Predicting High-Risk Customers Can Greatly Reduce Churn

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According to a recent report, one-third of customers regularly consider switching to a new brand, and 65% of customers end up doing it because of poor customer experience.

Customer experience is vital to retain customers, and poor experiences could be contributing to an increased level of customer churn. Businesses need to prioritize keeping their current customers happy, also known as customer retention. But many companies do not realize how big a factor customer experience plays in this.

Reduce Churn

Read on to learn why improving your customer experience can lower customer churn rates.

What is customer churn?

Customer churn is a business metric that informs brands on the percentage of customers who have stopped using its product or service. Calculating the churn rate is simple. All you do is take the number of customers lost during that time period divided by the number of customers you had at the beginning of that period.

However, the bad news is that calculating the churn rate after customers have already churned is difficult because you have already lost the customer. Instead, some brands use a customer churn prediction tool to understand better when customers are expected to drop off based on historical data pattern mapping. With this data, brands can predict high-risk customers, prevent them from churning, and potentially increase customer loyalty.

Why poor customer experience may lead to customer churn (and why this isn’t good)

Consumers have an ever-increasing number of businesses to choose from for their favorite products, services, and custom projects. And, more and more, consumers are becoming better informed and are taking the time to choose the brands they want to support.

If a customer does not feel that a business is making an effort to support them in the ways they need it the most, they may decide to go to another brand. If you ignore customer feedback, compromise their privacy, or prioritize company policies over customer needs, customers will feel disrespected and unheard.

Poor customer experience can be harmful to your reputation. When it starts to affect customer churn, it becomes costly. Keeping a customer is far better (and more cost-effective) than acquiring a new customer. Statistics suggest that new customers cost five times more than existing customers. By investing in customer retention and new sales, a business is likely to see a 25 to almost 100 percent increase in profits.

In general, poor customer experience generally translates into fewer sales, lower profits, and a vicious cycle of a company trying to save money and short-cut customer service training.

The importance of a good customer experience and what this means

In a post-COVID world, competition in every industry has skyrocketed. This is good for customers because it means they have more options. However, this can be hard on businesses, tiny businesses, who cannot afford concerted efforts at customer experience training.

If you can create extremely positive customer experiences even in turbulent times, this can go a long way with your consumers. This will also build brand loyalty, or the willingness for a customer to remain devoted to a brand and make repeated purchases.

Positive customer experience can also allow a brand to grow a strong customer base, which will save the company money from higher customer churn, allow brands to grow their product lines, grow their sales reach, and take advantage of free referential marketing avenues.

7 quick ways to improve customer experience

A consumer support strategy can repair bad customer experiences. Here are seven quick ways to do so:

#1. Provide customer support training. Poor customer experience may be coming from within. If your employees aren’t prepared to support customers, then they might be off-putting or even rude. Empower your employees to provide actionable solutions for customer pains.

#2. Implement live chat. Your human customer support team might be overworked. Consider adding tech tools like live chat (which millennials are craving) to provide more effective issue resolution and relieve monotonous employee labor.

#3. Get on social media. In addition, to live chat, you want to meet your customers where they are. 22% of all customers feel that social media presence is synonymous with a positive customer experience. Start connecting with current, past, and potential consumers on all major social media outlets.

#4. Use customer churn prediction to understand your audience. Customer churn prediction tools can provide you with data, which allows you to create predictive customer behavior models (i.e., the things your customers are likely to do). By analyzing these behaviors, you can better understand why your customers leave and then take steps to prevent them from churning.

#5. Identify weak points in service. Customer service improvements might help you identify at-risk customers, core avenues where churn happens (like resolutions are never reached on phone calls, but they are through emails), and products or services that are no longer working for customers (and therefore need to be changed).

#6. Incorporate feedback tools. Customers turn away from your company for one reason or another, and it’s up to you to understand it. Ask your customers directly for feedback. Ask them: “What can we do better?”

#7. Take steps towards change. With the feedback and data you receive, take steps to implement the changes that they are seeking. Being open and honest about your company’s desire for change might help potentially churning customers stick around and grow into brand loyal ones.

Positive customer experiences lead to positive sales.

The better a customer experience is, the more likely they will refer their friends to your brand, remain faithful to your product or service, and contribute positive feedback or constructive criticism about your offerings. Take the time to improve your customer’s experience – you may be able to build brand loyalty, reduce customer churn, and improve revenue.