I often get asked by our Partners: “what is the churn rate these days?” Having a great view of a diverse set of service providers, one would think that I could give an answer to this question on one leg. But of course I can’t. Firstly, churn rates are challenging to measure because it’s difficult to work out exactly when a customer has left. More importantly, the churn rates vary so widely across SPs, it’s impossible to give a good quantitative answer.
If you are an SP suffering from churn, you inevitably want a panacea, something to “just fix it”, and for that I do have a definitive answer: there is none!
A simple home truth provides the answer to this bane of our industry:
A customer will leave you for the same reason they came to you. It sounds very simple, and it is. Think about it: if a customer is attracted to you for price, then it stands to reason that they will be attracted to your competitor for the same reason. So they will leave you when they are offered something cheaper.
How about if they have been acquired by a telemarketer? Well, in that case, they are a person who is able to be convinced to make a purchase over the phone. Do you really think your telemarketer is better than the next one who calls this person? Indeed, they make be one and the same!
To me, this means that any churn prevention or customer retention strategy must actually start with the customer acquisition. In order to hold on to your customers, you must be attracting them for the right reasons, and not just bringing them in as fast as they leave.
Any expert will tell you that is costs several times as much to acquire a customer than to retain one. So in addition to making sure you acquire quality customers, you also need to setup barriers to exit – reasons they will either not leave or want to stay (and we prefer that one).
What have you been doing to hold on to your customers?