CUSTOMER CHURN MAY BE COSTING YOUR BUSINESS MORE THAN YOU KNOW
Question, which is better for your business? Having 1000 customers purchase from you one time, or 200 customers purchase from you 4 times a year for the next three years? Based on a $100 item with subsequent purchases of $50, the multiple purchases would actually net an organization 40% more revenue (we did the math, you can trust on this one).
While, an organization may enjoy a short-term revenue uptick from the one-time purchase customer segment, it is the latter that will provide a long-term, sustainable revenue stream that a business needs to be financially viable for the future.
THE HARD COSTS OF CUSTOMER CHURN
Customer churn has a corrosive effect on business. According to a recent study, nearly 67% of consumers said that customer satisfaction was more important than price when doing business with a company. Further, the overall cost of poor customer service in the US alone rose to $83 billion with a staggering $50.6 billion of that coming directly from customer churn.
BAD NEWS TRAVEL FAST
When it comes to churn, the conversation doesn’t end at the immediate dollar impact. In today’s digital world, people share their experiences on myriad social networks. According to a survey, 86% percent of respondents said they had been swayed by negative reviews, and 90% stated that positive reviews had led them to purchase from a specific brand.
HIGH CUSTOMER ACQUISITION COSTS, MAXIMIZING YOUR MARKETING INVESTMENT
Customer churn results in a constant struggle to find new customers. But trying to stand out is hard and research shows that the cost of acquiring a new customer is 7x more than the cost of retaining an existing customer. Also, the probability of selling to an existing customer is 60 – 70%, while the probability of selling to a new prospect is just 5 – 20%.
STEMMING CUSTOMER CHURN, WHERE TO BEGIN?
Even in todays connected world, organizational investment continues to focus on the pre-sale. Pretty stores, experts at the POS—none of these things have an impact when the rubber hits the road. At that critical moment, when a consumer is home, attempting to use their latest purchase at 9:30pm long after they left the bright lights of the retailer. Ultimately it is what a consumer products company has in place to support the consumer after they have given over their hard-earned money. Considerations that need to be made are (in no particular order):
- Video content that is easily consumable. That’s what people are doing today, YouTube has effectively made everyone (or at least made everyone think) they are plumbers and mechanics
- Recognize that access points are not limited to an 800 number. People have multiple mobile devices at their disposal and as research indicates, this is the primary choice for people when it comes to accessing information
- A feedback loop for customers to comment and connect with their brands of choice
- A mechanism to reward customers for their loyalty.
FOCUSING ON THE LONG TERM
Customer Lifetime Value is a prediction of the net profit you’ll make from a customer over time. It’s the right place to focus your time and attention. Long term customers become your brand advocates, who more than just continuing to purchase from you, preach your brand to their friends, relatives and co-workers. They become your brand ambassadors.
One of the primary keys to unlocking this puzzle is by offering an enhanced customer experience.
Curious about how you can enhance your customer’s experience? Find out today! Email/ Call us at 905-672-9964.