One of the things every retailer dreads is a high customer churn rate. Churn rate is nothing but the number of customers who drop out of the buying cycle. It could be non renewal of a loyalty program, or unhappy customers going in search of a better service. Be that as it may, one of the key things every retailer needs to do is to minimize the churn rate with every tool at his/ her disposal.
The average churn rate across the US across categories is as follows.
Image source: Statista
You can calculate the churn rate for your business over a particular period of time like this:
No. of customers lost/ total number of customers
The revenue generated from repeat customers is always more than that generated by new ones, so it’s wise to keep the churn rate as less as possible. 80% of future profits stem from just 20% of existing customers.
Here’s a list of 5 things that influence churn rate and how you can best use them to your advantage.
The wow factor
Wowing customers is one thing, meeting their basic expectations is another. So, let’s say your brand offers free shipping on all orders above a certain limit. If the last mile experience is smooth and memorable, along with personalized packaging, you’ve hit the wow factor. This plays a major role in keeping customers coming back for more, swearing unwavering brand loyalty, and promoting your brand for you free of cost!
Customizing viewing options for repeat customers is also another thing you can do to gain lasting interest. Loyal customers usually stay on with a brand despite multiple options being available to them because they feel treasured and valued as a repeat customer. They get access to exclusive deals, vouchers, and sneak previews of sales before anybody else!
Delivering on your promise goes a long way in meeting customer expectations.
Justfab knows how to leverage its VIP Member deals with well timed offers.
Image source: Justfab
How personal can you get?
Image source: Marketoonist
Personalization has become one of the most overused words in retail these days. This does not however diminish its importance when it comes to building a loyal customer base. Emails for new and recurring visitors can help customers who might be stuck at some point before checkout.
Newsletters offering the best style options based on individual tastes will let the customer shop easily without having to browse for what he/ she has in mind. A well curated newsletter is worth a hundred promotional emails!
If you take a look at Stitchfix or Trunkclub, you’ll realize the appeal they hold for customers is the concept of a personalized wardrobe picked out by a stylist according to their particular tastes or interests. Catering to the individual preferences and needs of customers is a tried and tested method to bring down customer churn.
Take a look at this adorable email for an abandoned cart that simply won’t let customers say no.
Image source: Shopify
Bait or be baited
You know how it works with so many competitors around. Bringing in customers to the front door is in itself a daunting task at times. If you add in the pressure of offering something that your competitors aren’t offering right then, you’re likely looking at a plethora of reasons for a high churn rate.
Some of the best ways to lure in customers the first time include exclusive discounts for first timers, discounted VIP Memberships for new subscribers, or the cherry atop the cake- FREE shipping! Trust me, that one always works.
Offers that are well contextualized also entice customers to go for your store over that of competitors. Look what flukerfarms offers potential customers. The possibility of a free bug hunting trip to New Orleans!
Image source: Fluker farms
Knowing your target customer base helps with offering personalized content and offers. Technology plays a vital role in ensuring you’re up to date on the personalization front, as dynamic personalization is gaining momentum right now.
Image source: chewy
When the going gets tough, the tough get going.
In the minefield of online retail, offering the best customer experience is what will set your brand apart from your competitors. When other retailers in the same space offer options like AR and personalized shopping, you need to keep yourself constantly updated on the latest tech trends that are going around. Existing customers will be happy to offer feedback on anything new you might want to try out. Customer feedback is also extremely important in addressing problem areas. Regular checks can ensure you can avoid several pitfalls and a high customer churn rate.
Image source: Nike
The well known rivalry between Nike and Adidas has taught some valuable lessons to small and medium sized businesses. Both sports brands take targeted advertising and leveraging their brand to the next level. While Nike focuses on promoting a unapologetically healthy lifestyle with its ‘Just do it’ pitch, Adidas focuses on technology, innovation and comfort. They reach out to their loyal customers with a standard brand voice that is as easily distinguishable as their brand logo.
Image source: Duettmann
Referral and loyalty programs
This is one of the best ways to increase customer retention for your store. The catch is that only well constructed subscription or loyalty programs help in increased revenue and decreased churn rate. Knowing the target audience and catering to specific needs is key. Consider the following models.
Image source: Friendbuy
Taking control of your last mile plays a vital role in decreasing churn rate. All the above factors work together in tandem to create wholesome customer experiences that will benefit your brand in the long run. Realising the value of repeat customers will ensure that you prioritize it over gaining new customers continuously. Referrals and word of mouth advertising will push your store up much farther than many targeted ads can.
Here’s to creating indelible customer experiences and saying goodbye to ridiculously high churn rates!