Effective Strategies to Prevent Customer Churn

Could you afford to lose 25% of your customers?

Most businesses can’t—and yet, with high customer churn rates, that’s effectively what’s happening to many brands.

While customer churn is often seen as unavoidable in businesses, let’s get one thing straight: the only good type of churning is the kind that creates ice cream. In general, customer churn is often a much bigger problem than many brands realize.

With the average customer churn rate hovering around 25% among general retail brands, most brands are losing a significant segment of their most valuable target audience members—those who have already purchased from them. Research suggests that the probability of selling again to an existing customer is between 60%-70%, whereas the probability of selling to a new customer is less than 20%.

So not only does churn mean you’ll need to spend more more money and resources acquiring new customers, but it also means you lose the opportunity for:

improved brand affinity and loyalty
increased CLV
more effective sales and marketing
developing customer trust
and so on.

So, how can you prevent customer churn and give customers a product and experience they’ll stay loyal to for years to come? Our team of customer experience experts shares their best strategies for preventing churn and developing loyal customers.

Identify and Address Customer Pain Points

If customers are leaving—or have already left—your brand, it might be too late to win them back, but it’s not too late to get feedback and find out what went wrong. In fact, many customers are happy to provide feedback or share their complaint if they know that it will be used to improve.

As a result, an essential strategy to reduce churn involves analyzing exactly why churn is happening in the first place. To do so, you’ll need to identify—and then address—customer pain points, within your process, product, onboarding, service and other touchpoints.

First, identify your churn rate and start measuring trends over time. Is it growing or declining? When is it improving and where is it increasing? If you’re not sure how to calculate churn rate, you can read our guide to calculating churn and retention rates.

Next, collect and analyze customer feedback—from both existing and churned customers—to identify areas of improvement. When customers know their feedback is being taken into account, they’re more likely to give it—and implementing customer feedback makes customers more invested in your brand and product.

Customer surveys are great ways to collect and measure customer feedback. CSAT and NPS surveys are two popular—and effective—formats that can give you effective data for customer sentiment and pain points. You can (and should!) also monitor customer review sites and social media to analyze what customers are saying about your brand when you’re not directly asking for feedback. Disgruntled customers are more likely to post on social media or leave a negative review than they are to respond to your survey, so gather feedback from multiple sources to ensure a holistic picture that will help you treat churn.

Deliver Exceptional Customer Service

The easiest way to prevent customer churn is to provide exceptional customer service. Now wait—you might be thinking—don’t most customers churn due to product issues or effectiveness? Yes and no.

While 74% of customers say product quality is a very important factor in maintaining brand loyalty, a whopping 96% of customers say that customer service is an important factor in their brand loyalty. Product quality, effectiveness and value are definitely important—but excellent service cannot be overlooked. In fact, data consistently shows that customers churn after negative experiences:

61% of customers would switch to a competitor after just one bad customer service experience.
37% of customers won’t do business with brands who don’t personalize their experiences.
67% of customer churn could be avoided if businesses had resolved customer complaints or issues within the first interaction.

As we can see from data, customer service plays an important role in customer churn. While customers may understand some small issues or problems, getting them resolved satisfactorily—and on the first try—is a must. Customers who are dissatisfied with your service won’t give you many chances to fix it, either—so delivering exceptional customer service from the very start is essential to reducing churn.

But how can you really provide this level of service? Keep in mind a few essential strategies:

Empower agents to provide best-in-class support. Your agents are your front line defense against churn. Give them the training and tools they need to provide exceptional support! According to one survey, 62% of agents say that more skills-based training would improve their performance. In addition to training, give agents flexibility and freedom to create solutions that meet customer’s needs and empower them to serve the customer. The more rigid and inflexible your guidelines are for issue resolution, the more likely you are to have dissatisfied customers.

Personalize customer interactions. Customers do not want to be treated like just another case number—and as the data above shows, a growing segment of customers won’t even do business with companies who don’t create personalized experiences. From simple acts of personalization like using customer’s names during calls or sending personalized offers, to bigger elements like personalized web experiences and products, a little personalization to show genuine care for your customers makes for excellent service.

Focus on what matters. Almost 80% of customers say that “speed, convenience, knowledgeable help and friendly service” are the biggest elements that make for a great customer service experience. Although these seem basic, they are considered fundamental for a reason—without them, you can’t deliver great service. Focusing on these foundational service elements and ensuring you can nail them for every customer will go a long way.

Resolve issues promptly. When customers have a concern, always attempt to resolve it within the first conversation. Brands who have a higher FCR rate also see higher loyalty rates. In addition, pay attention to trends in what customers are complaining about or having problems with, and work to fix those at the source, before they become a problem for the next customer. Be proactive in resolving customer concerns—whether or not they’re directly expressed to you.

