Ignoring customer churn is a crime against your company’s true earning potential. Here’s why.
Okay, I won’t assume that you’ve seen the 2002 blockbuster film Minority Report. In case you haven’t, the film is about a futuristic police force that arrests criminals in present time for crimes they will commit in the future. What does this have to do with customer churn? If you think about it, predictive analytics can work the same way when it comes to churn management — predicting which customers you’re going to lose before you lose them.
But First, I should read you Your Rights.
You have the right NOT to remain silent.
The worst action you can take is taking no action. If you know that customer churn is happening, tackle it head on. Unfortunately, churn can occur long before you even know it is happening. “By the time you see an increase in your churn rate it is six or eight months after the point in time when you actually failed the customer,” says Jill Avery, a senior lecturer at Harvard Business School.*
Don’t ignore churn because it will not go away. Don’t be a Kilroy.
Anything you learn may be used to keep more customers — thus, increase revenue.
Once you know you’re losing customers, make it top priority to address it. Many companies take the approach of focusing on growth and gaining new customers to compensate for customer loss. However, studies show that acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.* I like to think of it as a bottle of wine. You cultivate the perfect grapes. You crush and ferment them at their ripest point. You pour the sweet nectar carefully into the carafe. You’re ready to drink. Alas, the bottle is only half full because it has a crack in its base and is leaking. Repeat.
You have the right to consult a churn prediction professional.
You’re not alone. Customer churn is more common than you may think — your competitors included. Brand loyalty continues to dwindle in this global, use-and-toss day and age. Subscription-based companies feel it the most since their business model is based on long term relationships. There are a few companies out there that consult on customer retention. Seek and they will provide.
If you cannot afford a churn prediction professional, then you’re screwed.
I’m kidding. There are affordable products and services available that can be customized to fit your business needs.
The future is now…but later.
Losing customers is inevitable. That’s the bad news. The good news is that the future is not set. You can reduce and manage future churn based on what you do today.
Rafael Scott is Chief Customer Experience Officer and cofounder at Spyglaz — a business intelligence platform that delivers key insights on churn and predicts potential customer loss before it happens.