Churn, Churn, Churn
Most campaigns focus on gaining new customers. Why churn should be a top priority instead.
Most campaigns focus on gaining new customers. Why churn should be a top priority instead.
Have you ever tried running into the wind? Or filling a bucket with water, only to find that there were a few holes in the bottom? That’s the experience of churn, and it’s one of the most challenging and frustrating problem that marketers face. And although there may not be any easy answers, there may be a better way to go about trying to solve the problem using available data.
Provided, of course, you’re willing to look at it.
Learn From the Small
Simply put, churn is the rate at which your current customers are leaving your brand or company versus the rate at which new customers are coming in. If each month you lose 10 customers and gain only 5, you have the problem of a diminishing customer base. If instead you get 10 new customers and lose 5, you have the problem of hampered growth. If you get 10 and lose 10, you have the problem of stasis; you’re running to stand still.
The heart of the churn problem, really, is cost. The rule of thumb is that it costs 10 times more to get a new customer than to retain a current one. I don’t know if that’s true, but it certainly is easier, and better business, to try to keep the customers you’ve got. Even from a purely marketing mindset, keeping customers is a good idea. No matter what industry you are in, recommendations from current customers are probably the number one driver of sales for your product. Those recommendations come from happy, current customers.
A recent CMO Council report put a concise point on the churn problem: marketers tend not to have much of an idea of who their customers are. This is hardly a new condition. The wealth of data that’s available about a customer, from research and shopping patterns, often doesn’t get integrated and is only reviewed by teams in the beginning of a project as a way to get familiar with the customer.
There is, however, a small percentage of online marketers who buck this trend, and they tend to be the small guys. Small companies, often with under $1 million in sales frequently are absolute masters of their customers, and as such are really good at keeping their current customers.
There are two main reasons for small business success with customer retention. The first simply has to do with the company’s culture. When a company is small, customers will often deal directly with the founders or even the owners. Even if they never have an actual interaction with these people, there’s a distinct level of personal connection the company has with the customers, so service tends to be better and more genuine.
The second is that small businesses have made incredible use of the tools online publishers have offered them, at little to no cost. Publishers like Google and Yahoo offer online merchants sophisticated analytics packages that can tie directly into search engine and other marketing campaigns. Small businesses are hungry for knowledge, and they clearly make use of data availability.
Find the Churn
The availability of data from online sources can give companies of all sizes the chance to better know their customers and find and reduce churn. There’s no single solution for churn, and there’s no single data source that will tell you why it’s happening, but here are a few places you can start to look:
Invest in Churn
Churn should be a top priority for any marketer. Most campaigns and most efforts focus on gaining new customers. Churn isn’t that exciting, but getting it under control may just give you the steady stream of revenue you need to really start experimenting and searching for growth.