Preventing Customer Churn

“Churn rate is a measure of the number of customers who discontinue a service in a given period of time. A high churn rate suggests that either you’re better at acquiring customers than serving them, or you’re not acquiring the right customers.” –

The definition of customer churn rate clearly shows that a company is consistently failing at serving its customers in the way they expect and deserve. A high customer churn rate means that a company is not doing enough to keep pace with its customers and neither does it have strategies in place for preventing customer churn. Retaining customers is so important to a company because it costs far too much to lose customers – not just money, but valuable time, effort, and market reputation. Which company can afford a loss in any of these aspects?

It would be hard to think that any company believed that preventing customer churn is not important. The impact of losing even one customer is intense – research proves that a company would need to spend 5 times more to gain a new customer than is required to keep an existing one. In addition, by preventing customer churn even by 5%, a company can increase its profits anywhere between 25%-95% – which is a huge chunk of business. This is true of both online and offline business – the wider a company can spread its reach, the more chances it would have of gaining new customers, and reaching out and retaining the existing ones consistently. However, retaining customers entails a lot – it means being there for your customers, and showing them that you care about them and consider them extremely valuable for your company. Constantly losing customers has some serious consequences – ending with oblivion.

While preventing customer churn is critical, some amount of churn is usually normal in any business. Before putting in strategies for preventing customer churn, it is vital for a business to understand the diverse reasons for why customers leave. Most often customers leave when a company fails to live up to its promises, provides sloppy service, inefficiencies in the management of the ‘relationship’, and other such reasons, which would directly stem from a company’s ineptitudes. In addition, there could be times when a customer no longer has use of the offerings of a company, or could be moving to a new location and hence would not be able to continue the association with a company, and other such reasons that would stem from the customer’s end. Whatever the reasons, a company must always be prepared to counter the effects of customer churn, or else

The first three months of a relationship with a customer is usually the most critical – it is during this period that a customer could decide to leave or stay. It is tough for companies today to sustain the attention of customers, given the many ‘distractions’ for customers by way of several competitors, similar offerings, and a sharp increase in the expectations and demands of customers. If a customer stays with a company for at least a year (and longer), they would have the potential to become a loyal brand ambassador, meaning that a company must take good care of such a customer. It is important however, for a company to respect the privacy and space of its customers, connecting with them regularly but without overwhelming them with messages. One of the top ways for preventing customer churn is consistently monitoring each customer relationship. Doing so will ensure that a company can proactively provide for the customer’s needs, remain informed of any potential problems, keep a check on any changes to the customer’s buying behaviour, and other such factors.

In preventing customer churn, a company must be able to put together solutions that would counter several reasons for churn. If a company takes time to understand its customers well, it would be able to identify those who would have a greater likelihood of defecting, and would be able to pay close attention to such customers. It is always prudent to understand the reasons of why the customers would be at a higher risk of leaving, and ensure that strategies are in place for preventing customer churn. The most likely reasons are usually very simple – and easily preventable. Most often, simply by paying attention to such ‘high risk’ customers, a company would be able to prevent churn by as much as 50%.

If a customer may need to leave due to reasons that do not stem from a company, it would safe to assume that the customers are happy with the company. In such cases, a company could either find ways to help the customer to stay, or get them to provide testimonials and referrals that would make it easier for the company to replace the leaving customer. In getting referrals, a company would gain new customers without the effort and expense of promotions or incentives, and the new customers would already enter the ‘relationship’ with some amount of trust and confidence in the company.

Whatever the reasons for customer churn, preventing it is a necessity for any company. We know that top class service is now a priority for any customer, and if a company were able to provide the kind of service expected, it would succeed significantly at preventing customer churn. Each person in the company, and every touch-point for customers, must be equipped at providing high quality service and unfeigned empathy for customers in order to keep customers happy. It is never a good idea for a company to rest on laurels or believe that since it has the experience in handling customer problems, every customer would have similar problems and hence the same solutions can be applied. Customers hate to feel unimportant or ‘one in a crowd’ – they want customized solutions and personalized offerings if a company expects them to stay. For preventing customer churn, a company must ensure that it makes getting help and support extremely easy for customers. Irrespective of the length of the association, and no matter how well a customer may know your company, there would be times when a customer would require assistance. It would be the onus of a company to remain accessible to their customers – it makes customers feel valued and appreciated.

Another great way of preventing customer churn, is by seeking their feedback and using their inputs to improve processes, service, and products. However, it is important to let customers know that your company has used their suggestions – it makes customers feel valued and heard. In any case, building service and products based on customer suggestions is the ideal way since it would make the offerings relevant, useable, useful, and interesting to customers instantly. The more a company can give customers what they want the better a company would get at preventing customer churn. In addition, when customers stay on with a company for long, the amount of trust and faith they have in a company increases, making them loyal and more willing to spread the positive word of mouth to others. For any company, customer recommendations work better and more successfully than any branding, promotional, or marketing efforts.

It is not difficult to understand that the longer a company is able to retain customers, the more valuable and engaged those customers become. Long staying customers become loyal over time – meaning that they would be willing partners in the success of the relationship and their ‘partner company’. They would also be immune to the ‘distractions’ in the market – buying only from the company they are associated with, while encouraging others to associate with the company as well. Preventing customer churn / enhancing customer retention is possibly one of the top areas for any company to focus on, while simultaneously making improvements based on the feedback and inputs of its long-standing customers. Is your company successful at preventing customer churn?


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