Attracting new customers is more time-consuming and costly than retaining existing consumers. Studies show that it costs six to seven times more to attract new customers than to retain existing consumers. Additionally, it costs 16 times more to build lasting client relations with a new customer than to retain an existing one.
What makes customers churn?
There are several factors that contribute to customer churn, and understanding these reasons can help companies address the underlying issues and improve customer retention rates.
One of the primary reasons for customer churn is poor customer experience. This encompasses all interactions a customer has with a company, from initial contact to post-purchase support. When customers feel ignored, undervalued or treated poorly, they are more likely to seek alternative options and discontinue their relationship with the company. To mitigate this, businesses must focus on providing exceptional customer service and addressing concerns promptly and effectively.
Another factor contributing to customer churn is an unsatisfactory customer journey. The customer journey includes all touchpoints a customer encounters when engaging with a company, such as marketing materials, website navigation, and purchase processes. A disjointed or confusing customer journey can lead to frustration and ultimately result in lost clients. Companies must strive to create a seamless and user-friendly journey that meets the needs and expectations of their target audience.
Additionally, customers may churn due to a lack of perceived value in a product or service. This can be due to several reasons, such as high prices compared to competitors, low quality, or failure to meet the customer's specific needs. Businesses need to ensure they offer products and services that provide value for their current customers by understanding their needs, conducting market research, and continually improving their offerings.
Lastly, an inability to adapt to changing market conditions and evolving customer preferences can also result in customer churn. Companies must stay informed about industry trends and be willing to make necessary adjustments to remain competitive and relevant.
Why businesses need to address customer churn
One of the primary reasons why customer churn is detrimental to businesses is the impact it has on revenue and profitability. Acquiring new customers requires a significant investment in marketing and sales efforts, while retaining existing customers is often less expensive and more predictable. When a business loses a customer, it loses not only the immediate revenue from that individual but also the potential for future sales and referrals that the customer may have generated.
Additionally, high customer churn rates can damage a company's brand reputation and decrease customer lifetime value (CLV). Unhappy customers are more likely to share their bad experiences with others, leading to a ripple effect on potential new customers. This negative word-of-mouth can hinder growth efforts and make it more difficult for businesses to attract new customers. Furthermore, companies with high churn rates are forced to focus more on acquisition rather than nurturing long-term relationships with their existing customers, which can limit opportunities for upselling and cross-selling.
If you're finding that your business is losing loyal customers, here are nine strategies you can implement to win them back.
1. Ask for feedback
First and foremost, you can't win back previous customers without knowing why they left. Therefore, engaging your customers by asking for their feedback can help you to identify the reason you lost them and the areas that require improvement. Keep in mind that only one in 26 customers brings up a complaint. Therefore, to get the most information regarding inactive customers, make sure your clients know that they have a voice and it matters.
You can gain customer feedback by asking them to fill out surveys or reviews. You can also reach out to customers via email or SMS and encourage them to complete reviews or surveys by offering incentives.
For example, if most clients leave because of poor customer service, you should implement better training programs to improve consumer relations. However, if a large portion is negatively reviewing a specific product or service, you may need to go back to the drawing board to devise an improvement plan.
2. Provide exceptional customer service
The top reason many businesses lose customers is because of poor customer service. For instance, 33% of customers stated that they switched brands because of just one poor customer service experience.
Therefore, if you want to win back customers, providing exceptional customer service is a great place to start. You might have a great product or service, but if your customers don't feel like they're getting excellent customer service, they may decide to leave. You may be able to win back customers by improving the way that you handle customer issues and complaints.
This will help to show customers that you're willing to go above and beyond to make things right. In fact, 88% of consumers say that companies who go above and beyond to provide good service will get their business. This may mean answering customer service emails immediately, resolving issues as quickly as possible and thanking customers for their business.
Learn more: Struggling to Keep Hold of Customers? Here's How to Increase Your Retention
3. Offer rewards for customer loyalty
If you want to win back customers, it makes sense to start rewarding customer loyalty. Loyalty programs offer customers a reason to shop with you again and again – and a reason to refer their friends. This will help to increase your customer base and create repeat customers.
A loyalty program might include free shipping, early access, special discounts, gift cards or personalized offers. For instance, 68% of customers stated they valued shopping with a company that provides them with personalized discounts based on their purchase history.
