Reasons for Customer Churn

“If your customers are made to feel as if they are outsiders, they will eventually find a competitor who makes them feel better about doing business with them.” – Shep Hyken

Anyone who works in customer service and business owners know that customer churn is possibly the biggest downside to their business. No one needs convincing that customer churn could indeed be the start of a company’s downfall. When a company loses even a single customer, it would first need to replace that customer and then go on to expanding the customer base by adding new customers. Imagine the effort and time it would take to do this on a continuous basis. The scarier part of customer churn is that when they leave, not only do they take a chunk of your company’s revenue and give it to a competitor, but also can potentially influence the mind-set of other customers too. Customer churn due to problems could be the start of negative sentiments for your company, especially if the customer decides to share their poor experiences via social media. If the company has too much customer churn, it would most certainly affect employee morale, lead to an erosion of the company’s reputation in the market and make your competitors look good in comparison. That is bound to hurt!

The strange thing is, that despite these extremely detrimental consequences, there are some companies that do not know the reasons for customer churn. Without a clear understanding of these reasons, it would be almost impossible to stop this ‘trend’ and soon a company would have to shut down. Of course, companies must do whatever it takes to prevent customer churn, but in the event that it does happen, they must make every effort to understand the reasons that led to the decision on the part of the customer. Customer churn is a reality for any business despite every effort a company may make – customer needs change, they may no longer have use of the offerings of the company and other reasons. However, companies need to guard against customer churn that arises out of poor service and shoddy treatment of customers. Angry customers could potentially strip a company of its profits, reputation, and even its survival.

Customer churn could take place when the situation a customer may currently be in, changes. The customer could shut shop, may relocate, sell off their business, or bought off by a larger company. Of course, it is possible that despite these situations, a customer could take a company along and make them partners in their new business, the new location or with the new partners in business. However, if a customer has financial problems, they may need to cut down or off certain expenses, and the association with your company could be one of those expenses. Your company would lose a customer for no fault but the fact would remain that you would need to think and act swiftly to not only make up for the loss of revenue from that customer but also add new ones. While the reasons for customer churn could be many, it is possible to avoid it from becoming detrimental to the ‘health’ and survival of your company. The fact is that if as a company, you have done enough to please consistently your customers, they will make sure that you are covered even if they do not need or can afford your offerings any longer. It just requires your company to develop a customer focus and an open outlook, to may be change the way things have been done traditionally.

What we have just spoken about as one of the reasons for customer churn, is an external circumstance and may be something that your company would have had no control over. However, most often among the top reasons for customer churn is the fact that your company messed up – did not provide the kind of service it should have and did not live up to the expectations of the customers. A customer leaving for this reason would definitely hurt your business more than any other reasons for customer churn.

Customers have certain goals, expectations, and needs when they decide to associate with a company. If all these aspects are fulfilled consistently, customer churn does not tend to happen. Customers do not have the time or want to make the effort to look for a new service provider or a business with products that they need – and hence would much rather stay with a company that has whatever they need. If a company manages to provide great service and meet the expectations of customers, customers tend to become loyal and profitable. In addition, they would be extremely willing to spread the word about your company and its offerings. The shortest route and among the top reasons for customer churn is when a company fails to help customers achieve their goals and provide them with what they need to become successful.

In effect, avoiding customer churn is actually in the control of companies. Companies must simply do the job customers expect them to do, solve their problems, and deliver on every promise and expectation. The company’s products must be outstanding, competitively priced, must have updated technology to keep pace with the customer demands, provide personalized customer service and overall be a ‘human’ company. Missing any of these could prove to be the reasons for customer churn – however, the reasons are not exhaustive (only indicative) and there could be many others depending on the customer.

In order to avoid mass customer churn, a company must constantly monitor its own processes and identify any glitches that would keep customers away. It is critical to have a thorough understanding of the customers – each one individually. We know that customer service is highly subjective and how a customer views a company would depend on their particular circumstances – so what could be great for one customer, could be a complete no-no for another. It is therefore completely essential that a company is able to give each customer what they need rather than putting together ‘umbrella’ policies and processes. The only standard must be to provide top class service to all – from the customer’s perspective.

We have said earlier, that making a strong and lasting impression on customers is essential. Right from the time, they search for products or services provided by your company – they should get a feeling of comfort and value. When they do connect with your company, the response they receive would either make them go ahead with the association or continue their ‘search’. What we are saying is that whenever and however a customer may connect, they must have enough reason to stay with a company, especially in the initial stages of the association. The longer they stay, the better they would understand your company and would then be more willing to overlook service lapses or any minor problems. In addition, they would be happy to recommend your company to others. However, at any stage in the ‘relationship’, if they have shoddy experiences and are treated poorly, your company would have customer churn. Not only do such frustrated customers take away their own business, they can potentially influence their friends and associates to follow suit. As negativity around your company spreads, you would lose the chance to ‘convert’ potential customers too.

We are not saying that every customer experience will be top of the line – what we are saying is that every experience must at least let customers know that your company is committed to helping its customers achieve their goals and would do whatever it takes. There are no excuses for not doing what a company should do for its customers – remember you could be one of the top reasons for customer churn.

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