Part II: Avoiding customer churn
Okay, now that you are more familiar with customer churn (if not, read this first) and why it's not a good thing, let's cover the common culprits of customer churn and how to not fall into the churn trap.
Common internal and external causes of customer churn, and ways to avoid them:
INTERNAL
1. Not knowing or listening to your customers. This is the most obvious, but so often overlooked. If you take the time to listen and learn from your customers, the rewards can be tremendous.
2. Not putting the customer at the center of your marketing efforts. Hello? Change your point of view to that of your best customer. Focus on his or her needs in the context of their entire experience of your product or service over time.
3. Getting stuck in the old 4 P's paradigm (Product, Price, Place, Promotion). Yes, they still teach this in b-school, but these days it's about the 4 C's (Customer, Cost, Convenience, Communication). See 'Integrated Marketing Communications.'
4. Talking at your customers instead of with them. Stop telling them about your business, and start telling them what your business is going to do for them. Then be prepared to begin a dialogue with your customers so you can stay on top of their needs.
5. Short product lifecycles. On to the next product, right? Great way to leave the customer in the dust. To stop churn you need customer loyalty. Entice your customers and usher them along in your marketing communications. Bring them along for the ride and pay attention to the product or service transition process for the customer.
6. Promotion-centrism. You can't constantly be calling your customers to action. Sooner or later they've got to trust you for more than a quick discount or a dangling carrot. This can be a costly one. Do the math and weigh against the benefits of investing in real long-term customer relationships. See also, 'Rewarding best customers over new customers.'
7. Saying one thing and doing another. Usually accompanies slick promotions or carrot-dangling. Don't over-promise and under-deliver to the customer. It kills trust.
8. Quick-results media grabs. Building fast traffic or lots of site hits rarely translates to loyal customers. Don't be fooled. It is more than just a numbers game.
9. Business cost cutting measures that ask customers to sacrifice first. Have you been on a plane lately? Two words: American Airlines.
10. Ignoring the power of branding. Your brand is already representing you whether you're aware or not. Take charge of it. Use it to your advantage.
11. Not recognizing the difference between sales and marketing. Both are important, but effective marketing is not about gimmicks or chachkis. It is customer-centric and it extols benefits.
EXTERNAL
12. A sudden rise in competition. Obvious, but learn how your competition is exploiting your weakness to take away your customers.
13. Your competition begins to define you. Goes hand-in-hand with having competition. Define yourself and demonstrate your benefits to your customers.
14. A history of prosperity/success followed by sudden change in the market landscape. Industry deregulation is a great example of this, and can cause one-time monopolies to fall fast. Never get too comfortable with your customers, and never abuse your customers. Situations change. Customers change. Or, there can be a fundamental shift in customer buying power. Pay attention and anticipate.
15. Sudden change in economic conditions. The better the relationship with your best customers, the better you'll be able to weather tough times and mitigate loss.
16. Sudden change in customer product/service demand. Can go hand-in-hand with above, but the best marketers anticipate customers' needs and continually surprise them. See Apple, Inc.
Obviously, the common thread is knowing and having a positive relationship with your best customers. That begins by asking your customers questions, then listening and observing. More often than not, they can provide you the answers you need to keep them around longer.
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