This HBR Blogpost by Amy Gallo caught my attention. From working previously in the customer service industry, I have often be told to not only get new people into the store, but to retain customers,
“make them want to come back again and again!”
I’m often told. Bottom line from the above article is: keeping the right customers are valuable, better known as “churn rate”
Churn rate is the measure of the percentage of customers who end up with a relationship with the company in a specific time period. (Monthly, Quarterly, Annually)
How do companies use the churn rate to maximize their profits?
Main objective: Asking why customers end the relationship with the company. Understanding what has happened in the last period and to predict what might happen next; what they need to change in order to keep customers.
Common Mistakes:
- Taking the rate as a given rather than as an opportunity
- Looking at the churn rate as a number rather than as an indicator for behavioural change
- Marketers believing in a ‘magic’ number
- Not seeing that high churn rate is the result of poor customer acquisition efforts
I think that often, businesses often overlook the importance of retaining customers, but in turns look to gain new or potential customers. Businesses should refocus and focus on keeping clients happy and wanting to come back every time. (Customer loyalty, word of mouth, life-time value, no acquisition costs)