What?s the true cost of customer churn?

Written by David

How much effort does your company put into winning customers and breaking new markets? Now think about how much effort you’re putting into reducing customer churn.

Churn happens, we often hear, we just need to work on reaching the right customers at the right time.

But imagine your company made 100 sales from 100 different customers. How much resource would it take to get their attention, educate them, persuade them to buy, and then get them to commit? And how many potential customers dropped out of the funnel along the way?

Now imagine your company made 100 sales from just one customer. That’s an incredible saving on cost-to-serve, and that profitability is compounded with each repeat sale. Plus, after 100 sales, the likelihood of that customer making purchase 101 is near certain.

Understanding the significance of churn

It’s important to be precise when identifying different types of churn.

There’s a huge difference between the customer that’s vowed on social media never to use your services again, and the customer that would love for you to start shipping to the country that they’ve just emigrated to. Not all of your customers churn for the wrong reason, or a reason that you have any influence over.

If you led a political party into a General Election, you would put most of your effort into winning over voters that are likely to swing to a different party. Retail is no different: you need to identify customers that are most likely to change their mind.

Who are they? What caused them to leave, and how can they be won back?

A husband that buys his wife some earrings from Swarovski for her birthday probably won’t visit the retailer’s site for another year. Any time or money spent encouraging him to return within the next 11 months would be wasted.

Instead it’s far more valuable to identify those that are most likely to purchase again, and foster long-term, meaningful engagement on the channels that matter to them. By doubling down on these customers, you’ll improve brand loyalty and see instant ROI.

And the alternative? More churn.

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