High customer attrition rates is a headache for all businessmen because it leads to loss of customers. The metric that lets you gain insight into customer attrition rate is customer churn. According to experts reducing customer churn rates just by 5%, you could improve your profits by 25-120%. Businesses turn to customer churn analysis to improve the revenues they make.
In this article we’re going to talk about customer churn analysis and its impact on increasing revenue for various businesses. But first why don’t you go through these short articles about enterprise application software and effective model to measure customer experience.
When some amount of time passes since a customer has last interacted with the product, service or the website then the customer doing that is called as churned in online business. The money lost due to customer churn consists of lost revenue and the cost of marketing that goes into introducing new products to replace the old ones.
Since it’s easier to retain the old customers compared to attracting new ones, customer churn analysis always takes precedence.
Reasons for Churn Analysis
If you’re still not convinced why you must analyze your churn rates, let’s give you some more reasons.
Because churn analysis tells you how to retain your present customers so you get a chance to make extra profit. As we already told you, by merely reducing your churn rates you can increase your profit by as much as 125%. If that’s not enough for you to take churn analysis seriously, we don’t know what is.
Improved Customer Experience
If your churn analysis is effective, you’d better understand the journey that your customers take. This means that you’d know at what point your customers leave. Your company can keep that into consideration and come up with some actions for retention so that they can have a better experience and get what they expect.
As your satisfied customers share their experience with others, this will help create a community of loyal customers who advocate your brand.
Product and service Optimization
The metric of customer churn gives you a very accurate insight into what the preferences of your customers are. This is very important information for when you have to optimize your current services, products or make new ones.
You have to get your customer churn rates first. After that you can use customer data analytics and BI tools to analyze the churn rates. To identify and define the triggers that cause your customers to leave, you have to divide your customers that are leaving into segments.
Using the triggers you can come up with what the likeliness of churn for a certain customer is and define the threshold for the customers that are at risk for leaving. This will be very useful for when you have to step in and take the remedial actions to stop the customer from leaving.
Good customer experience is already a differentiation factor among brands. So to improve customer experience and the brand image, companies have turned to customer churn analysis. If you want to make a difference, you better join them as well.