Churn Rate
Customer churn rate refers to the percentage of those customers who stop conducting any business within a given time. Churn rate may also be referred to as attrition rate but in call center, attrition rate often refers to employees that leave the organization. For some industries including non-subscriber businesses or businsesses with a short buying value, customer churn rate may not be as useful and can only be used as a net value. It is, however useful in those businesses where number of active customers can be calculated such as Saas business enterprise.
How we calculate Churn Rate?
First identify a time period in which you want to measure a churn rate. After you have successfully identified a specific time, calculate churn rate by dividing the total number of customers churned during that time period by the total number of customers at the start of that time interval. It is common practice for business to calculate their churn rates monthly.
The formula used to calculate churn rate is as follows:
Churn Rate = Remaining Customers / (Customers at the Beginning+Number of Customers Acquired) ∗100
Calculating churn rate allows organizations to assess their performance and devise strategies to enhance and increase customer loyalty.
How it affect revenues?
If your customer churn rate is higher than your customer acquisition ratio, it’s time to rethink your business strategies. Customer Acquisition Cost is the amount of money a business spends to get a new customer and customer churn ratio is directly linked with it.
It takes significant cost to acquire a new customer and convincing them to purchase a product or service. With high churn rates, your customers may be churning before they could refer your product to other customers. They may also be churning before you get that investment back which you spent on converting them. Tracking churn rate can offer insights into the reasons behind lost customers. They may be having trouble with the features of your product or they may not be satisfied with your customer service.
How to reduce Churn Ratio?
You can reduce your customer churn rate by adopting the following practices:
Personalized Customer Support
Customers want to feel special and there is no better way than to provide them with a personalized customer support. We make sure to provide a tailor made experience to your customers with our call center support, live chat support and email marketing. We can also assist you in devising strategies like providing a customized site visitation.
We can provide you with valuable data related to customer information and their interaction with our ChatPandas with the help of our CRM system, where all information is stored and centralized. Analysing this data can gain you insights into your customer behavior and will make it easier for you to strategise a more relevant support experience according to their needs.
Tailored Follow-ups & Promotional Emails
We can follow up with your customer providing a tailor made approach and send promotional emails with a customized approach. We can also contact your customer and alert them of any promotions or sales going on and allow them early access to make them feel special and make them realize that your business cares about them. We can provide you valuable data related to their past interactions and purchases and this will allow you insights into customer behavior and we can suggest them similar product or services.
If you keep reminding your customers about how important they are, show them how you can serve them better and provide a tailored made approach according to their needs, you can effectively reduce your churn rate.
Loyalty Rewards
Loyalty rewards are an incredible way to retain your customers and reduce churn rate. Customers love loyalty rewards and it is a successful strategy to not only make customers feel connected to the brand but also encourages them to spend more to earn more rewards in return.
Only loyalty programs will not be enough to retain your customers. It needs a thorough strategy, attention to detail and a tailor made customer experience to reduce churn rates and create a loyal customer base and with ChatPandas you can achieve all of that and more!