The more creative you are with your rewards program, the more likely you are to stand out from your competitors. If your customers feel like they're being rewarded for their loyalty, it will make them feel appreciated. This will improve the way they feel about your brand, in turn improving their loyalty to the brand. In fact, 58.7% of customers value rewards and loyalty points.
Learn more: Your Customer Loyalty Mastersheet: Everything You Need to Maximize Retention
4. Add value
You can also win back customers by adding value to your service. This can be done in a couple of different ways. You could offer an upgraded product or service, or you could add features or benefits to your current offering. If there's a common complaint or issue that customers are having, you can also add value by resolving that problem. The more you can do to improve your product or service, the more likely customers are to remain loyal to your brand. In fact, 77% of consumers agree that they are loyal to a brand because of the quality of the products or services.
If customers feel like their needs are being met, they're less likely to look elsewhere for those needs. Where possible, try to add value to your product or service for free. This will show your customers that you appreciate their business and are grateful for their loyalty. It's a small gesture that can go a long way toward regaining lost customers, retaining existing consumers, and building client loyalty.
5. Communicate with your customers
If your usual communication methods are coming off as generic or impersonal, you may be alienating your customers. This could be one reason why they're leaving. When you communicate with your customers, make sure that you're doing it in a way that feels authentic and genuine. This can include everything from your emails to your website content to how you respond to social media posts.
If you have an email list, make sure that you’re not just sending out mass emails. Instead, personalize your emails to your customers, or at the very least, make sure they aren’t coming off as impersonal. Interestingly, 33% of customers state that their relationships with companies weren’t personalized enough, and 74% prefer personalization over standard communication approaches. Similarly, make sure that your website content isn’t generic. If you want to retain customers, you’ll need to make them feel like they’re being spoken to as individuals.
6. Refresh your brand’s image
If your brand's image is holding you back, you may want to consider refreshing or changing it completely. It could mean remodeling your storefront to look more modern or upgrading your packaging to look more appealing. It could also mean reworking your website to feature a modern design or creating new marketing materials that better convey your brand's message.
Depending on the demographics of your target audience, you may need to alter your brand message or tone to appeal to their preferences. For instance, if you aim your products or services at the younger generation, you may gain more traction by refocusing your brand's marketing efforts on TikTok or Instagram.
7. Offer financing options
Another way to win back lost customers is to offer financing options for high-ticket purchases. If a customer is on the fence about making a significant purchase from your company, offering financing options may be just what you need to get them over the hump.
Those customers may have just been holding off on making their purchase because they weren't sure they could afford it. With financing, you're demonstrating that your business is willing to work with customers to ensure they have the purchasing power necessary to get what they want.
8. Offer upgrades or new products
Implementing a win-back strategy focused on offering new products or upgrades can be an effective approach to re-engage these lapsed customers and drive business growth. This demonstrates your business's commitment to innovation and continuous improvement, which can rekindle the interest of a disengaged customer. By showcasing enhancements in features, functionality or overall product experience, businesses can address previous customer pain points and encourage them to reconsider their decision to switch or discontinue a service.
Offering exclusive promotions or incentives tied to new products or upgrades can also be a powerful win-back strategy. These deals can create a sense of urgency and exclusivity for lapsed customers, enticing them to give the product another chance. By providing added value or a special offer, businesses signal that they value their former customers and are willing to make amends in order to regain their loyalty and trust.
Learn more: 5 Brilliant Customer Loyalty Programs from Big Brands
9. Reach out to customers on a personal level
Reestablishing a strong customer relationship is crucial for businesses looking to win back lost clients. A personalized approach in reaching out to disengaged customers can significantly impact their decision to reengage with the business. By understanding the reasons behind their disengagement and addressing their concerns, businesses can demonstrate their commitment to customer satisfaction. Moreover, offering tailored solutions and incentives can create a sense of value and appreciation, which fosters loyalty and trust.
Winning back lost customers can be challenging, but it's possible. When you consider how much time, money and resources go into attracting new customers, it makes sense that businesses will go to great lengths to retain lost customers.
Ultimately, there is no one strategy that works for everyone. Instead, there are many ways to win back lost customers, from loyalty programs to financing options. But before you implement new customer retention strategies, first understand why customers left in the first place.