Enhance Customer Experience Across All Channels

At one time, customer experiences mostly happened in a store, or perhaps over the phone with a store employee or representative.

Those days are long gone.

Today, customers communicate with friends, relatives and yes, brands, across a variety of channels—from in-person to websites, social media, texting, calling, videos, blog posts, email and more. As a result, when you think about enhancing the customer experience to reduce churn, you need to focus on all the channels and touchpoints a customer may encounter when researching or purchasing from your brand.

To do so effectively, best-in-class customer experiences make use of seamless omnichannel support to provide consistent and convenient support for customers. Omnichannel support uses modern contact center software to integrate all of your channels and ensure that every experience a customer has is collected for the next person they interact with—giving your agents a full picture of their experience, and providing a seamless experience for your customers.

While customers more and more expect seamless support, 78% of customers feel that true omnichannel support rarely or never happens. This means companies who do offer omnichannel experiences can stand out in delivering exceptional customer support—and therefore reduce churn.

Companies can take this a step further by integrating self-service options to empower customers to get the service they want and need, whenever they need it. Self-service options provide faster, more efficient service that values the customer’s time while also making processes more efficient for your business.

Proactive Communication and Relationship Building

Talking to your customers to get feedback on pain points and concerns is essential, but you should also be proactively communicating and building relationships with your customers when everything is going well too!

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For example, sending your customer feedback and customer satisfaction surveys to currently happy customers can help you predict and prevent churn before it happens. Using historical data and predictive analytics, a good data analysis platform or team can analyze which of your current customers are at-risk for churning based on their actions, current satisfaction or other indicators from your historical data.

Don’t have the time or resources to manage this in-house? An outsourced team can manage customer surveys and data analytics for you, allowing you to get the business growth and bottom-line benefits of such initiatives, without having to run them yourself.

In addition, building relationships with current customers is a valuable strategy for creating long-term customer loyalty. For example, you can:

regularly share relevant updates and product news to make your products more valuable for your customers
share relevant offers and sales for current customers
send personalized reminders or updates to restock on products based on their last purchase
share how-to guides or usage guides to help customers get the most out of their purchases

As with all types of customer relationship building, personalization is the name of the game in 2023. With so many brands to choose from—and so many pieces of communication at customer’s fingertips on a daily basis—your communication needs to be proactive, personal and highly relevant to stand out. Dedicated account managers or customer success managers can help add a layer of necessary personalization to your biggest or most valuable accounts.

Offer Incentives and Rewards for Loyalty

Finally, don’t forget that rewarding loyal customers is an effective strategy to keep customers loyal. When customers feel appreciated and taken care of—and, perhaps more importantly, see immediate value in choosing your brand over another—they will spend more, make more frequent purchases, and stay more loyal to your brand. Consider some of the data on customer loyalty programs:

64% of customers who are part of a loyalty program shop at that brand more frequently to maximize points or earnings.
68% of American women are part of at least one loyalty program.
The average American is a member of 16.7 loyalty programs.

Creating a customer loyalty program with exclusive benefits is not only a good way to create and build loyalty—it’s also a great way to stay engaged with your most valuable customers, learn what they want and cater to their needs.

But how do you create a loyalty program that works? Most importantly, be sure your loyalty program gives customers the rewards they really want. Figure out which incentives are worth the most to your target audience—be it discounts, free samples, bonus products, free shipping, or something else—and then structure your loyalty program appropriately. For more advice on creating a loyalty program, check out our full guide on designing effective loyalty programs.

In short, you want to recognize and appreciate customers’ continued support of your brand—which in turn begets more support. As a result, you can also try these loyalty techniques on customers who are currently at risk of churning treating customers who are on the fence as valuable all-stars can lead to them becoming so. Try offering discounts or additional benefits to customers who show risk of churn, and monitor their churn rates three, six or twelve months down the road to see how it impacts your churn rates.

Can Outsourcing Help Prevent Customer Churn?

In many cases, customer churn may be too big and multifaceted a problem to handle in-house. In such cases, you might want to consider outsourcing.

Outsourcing can help reduce churn when you need to:

improve customer service
provide better customer experiences across multiple channels
implement omnichannel support
analyze why churn is happening and design a strategy to prevent it
create a customer loyalty program
reduce churn without dedicating too many internal resources to it
strengthen your outbound customer communication or customer success team

In these cases, among others, an outsourced team—like ROI CX Solutions—can help you reduce churn while alleviating internal workloads. Our team at ROI CX Solutions has decades of experience with customer acquisition and retention strategies that have helped our clients achieve: