Does your business have a leaky bucket?
Every business has some customer attrition or churn. All else being equal, if you don’t acquire new customers, your customer base will shrink. Some of that loss will be due to things beyond your control. For example, a business that sells infant products will see some customer attrition simply because consumers have grown out of the company’s products. Some attrition will be the result of inertia. Some will result from having a bad experience. The bottom line is that customer attrition is a fact of life. If you are trying to grow the business, then customer acquisition needs to be greater than customer churn.
The levers for increasing acquisition tend to be better understood than those for limiting attrition. Below are some tips for managing churn.
Understand your best customers
For most businesses, their best customers generate a disproportionate amount of revenue and margin. Understanding what makes these customers tick is essential. Knowing the best places to market to them will help you find more like them. Making sure you understand what they buy and when they buy will help you identify when they are at risk of leaving. This will also help you nurture other customers, so they become like your best customers.
Develop a good onboarding strategy
New customers are likely not as committed to your brand. Developing a plan to welcome new customers and to introduce them to your brand is crucial to developing the relationship.
Create a roadmap for customers
If your company’s product or service has several features and benefits, make sure you are consistently tracking the features customers are using and not using. Create a communication plan, and if necessary, an incentive plan so your customers are trying the full suite of services and benefits. You are essentially developing a plan to create loyalty.
Collect customer feedback
Develop a process to collect customer feedback and a plan to act on it. There are many venues to collect feedback. Here are a few examples: after the site visit, post-purchase, a few months after purchase, or after a customer has lapsed. This will give you insight into why customers are buying, opportunities for improvement, and enhancement ideas.
Bottom-line for overcoming customer attrition
Given the significant cost of acquiring customers, managing attrition is an essential tool to manage profitability, and these tips are a good place to start.