In our most recent eBook and How to Become a Customer Retention Champion infographic, we walked through best practices for retaining your customers and stopping churn. We'll expand upon these lessons learned and highlight the main takeaways.
Lesson 1: Know Your Numbers
One of the biggest mistakes a company can make is not holding retention to as high a standard as acquisition. As such, a whopping 44% of executives do not know their own retention rate or their churn. It’s important to know your numbers when it comes to churn and its financial implications:
- Customer Churn vs. Revenue Churn While it’s important to value every last customer, remember, not all customers are worth the same value. When you are trying to determine your churn, you need to calculate your Customer Retention Rate (CRR) and your Revenue Retention Rate (RRR).
- Financial Impact Once you calculate your churn, it’s time to analyze the financial impact. On average, B2B companies lose 23% of customers a year and B2C companies lose 32% of customers a year. With a revenue of $1bn this means that B2C/B2B companies lose a potential $320m/$230m every year! Companies should be tracking the financial impact of their churn and identifying areas for growth within their existing customer base.
- Net Promoter System® Understanding how customers perceive your company is a big task that requires a sizable tool. A Net Promoter System allows you to tap into your customer base and act on insights to save customers from detracting.
Lesson 2: Predict the Future
I like to refer to this part as “becoming a fortune-teller of churn” because it involves using historical data to determine future trends and inform decision-making:
- Basic churn analytics If you want to inform your future decisions, it helps to dip into past mistakes and triumphs. This is the same thought behind basic churn analytics. Using basic churn analytics, you can get a historic overview of churn data to determine who’s churning and what’s been done in the past to stop it. With basic churn analytics you can determine: - When customers churn - Which customers churn - How customer experience, or any other initiatives, have impacted churn
- Churn Drivers What, specifically, is driving your customers away? The best way to find out is to analyze your churn drivers. Churn drivers allow you to more easily determine what is factoring into your customers’ decisions to leave. Using NPS and churn surveys, and performing simple driver analysis, you can better understand what areas to focus on. Once you’ve determined the drivers of churn, you can analyze: - Churn drivers and their share of customer churn - The monetary value of churn drivers
- Predictive Churn Analytics By combining historical churn data and churn drivers, you can begin to identify patterns and trends within your churn data and improve to stop churn in its tracks. Part of this is segmenting your customers by likelihood of churn and the revenue value of customer churn. You can then define your customers into certain buckets such as safe, at-risk, and grey-zone customers.
Lesson 3: Take a Note from the Best
Customer experience plays a vital part in retaining your customers. In this case, it pays to take notes from some of the hardest working customer experience people in the business—waiters and waitresses. Here's just a few lessons you can learn
- Bring the wow factor every time
- Always know your churn and retention
- Be the one to reach out first
- Follow-up with what you’re doing to improve