Customer churn tends to be marketers’ nightmare for good reason: if an organization’s average contract value is $50,000, losing even ten customers can cost as much as $900,000. What’s more, it won’t take long for leaving customers to resort to your competitors. In the end, it will strengthen their market presence and inevitably weaken yours.
Customer churn might seem like a stroke of bad luck, but it’s also a good chance for you to try and see this marketing glass half full, not half empty. If addressed timely and with the help of BI consultants, customer churn data can turn to be pretty much handy.
Customer Churn Data as a Business Booster
Generally, what makes customer churn valuable is that a business can evaluate what has been going wrong only after it loses customers. Taking a closer look at churn-related data, some companies can develop better predictive capabilities. In the long run, it will help identify these companies’ weak spots, fast and objectively.
Before getting down to analysis, though, it’s crucial to unify historical churn data as long as it often comes from different sources and in various forms. This is where data normalization might help. Today’s business intelligence techniques allow aggregating data from a variety of sources and consolidating multiple structured and unstructured data types, so in the end you get quite a workable format for your churn analysis.
Having valuable churn insights at your disposal, you can finally start deriving benefits from them. Indeed, here’s how customer churn data can become a solid business booster.
Detect Your Weak Spots along Customer Journey
By analyzing churn data, you can puzzle out at what stage of their journey customers usually decide to leave you. That’s how you can plainly see your company’s bottleneck.
Mainly, it’s possible to divide leavers into three broad groups:
- Short-term churn: when customers desert after a month or two of using a product.
- Mid-term churn: when they stay for a few months only.
- Long-term churn: when they leave after years of loyal ‘business-customer’ relationships.
Each group can have its own grounds to cease your partnership. Indeed, short-term churn can root back to customers’ dissatisfaction with the initial trial experience. Mid-term churn tends to happen when a user makes repeat purchases but still doesn’t receive enough value to go on using a product for longer. As for long-term churn, it can result from poor upsell and cross-sell campaigns or a critical lack of personalization.
While going through the data, you can also notice that certain customers leave as a reaction to specific negative events, be it an extreme price spike or wrong-headed website redesign. At the same time, some can churn gradually, for example, by purchasing less and less until they leave, once and for all. In this case, it’s essential to dig deeper into the story of their disappointment and find that breaking point when they decided to leave.
All in all, when you know what stage (and probably which of your actions) puts you to trouble most, it’s easier to start moving in the direction of salutary transformations.
Identify At-risk Customers
Churn data and historical insights on your customer behavior might give you a perspective on those customer segments having a high churn risk.
Imagine that after analyzing your historical data, you learned that lax browsing is usually one of the red flags pointing to possible churn. Now, you notice a loyal customer browsing your e-commerce store for ten minutes but navigating away from it without making a single purchase even though their items of interest are in stock. You can grasp it fast: that customer is soon to go over to your competitor.
However, this was only one of the possible scenarios for at-risk customers’ behavior. A long gap in purchases or, what’s worse, negative reviews and direct complaints can also speak well for soon-to-come churn.
Whatever the signs, it’s vital to dedicate your time and energy to retain at-risk customers as it’s typically much cheaper and easier than winning new ones. To retain, try to communicate with your customers more, ask for their detailed feedback, add more personalization to your services, and, on top of that, start truly caring about your customers. As a proactive, more human-like version of customer experience, customer care implies targeting each customer individually, which is just what today’s audience needs.
Pinpoint Your Target Market Better
When you see your customers leaving out of the blue, it’s high time to rethink your target market. That’s because if you continuously attract the wrong audience, your retention strategy will have absolutely no effect, no matter how excellent it is.
Here, the following story might be a good example. In 2009, the Burbn app was launched to let users share their photos with tagged locations, thus trying to compete with the market stronghold Foursquare. Although Burbn had way more features, the app didn’t catch on with the audience. The founder then used customer analytics to reveal they were continuously targeting the wrong market. Having found their niche, Burbn changed its course, and that’s how Instagram was born.
That may be a consumer example, but here’s the lesson to be learned: you should make sure you are targeting those customers who are the best long-term fit for your product and who can see value in it. In such a way, if it’s the wrongly targeted audience that churns, you can breathe freely and continue working for those interested in your business. If it’s your correct target customers churning, go back to the tips listed above.
Doing nothing after you find out your customers are churning can easily bring you even more losses and quickly bolster your competitors’ positions. To avoid that, it’s a good idea to turn to data analysis enabling you to acquire a sound understanding of those customers leaving and staying, and the reasons behind it. As a result, you can better target your campaigns and set the appropriate expectations, which reduces the possibility of a repeated churn.
In the end, you’ll not only get a better perspective on your company’s performance but also school yourself into positive thinking, which seems like another business advantage.