Customer loyalty churn rates are not just to predict what happened in the past but it is the foundation for even predicting the future. The churn rate of customer loyalty is a parameter to tell you if something is going well or needs to be addressed.
To retain your customers it is important not only to understand what will draw them and keep them loyal but also understand what makes them leave. Deriving an understanding of the underlying reasons of a customer terminating their relationship with a company can nip an adversity right in the bud stage.
Customer churn rates are the early warning bells that indicate which way your strategy is headed. Seeing an early increase in the retention rates will throw a positive light on your strategy and the culminating future results. However an increased outflow of loyal customers within a short duration is an early sign to revisit and revise strategies to rectify and prevent further destruction.
The 3 common mistakes that arise when reading and implementing customer churn rate data are that of losing a hidden opportunity, not using it as an indicator or behaviour and finally not seeing churn rates for comparitive strategies.
Opportunity loss
Reading customer churn data as merely information of past strategies creates a rabbit hole of dwelling on unchangeable past results. Churn rates are a customer retention report that usually cycle between periods of 6 to 8 months. This may be a point when the dent is already created. To effectively conquer this companies have begun developing software’s and analytics to predict the customer trend of who is going to leave as well as in real time to derive data of where there are dips and increases in customer retention and attrition. It is all revolving around creating analytics that marry your customer churn data to take you one step ahead of the customer.
Not using churn data as an indicator of behaviour
The customer loyalty churn data is not just a metric number of how many customers leave or join your brand. That is only the top of the iceberg. To really effectively use the data it is important to answer more thinking questions like “How can we improve our customer retention strategies?” “What factors are causing our customers to terminate their relationship with the brand?” “What is causing such high turnover ratio?”. These are behavioural questions that help you move into the metrics and create strategies for positive impacts.
Not seeing churn rates for comparative strategies
Customer loyalty churn ratios are not merely for pre-defined time periods. Using them as indicators for short term indicators sells you short for long term sustainable loyal customers. The accurate utilization of churn data is when it is compared to pre-defined periods of time. It could provide a clear understanding through a yearly comparison of seeing where the churn ratio stood a year ago as to where it stands today. This will provide data backed clarity on what strategy is working, what went wrong or right, what could be done to improve the positioning and finally how the loyalty growth could be sustained.
It is both easier and cost effective to focus on retaining your existing customer. Acquiring new customers becomes a much easier battle if your customer retention strategies are in place.
Leading Customer Loyalty is a one-day work session to learn the principles and practices that are needed to win the hearts of customers. To drive this concept within your organization, register for the Leading Customer Loyalty workshop today.