Maintain customer loyalty and reduce your churn rate
When you want to grow your customer base, it can be tempting to only look ahead, and think of your next big marketing campaign or a plan to outmaneuver your toughest competitor. However, it is prudent to also look back at your recent performance, particularly when it comes to customer satisfaction. While it can be fruitful to attract new customers, it's even more important, and often less costly, to keep the ones you have.
Customer churn is the measurement of customers that move away from your business, often in favour of a competitor. Even if your customer base remains fairly stable over a long period of time, there is likely some churn happening.
What causes churn?
- Customer dissatisfaction
- Cheaper and/or better offers from the competition
- More successful sales and/or marketing by the competition
Let's say you operate a fitness centre and sell annual memberships. While some of your customers might choose not to renew those memberships when their contracts are up, you will likely be acquiring new members throughout the year. An increase in customer loyalty means more renewals, and a reduction in your churn rate.
It's important to know why customers return to your business, so you can focus your efforts in the right places. The best way to find out is to ask them directly, and not make assumptions. In the example above, do your clients like the personal training services you offer or group classes available to them? Are your facilities well-maintained? Do you offer incentives such as rewards programs that your competitors don't?
Surveys, focus groups, and other kinds of market research methods can help give you a better sense of who your customers are, along with their attitudes and behaviours. You can more easily define the needs of your target audience if you understand their motivations and buying patterns.
Listening to your customers' feedback allows you make improvements and even customize your products and services, thereby keeping them happy. You may discover that you're doing a lot of things right. If you've set baselines or goals, compare them to your results, and adjust your plans accordingly.
More and more, customers have an abundance of options when it comes to their purchases and memberships. By paying attention to what they want, and providing it where you can, you have a much better chance of retaining your client's loyalty and keeping your customer churn rate low.