The definition of customer churn is the loss of customers or clients. This is the harsh reality that any business has to face, whether you are a fully established business or a start-up, your business wouldn’t be possible without its customers. Although it is hard to acquire leads in the first place, covid-19 hasn’t made that process any easier, it has had a huge impact on the way businesses are choosing to focus their strategy and it has certainly put them to work.
Businesses in the SaaS industry have suffered from acquiring new leads, according to Contemsa ‘73.9% of sales opportunities have decreased’ since Covid-19 hit. With prospects cutting back on costs and less eager to accept new deals, we believe now would be a good time to focus on your existing customers rather than acquiring new ones, to keep you afloat.
Customer churn is an important metric that you should be tracking because it is less expensive to retain existing customers than it is to acquire new customers. This metric allows you to see how many customers have decided to carry on utilising your products or services or if they terminate. An example of customer churn could be closing down a monthly subscription or ending an account. Being aware of your customer churn rate is essential so you can keep track of where your downfalls and successes may be, and how to work from this.
If you are experiencing a low level of customer churn then your strategy is on point, so keep it up! After all, It would be unrealistic to believe that you can maintain every single customer you’ve ever had. But, if your customers are dropping like flies, it’s time to rethink your strategy. However don’t let this knock you back as a switch up could change everything.
Numerous different factors can affect your loss of customers, a great one for us to start with is your pricing strategy. This can be a deal-breaker for customers and could be the determining factor as to why a customer chooses your product or service over your competitors, which makes it tricky because everyone has different boundaries financially. Keep an eye on your competitors, evaluate your pricing method and offer competitive prices. Having the same prices as your competitors or offering something cheaper will help to reduce the loss of customers, because they won't have a motivation to churn.
Poor customer service can cost you a loyal customer because '59% of people would try a new company to receive better customer service' as stated by Ameritas. The article also explains that 'about 97% of customers will tell others about very good or excellent customer service experiences' which is of course a bonus for any business, because not only would you be retaining a customer with your customer service, you hopefully will be gaining new ones too! The way you treat your customers is a representation of your company, so it is essential that good customer service is a priority. To ensure good customer service make sure that you know your product inside out, put the customers needs first, listen to your customer and always maintain a positive attitude.
Lack of engagement could be why you might be losing customers. The customer journey doesn’t just end at the sale of a product, it is where it begins. Engaging with your customers benefits you and your companies reputation whilst also benefitting the customer too. Engaging displays that your company has an active online presence and are on hand to respond to any enquiries. It contributes to customer loyalty and trust. So, if you aren’t already engaging, here are some things you can do, email marketing, active presence on social media, engage in conversation online with customers, create a loyalty programme and ask your customers for feedback.
Does your product fit in the current market? If you have a weak product market fit then you could struggle with retaining and acquiring customers. This is particularly important for any start-up because you are establishing your brand identity and audience. Firstly, make sure that you are marketing your product or service to the relevant customers that you believe will benefit from your services, you don’t want to spend time and money on customers who are not going to be benefitted by what you are offering. Spend time researching into your target demographic, cater your sales pitch to each of the prospects you reach out too and explain how it will benefit them specifically. An article by Hotjar suggests that 'As you grow, so will your understanding of the problem you are solving; and with this understanding, your customer profile might evolve.'