Churn, Baby Churn – Losing customers due to lackluster customer service

I used to think that good customer service came naturally to most people because it comes naturally to me since I’ve been providing it to people for so long. But, over the years, I’ve come to realize that good customer service is a rarity in today’s society.  Sadly, most consumers have become accustomed to lack-luster customer service.

And they just put up with it.

Are your customers happy with your level of customer service?  Are you sure? How do you know? How do you know if some of them are so unhappy, they just don’t like doing business with you anymore? 

Many small businesses are losing customers and they don’t even realize it.  Could yours be one of those companies that is unknowingly losing customers to your competition?

The hard work of entrepreneurship pays off when customers patronize your business and pass along some of their hard-earned money to you in exchange for your product or service. It REALLY pays off when they spend money with you again and again and refer friends and family to you as well. 

More than likely, you’ve spent lots of money and time attracting customers to your brand in order to keep your business thriving.  Maintaining a loyal customer base  and consistently attracting new customers is key to increasing your bottom line.  

But what if I told you that  you could be losing customers to your competition and you aren’t even aware that you are losing them?  And you may not know what you are doing (or not doing) to lose them.  

Check out these statistics that I found to be quite eye-opening:

·      For every customer complaint, there are 26 other unhappy customers who remained silent – Lee Resource

·      Roughly 50% of customers say they would switch to a new brand after one bad experience. – Zendesk

·      Only 1% of customers feel that their expectations of customer service are always met. – RightNow

Now – Let’s talk about churn

If you have a customer purchase from you once and never again, you’re experiencing a form of churn – a measurement of the rate at which customers stop doing business with you.  If you have customers who were consistently purchasing from you but have now stopped, that is also churn. 

Determine your churn rate by taking the number of customers you lost in a month (or quarter or year) and divide that by the number of customers you started that time period with. The percentage you get is your churn rate. If you started the quarter with 100 customers and lost 20 customers that quarter, your churn rate was 20/100 = 20%.

Here are some things for you to think about: 

    • Do you know your churn rate for your business?  It is estimated that an average churn rate for product-based businesses is between 7%-9.5%. It is estimated that an average churn rate for service-based businesses is around 6%.

    • Have you surveyed your current customers to see if they are truly happy with your customer service – enough that they don’t plan to stop patronizing your business any time soon? 

    • Are you losing customers because of lackluster customer service?

    • Do you know how much revenue you are losing due to your churn rate?  

All businesses experience some churn.  It’s inevitable.  But it does help to know what your current churn rate is and to figure out why you may be losing customers so that you can develop a plan of action to retain them. 

The key words above are “plan of action”. When I work with my clients to develop customer service standard operating procedures for them, my goal is to help them become more proactive versus reactive in their business. You need to prepare for how you want your customers to be treated, how you want them to feel, how you want them to be appreciated – all in an effort to increase retention and loyalty and decrease churn. Just like you plan sales launches or service offerings, you need to plan your customers’ journey. 

If you fail to plan, you plan to fail. Customer service should be a priority in every business and consistency is what will create the customer loyalty we all crave in business. Take the time to plan and you will reap the rewards!

-Angela Black


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