where your product or service falls short
Forming a solid understanding of your customer churn rate will help show how you can improve your product or service.
Generally, B2B companies with a high rate of customer churn have a large number of dissatisfied customers whose pain points have not been properly addressed. It points towards the problems with the product or service, customer success management (CSM), sales, or other factors that impede customer adoption. Therefore, every organization should aim to minimize its customer churn rate. The closer you can get to 0% or below, the better.
Churn can’t always be controlled
Regardless of how great your product or service is, you simply can’t satisfy every single customer. Sadly, some customers will never be a good fit for your product. Many customers will only require your product or service to fulfill a short-term need, and some won’t fully understand their goals or aspirations, so working with them can be difficult. But, sometimes you have to lose a bad-fitting customer to realize what an ideal customer is.
So, what can your enterprise do to control its churn and achieve negative churn?
Develop an effective loyalty program
Creating a sense of customer loyalty is important
Creating an emotional connection with a customer is an excellent way to evoke loyalty and aid your retention rate. After all, 80% of your business will come from just 20% of your customers. One of the most effective ways to do this is with an innovative loyalty program.
Benefits of a loyalty program
80% of customers are more loyal to brands that offer rewards programs. A customer who signs up to your loyalty program is also 47% more likely to buy from you again.
A loyalty program will ensure you retain your customers and reduce customer churn; research conducted by Frederick Reichheld, the inventor of the net promoter score, shows that increasing customer retention rates by just 5% increases profits by 25% to 95%.
Be proactive in engaging your customers
Adopting a customer-centric ethos across your organization not only ensures that departments align, but also helps move towards negative churn.
Nurturing your customer’s ambitions and working with them closely to achieve their goals is the best way for customers to achieve the best ROI with you. For your company to add the best value to your customers, it’s crucial to proactively improve your brand value and communicate this with customers. When you take a proactive approach, you can act before circumstances change.
Identify growth opportunities for your customers
To achieve negative churn, you need to go above and beyond. Simply providing the product, providing support, and periodically checking in with customers isn’t enough. Consistently identifying growth opportunities for your customers is a fantastic way to show that you are committed to their success — allowing them to feel supported and get the best value out of your product or service.
Get genuine feedback from customers; and learn from it
Complaints are just the tip of an iceberg; they indicate that a bigger part of the problem is hidden from view. Even when you get constructive complaints, only an average of 1 in 25 unhappy customers will complain directly to you — the rest won’t voice their concerns, their pain points will go unaddressed, and they will be at higher risk of churning.
Customer feedback is a window on the factors that cause churn
Keep in mind that if you are not proactive in identifying and solving your customer’s problems, they’ll find a solution elsewhere. Refine your strategy in obtaining honest feedback from customers by actively promoting opportunities for them to do so. Schedule meetings to discuss their concerns and incentivize reviews with rewards; customers need to feel that their opinion matters and is valued.
Utilize website visitor identification software
Website visitor identification software, such as Web Insights, serves as an excellent tool for customer success to leverage in achieving negative churn. This software provides total visibility on your website visitors’ activity, including where they have come from, what pages they have viewed, and how long for all in real-time. It can also identify existing contacts in the CRM alongside their activity, allowing you to keep track of your high-value accounts’ movements.
These data-informed insights will help you achieve negative churn by outlining:
- Where a prospect or customer is on their journey, aiding a high adoption approach by enabling real-time, personalized communications.
- Opportunities for resource expansion, cross-selling, and other forms of upselling, allowing you to identify customer needs with ease.
- Automated prompts on which pages they have visited, and when they viewed them, you can more effectively spot the customers at risk of churning.
High-level automation is incredibly effective in uncovering new business whilst being an excellent tool to nurture relationships with customers. With these insights, your customer success team will have everything they need to provide the best service for your customers — allowing you to improve your retention rates, achieve negative churn, and maintain it.