It’s not rocket science: the lower your customer churn rate, the higher your profit. But do you know how much customer retention is really worth?
According to Harvard Business School, even just a 5% increase in customer retention can lead to a 25-95% increase in profits. And a study by Temkin Group concluded that loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 4x as likely to refer, and 7x as likely to try a new offering.
On the other hand, if a customer has a poor experience with your company, not only might you lose them for good (58% of customers say it only takes one bad customer experience to never use a brand again), but you might find it difficult to attract new customers—85% of disgruntled customers want to warn others about doing business with the company, which means word will get around.
If you’re reading this, you’ve probably already tried different tactics to boost customer experience and have only seen minimal success. That’s because the key to reducing customer churn is to apply a systematic approach to the problem, not tactics—you must identify where in your system customers are having issues, and what those issues are from their perspective.
And once you know where your customers are having trouble, you’ll be able to make the necessary adjustments to decrease or even prevent customer churn.
Use data to find and fix issues causing customer churn
To find the issues within your system causing customer dissatisfaction, you’ll need to turn to data. Here are three measurements you should use to identify your disgruntled customers and what’s causing their frustrations.
1. Identify Your Detractors with Net Promoter Score® (NPS®)
NPS surveys determine customer loyalty by asking on a scale of 1-10, “How likely are you to recommend us?” The term Detractors refers to those customers who give your business a score of 6 or below. In other words, Detractors are unhappy customers who are at high risk of contributing to your churn rate.
Measuring your NPS score will give you a clear view of your current state of customer loyalty. More importantly, it’ll spotlight the customers that you need to nurture. You can begin the process of rebuilding a positive rapport with Detractors by tailoring your NPS survey to include a follow-up question asking them to explain their reason for the low score. If you’re wondering what this type of NPS survey question should look like, see the sample survey in this NPS blog post.
Once you’ve gotten the initial customer feedback, you can take action. Check out this piece for more advice: Dealing with Detractors in 4 Simple Steps.
2. Define your customers’ expectations with win-loss surveys
Once someone has made it through the sales touchpoint of their customer journey, your company can trigger a win-loss survey to be sent to them. If you’re not familiar with this, here’s how it works:
If the sale was a success, you can send them a closed-won survey that asks, “Why did you choose us?” You’ll learn directly from your customers what you have over your competition.
If the sale was a bust, you can send them a closed-loss survey that asks, “What’s the main reason you didn’t choose us?” This will give you insight into areas you could improve upon.
While win-loss surveys are primarily used to help sales teams, the knowledge gained is invaluable for retaining customers: it reveals your customers’ expectations, helping you fulfill or even surpass them.
3. Get to the root of customer churn with Customer Effort Score (CES)
The Customer Effort Score survey measures how difficult it was for a customer to solve their problem by asking, “Did we make it easy for you to resolve your issue today?”
This survey will reveal the underlying factors that impact your customers’ satisfaction. With it, you can identify what’s making things easy for customers and where they’ve run into difficulties. From there, you can focus on making improvements that’ll prevent future customers from running into the same problems and churning.
Never seen a CES survey before? Check out the puppy below created by yours truly.
Click here to learn more about how the CES survey helps with customer retention.
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