Customer retention is vital for the success of any business. On average, 65% of sales come from repeat customers. This fact rings true for companies of all sizes, from sole proprietorships and small businesses to large corporations.
While companies must focus on obtaining new customers, they should refrain from doing so at the expense of existing patrons. Whether they are purchasers or subscribers, you should look past the initial transaction and take steps to foster an ongoing relationship.
Failure to keep clients loyal to your brand is known as customer churn or customer attrition. There are various steps you can take to avoid this problem and create a lasting relationship with your clients that will boost your profits in the long run.
Here's a closer look at the strategies for churn prevention.
What is customer churn?
If you want to improve your retention rate, the first goal is understanding what customer churn is and what causes it.
What does it mean to reduce churn? In the simplest terms, customer churn refers to the percentage of current customers who stop purchasing your product or using your service for any reason. This measurement involves all the customers lost in a specific timeframe. For example, a subscription service may measure churn monthly, while a retail business might look at figures for a quarter or year.
By measuring losses over the same timeframe, companies can see whether their strategies or modifications are helping them improve client retention.
While you may be able to reduce customer churn, some loss is expected. The customer churn rate will vary by industry. For example, if you operate a video streaming service, some subscribers will leave each month for different reasons. Users might simply want to trim their entertainment budget, while others may want to take advantage of free trial offers from other providers.
Although you can't eliminate customer churn completely, you can lessen its impact by engaging your audience, providing new offers, adding value for existing clients, and increasing satisfaction
Why should you focus on preventing churn?
Why is customer churn prevention so important? Repeat customers can have a significant impact on profitability. According to Think Impact, keeping existing customers can increase profitability by 25% to 95%, depending on your business model and industry.