Customer Churn is most likely

“To lose a customer and replace it is very expensive. It’s critical that we have low churn…The investment we make in having a live person pays for itself in the long term.” – John Nee

Customer Churn is possibly one of the worst aspects of any business. It can, if left unchecked, completely destroy a company irrespective of how long the company may have been in existence. It is critical therefore, for companies to understand when is customer churn most likely to happen, what causes it and what they can do to restrain it. In today’s competitive environment, gaining customers is tougher than ever and it would make sense to hold on to the ones a company already has. The problem seems to be that companies often leave the responsibility of holding on to customers – both satisfied and irate – to their customer service agents. Most often, this does not work unless every other team in the company would be collaborating with the service teams to provide top class service. Customers, who call in to convey their dissatisfaction and let the company know that they may leave, must be managed swiftly and differently. However, companies must not wait until customers reach the stage of possible churn.

Customer churn is the complete opposite of growth and prosperity of a company, and it would seem strange then that companies still struggle to prevent it. Offering huge discounts or fabulous incentives to stay, may keep a customer for a short time, but to gain their loyalty, a company must know exactly what made them want to leave and what could be done to keep them with the company indefinitely. The worst part of customer churn is that a company would need to remake all the effort and invest more resources to replace the lost customer – which they could have otherwise used to gain a fresh customer. In addition, losing one customer is usually not just about losing the revenue from the one – a company also faces the risk of losing other customers leaving based on comments from the irate one, it faces the real threat of not being able to attract more customers. There is also the possibility of the angry customer posting negative comments about it on highly visible platforms, letting competitors know the weaknesses of the company, and maybe even helping the competition to wreak havoc on the company.

There is no doubt that customer churn is bad and detrimental to any company, but what is worse is when a company is unable to tell when customer churn is most likely and why customers would want to go. It is critical for any company to know both these aspects, such that it can prevent them from happening in the future, and the best way to do so would be to ask. Agreed – angry customers may not be in the mood to discuss anything with a company they decide to leave, but it makes sense for a company to know when customer churn is most likely. In all cases of churn, it is not necessary that it may be the company’s fault. Something could have changed with the customer – they could have gone out of business, changed their location, altered their business, got acquired by a bigger company, and several other such reasons. Of course, it is possible that if your company would have pleased the customer consistently, they could take your company with them even if, for example, it was acquired. This would be an improved opportunity for your company.

If the reasons for customer churn were financial, the company would need to make a decision on which vendors / service providers they would keep and which they would let go. A company that would have provided top class service would certainly be on the list of top vendors that the company would retain. Customer churn is most likely for any company, actually, it is inevitable – however, prevention is possible and it all depends on how a company treats its customers even in the worst of situations. While companies may take the fact of customer churn for granted, the truth is that churn rates can be a lot lower – it just requires a change of mind-set and a willingness on the part of a company to do things differently.

The other reason for when customer churn is most likely, and possibly the more common one is that customers did not receive the outcome they expected from the association, and neither did they get the kind of experience they deserved. Customers that do not gain the outcome they expected, are most likely to churn – sooner than a company would think. The customers that do receive their desired outcome are more likely to stay, increase business, and act as brand advocates for the company. It must be the endeavour of every company to ensure that their customers get whatever they may be trying to achieve and accomplish, and in doing so a company shows its true expertise and value for the customers. Customers do not have the time or the patience to wait in order to experience the abilities of a company – if a company seems unable to resolve their problems, it will cease to be an option for customers. Failure to deliver is enough reason for customer churn, and for them never returning. In addition, companies must ask themselves whether their products and or services would help customers achieve what they expect – if the answer is yes, then a company could have the assurance that customers would stay. If not, then it is possibly because the products may be missing a crucial element or functionality, or the company did a poor job introducing the products, or the setup of the services offered was less than satisfactory, and many other such reasons.

The fact is that customers make up their mind about a company in the initial stages of the association, and failure to engage them at the sales and marketing stage would mean no association at all. However, if a company were able to convince customers of the efficacy of its offerings at the initial stages, they would engage with, but would leave if the company were unable to deliver on the promises. Promising and not delivering is when customer churn is most likely – and usually sooner than a company would expect.

Customers engage in business with a company to achieve certain business targets and goals. They do so because a company may have presented a compelling case for the association. However, if the emails and other forms of communication lack punch and do not have a strong call to action, customers would not feel the need to engage. A company and its products must deliver on achieving the outcomes of the customer consistently. Most often customers know what they want to achieve, but do not know how to do so or solve the problems that assail their business. Customers would stay with a company that could act as a guide and able partner helping them do what they would be unable to on their own, and customer churn would take place if a company prove inefficient in helping them in the way customers expect. The challenge for companies lies in the fact that the needs, goals, and expectation of experiences differs with each individual customer – and it does take consistent focus, effort, customer-centricity to match pace with the differing needs of customers.

Customer churn, as mentioned, is an inevitable fact of any business. However, what is also true is that gaining a new customers costs between 5 to 15 times more, and if a company were to incur such expenses each time to replace a lost customer, it would not be able to sustain itself for too long. Instead, it would be prudent for a company to predict possible reasons for customer churn and respond efficiently and swiftly. How high are customer churn rates for your company?


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