For those of you who own a business, one word that gets batted around a lot but is hard to understand and quantify is customer churn. Like the saying goes, knowledge is power. So the first step in reducing your customer churn rate is understanding exactly what customer churn is.
NGData defines customer churn in these terms, “customer churn occurs when customers or subscribers stop doing business with a company or service. Also known as customer attrition, customer churn is a critical metric because it is much less expensive to retain existing customers than it is to acquire new customers – earning business from new customers means working leads all the way through the sales funnel, utilizing your marketing and sales resources throughout the process. Customer retention, on the other hand, is generally more cost-effective as you’ve already earned the trust and loyalty of existing customers.“
One of the biggest reasons for negative churn is the lack of proper customer service. In the age of technology, poor customer service can truly be the death of a business. Users of your product or service who receive poor customer service not only stop doing business with you, they write bad reviews of your business on places like Google Reviews and Yelp, spreading their experience like wildfire.
David Skok at For Entrepreneurs–voted #2 in Forbes list of 100 Best Websites for Entrepreneurs–wrote an article titled Unlocking the Path of Negative Churn.
In that article, Mr. Skok has created very effective graphs that Small Business Promote highly suggest you take a look at to help you unlock the secrets to what he has dubbed Negative Churn. Negative churn happens when the expansions/up-sells/cross-sells to your current customer base exceed the revenue that you are losing because of Churn.
Now that you have a better handle on what exactly customer churn is, it is time to go deeper and figure out how to reduce churn and even create what Mr. Skok above defined as Negative Churn. For help with that, we suggest you also read this article titled Customer Churn – Mastering A Key SaaS Metric from UserIQ. That article is one of the most in-depth we have found on customer churn.
By using all of the information we have provided in this blog post, Small Business Promote is confident that your business can begin holding on to current customers and avoid high churn rates.