Fighting Customer Churn

“Even if it’s just 1 or 2 percent churn, it could be devastating to a company”. – Larry Ponemon

Customers now have become smarter and more aware of with whom and when they spend their money. They seem to be holding on to their purse strings a lot more tighter than ever before, making it increasingly hard for companies to gain new customers and to hold on to the ones they have. Research has shown that it takes approximately 56 days and about $8500 to replace a lost customer – those are whopping figures and over a year, this could translate to some serious losses and severe damage to a company. This makes fighting customer churn, an essential part of any company – around 58% business leaders agree that retaining customers is vital for the very survival of a company and agree that customer churn is also one of the biggest challenges – to the point of being a threat – for any company.

There is no doubt that top class customer combined with the experience of a company are the key reasons for customers to stay. There is more than enough evidence to show that those companies that endeavour to differentiate themselves through customer service are the ones that are poised to grow and remain successful. Fighting customer churn is not easy since churn arises because of many different factors that may or may not emanate from the company. Some of the top reasons for customer churn are poor customer service, bad quality products, better and more efficient offerings from competitors, and others. Companies need to come up with innovative ways of fighting customer churn as this factor could determine how big a business would become. If customer churn is too fast, a company would have to shut its operations – no customers means no business. Fighting and reducing customer churn is imperative to survival and every company is susceptible to it. It would be wise for a company to invest time and effort into providing top class service and products, incentives, and come up with other strategies that would make customers ‘stick’. From whichever angle a company views its success – there is no doubt that, top class customer service is what will make the difference and allow it to stand out from the sea of companies.

Some companies believe that for fighting customer churn, they need to better and increase their customer acquisition strategies. While this may be true for building a customer base, it is not the right strategy for growth, profitability, and sustainability. As mentioned at the start, customer acquisition is a very costly business and these costs are on the increase with each passing year. It is a double whammy for companies – on the one hand they are fighting customer churn costs and on the other spending huge amounts to acquire new customers to make up for the lost customers. If the churn rate or the rate of acquiring customers were high, both would not allow a company to reach its maximum profitability level. The cost of acquiring customers is dramatically higher than the cost of retaining a customer, and by the time a customer becomes profitable, the company has already lost precious time and dollars.

It seems like common sense that companies would do whatever they can to retain more customers than they lose. With very high and fast rate of customer churn, a company would need to get more out of existing customers, while spending money on acquiring new ones. This too would lead to an imbalance – frustrating the existing customers enough to leave. It is not hard to see why fighting customer churn is critical to any company and how important it is to grow the customer base but with an eye on profitability. Companies must acquire new customers at a consistent pace and these costs should get paid through the recurring business of current customers. If the growth is too rapid, then the acquisition costs could bring down profitability if the earnings through current customers are not at par. It becomes necessary for a company to either lower the average cost of acquiring a customer, or lowering the cost of service it provides or doing both, in conjunction with fighting customer churn with all their best efforts.

Customers are the lifeline of any business – their business is what enables companies to succeed and make money. Customer churn erodes the bottom line and makes it increasingly harder for a company to make and sustain profits. Every company wants to grow without limits but that will not happen if a company simply relies on acquiring many new customers in the year but not getting revenue from existing customers to match its customer churn. Lowering the percentage of customer churn, would allow a company to strike a balance between growth and increasing business from existing customers.


The bad news however, is that, customer churn is a reality and despite best efforts every company has to deal with it. Most of the time companies do not even they are about to lose a customer until it actually happens, and most often customers never give a reason before they leave. Customer churn coupled with no idea of what a company did wrong proves to be extremely challenging and frustrating for companies. Companies would be well advised to continually strive to learn more about their customers, understand their needs and expectations, and give them the best of service and products at all times. In addition, when all is going well, a company must focus on driving growth at that time, such that in the event of churn, they would have already made up for the loss.

Fighting customer churn is a challenge but it is not impossible for companies to apply the brakes on it. One of the best ways to counter this challenge is by establishing connections and building trust immediately when a company acquires a new customer. The new customers must perceive trust and dependability at the outset of the relationship, and must be clear about the offerings of the company. Openness and honesty are vital to the sustenance of any customer-company relationship, and these begin with the company before they expect customers to divulge personal information or provide open and honest feedback. In addition, a company must live up to all the promises it makes when trying to attract customers. Failure to deliver on promises is a sure shot way to customer churn. Customers expect that their association with a company would help resolve their problems and make their life easier – a company that can do these things successfully is more likely to hold on to its customers for longer. The service representatives must be empowered enough to make spot decisions to help customers and everyone in the company must understand their role in making customer service a success.

One of the best methods of fighting customer churn is to make customers feel valued and important. A company must consistently ask for their feedback and use their insights to drive training for its employees, such that there is some semblance between what customers expect and the capability of the employees in meeting those expectations. The more a company understands its customers, the better equipped it would be to provide customized products and personalized service – leading to customers feeling cared and important.

While a company may put its best resources and efforts into fighting customer churn, the truth is that customers have an ephemeral life span with any company. They would leave for some reason and the only way to combat that is to reduce the number of such cases and focus on gaining the maximum value from existing customers, while acquiring new ones. Losing customers is never easy for any company – however, being prepared and proactive to combat its effects is what would make a company successful.

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