Using Mystery Shopping to Reduce Customer Churn
Customer churn is a problem that affects businesses in every industry, in every part of the world. Many businesses often neglect their existing customer base and focus on attracting new ones, forgetting that a loyal customer’s lifetime value has far more impact on business growth and success than the constant search for new customers. Customer churn is natural, there is always a certain percentage of customers that will leave your business for a variety of reasons – they move away, they switch to the competition, they die. It’s the reasons within the control of a business that need to be analyzed and constantly addressed; no one wants customers leaving for reasons you could have controlled.
What is Customer Churn?
Let’s backtrack for a moment and define ‘customer churn’. Also called customer attrition or atrophy rate, customer defection or turnover, customer churn is what happens when a customer – subscriber, client, user, follower, etc. – stops their relationship with the company.
Most companies have a metric they use to measure and classify a churned customer, usually connected with a timeframe. A good example might be the last time a customer made an online purchase; a company might establish that a churning customer is defined by not having made a purchase in the last year.
For businesses, it’s important to measure customer churn because it influences the lifetime value of a customer: the longer a customer is buying a product or service – i.e. the less they are churning – the more revenue that customer is bringing in for the company. Makes sense right?
Customer churn can be represented in a number of ways, the most common being:
- Percentage of customers lost
- Percentage of recurring value lost
- Value of recurring revenue lost
Why do Customers Churn?
Customers churn for a lot of reasons – as mentioned above, some of which are entirely beyond anyone’s control. The key reasons within our control that create customer churn are:
- Bad customer service
- Bad Training
- Lack of interest in improvement
Customer service experiences is one of the key ways in which companies can differentiate from the competition. Providing customers with great opportunities, excellent service, and an experience they wouldn’t get anywhere else is the best way to assure that customers don’t stray.
The same can be said of bad frontline service training – if employees don’t know what they’re doing, or how to sell, customers will leave the business and look for a place where they will get the help they want and the salespeople they can work with.
A lack of interest in improvement, or simple maintenance of the status quo, can be a killer for companies. ‘Because this is how we’ve always done it’ no longer cuts it, no matter what industry you are in, everyone benefits from improvement, whether it’s a quick check up or a thorough overhaul.
How to reduce Customer Churn?
Staying on top of customer churn can be tricky. Ideally, a company would adopt several varying tactics in order to ensure customer retention and satisfaction.
- Adding value all the time
- Listen to the customer and use their feedback
- Really know your industry trends
- Identify ‘at risk’ customer segments by establishing clear indicators
- Track lifetime values across sales and marketing channels
Using Mystery Shopping to Reduce Customer Churn
Finding ways to analyze your customer churn is one thing, and managing it can be accomplished by taking a good look at what’s going on internally. A focussed, tailored approach through a solid mystery shopping program could let you assess the situation from the customer’s perspective, combining it with a professional understanding of your industry.
Mystery shopping provides an objective, clear view of what your customers are experiencing when they interact with your company – good and bad. This means that any reasons for customer churn can be thoroughly investigated and analyzed and then addressed.
Understanding customer churn is the best way to develop a strategy to reduce it, and one of the best ways to get to the bottom of why your customers are churning is through a good mystery shopping program aimed at uncovering the reasons.
