Customer churn is an unavoidable fact of life in any industry, particularly for sectors centred around a sales and retention model. Customer churn is a significant consideration for companies in the financial services markets and a very expensive consideration at that.
Customer churn is inevitable. You can please some people all the time and all people some of the time. One thing you can't do is please all of the people all of the time. If that's your policy to prevent customer churn, how's that working out for you? Not amazingly would be my guess.
So what is Customer Churn Exactly?
Customer churn is defined as the percentage of your customers that stop using your products or services inside a specific time frame. Obviously, the lower your customer churn rate, the more money your business makes and the higher your marketing ROI. The cost of customer acquisition in the financial markets has risen steadily over the years, as evidenced by the CPA rates on offer for affiliates in these niches. Take forex, for example. CPA rates for Tier-1 geos are fast approaching the $1,000 mark for a $250 FTD. Spend that kind of money on client acquisition, and a rising churn rate will keep you awake at night!
A low customer churn rate means better retention figures. Don't obsess about getting your customer churn rate to zero. It's not going to happen. You will lose customers. The goal is to keep your churn rate as low as possible.
Our Top 5 Tips to Prevent Customer Churn
1. Concentrate on your Customer Support
One of the main reasons behind high customer churn rates is poor customer service. Customers want to feel you value them and their business. If your customer support falls short of the mark, expect your customer churn rates to go up. So important is customer service that industry reports estimate that 90% of customers moved to a competitor after experiencing unsatisfactory customer service from their original choice.
We detailed how to provide an excellent customer experience in one of our earlier articles, but the gist of the process is about anticipating customer needs and providing the answers to their questions before they even ask them. That doesn't call for a crystal ball; just a well thought out process with all the possible pain points mapped out as a part of your sales and retention process. A simple example of that, specific to the financial services vertical, would be download links for trading platforms. This is one of the most frequently asked questions for brokers "how do I download your platform?" Answer that before it's even requested and your customer churn rate has just gone down. Pat yourself on the back; you deserve it!
2. Provide Added Value
Your sales desk has converted a lead to an FTD. Impressive, but that's just the start of the journey. Go back a few lines and check the figures I quoted on the affiliate CPA example. If you're paying out $1,000 for a $250 FTD and leaving it at that, good luck.
Added value not only gets further deposits but also lowers your customer churn rate considerably. Sticking with the financial services example, offering MetaTrader isn't that big a deal anymore. Almost every single forex broker will provide traders with a version of MetaTrader. The stand-out brokers load their backend with added value in the form of addons for MetaTrader, for example, or newsletters and webinars.
3. Personalize your Customer Experience
Everybody likes to feel important, and your customers are no exception to this rule. Personalize your communications with them, and you make them feel special and that you value their business. If your email communications include personalized salutations (and we strongly suggest they do), make sure these are recorded accurately in your CRM. All too often, we see things like Dear JOHN SMITH or Dear SMITH JOHN. Yes, that's down to how the lead entered their details during the signup process, but it looks ugly and unprofessional if you send emails like that.
Take the time to comb over your CRM contacts and correct the First Name and Last Name fields. Your customer churn rate will thank you!
4. Get Feedback
All companies know the value of positive feedback, but successful companies understand the importance of negative feedback. It's great to know what you're doing right but to lower your customer churn rate, you really need to know what you're doing wrong.
Don't be afraid to ask questions. Ask churned customers to take part in a survey, for example. See what caused them to jump ship and make the changes necessary to plug those particular pain points. What you're doing right is already working for you. Find out what you're doing wrong and fix that.
5. The 80/20 Rule
No matter what you do, you will lose customers over time. By all means, follow our first four tips to reduce the churn rate, but Tip Number 5 has to do with keeping your best customers happy. These are loyal customers who like your company, follow you on all your social media accounts and leave glowing reviews about your products or services.
This is the 80/20 rule in action. 80% of your revenues come from 20% of your customers, so do your best to keep them happy.
One often-repeated mistake we see is giving new clients only a special offer. That might be great for attracting new clients, but you risk annoying your existing clients. Make a special offer to new clients by all means but mirror this for existing clients as well.
Are you seeing rising customer churn rates in your business? Our success managers are here to help, so get in touch with us today for a no-obligation FREE consultation!