There are some surprising reasons your small business might lose a client. Much of my experience has been in the printing industry. It's prone to fatal customer service problems such as missed deadlines, printing errors, or finishing mistakes. Each industry has it's own prevalent reasons for losing customers.
However, customer churn research from Pitney Bowes outlines some other reasons that might sneak up on you.
Reasons Why Your Customer Churn Rate Might Be High
Aside from poor customer service, the next most cited reason for switching a supplier is ‘poor communication.’ In a churn analysis of 1000 business managers around the world, 14.8% switched their Print Services provider within the past 12 months.
Their reasons might surprise you. And if you're focusing on the commonplace customer service issues I mentioned in the beginning, you might be left wondering why you lost a customer. The reasons below also apply to nearly all small businesses:
- In the USA 28.9% say their reason for switching is that the supplier is “Not in touch”
- 23.3% switched because they’re “not told about updates and developments”
- 25.4% switched because they “don’t ask about customer’s needs”
To put it simply, if you don’t talk to your customers, you will lose a significant percentage of them this year. That’s a fact.
The nice management name for this is customer churn, turnover or attrition. As a small business owner, those mild-mannered names bother me because it disguises the severity of the problem. In a sense, it makes it seem acceptable.
Let’s think about this. The purpose of making the sale is to get a customer and to keep that customer for the lifetime of the business.
So when we talk about customer churn, we're talking about a process that's working in opposition to our main reason for being in business. That makes it a critical, life-threatening business issue and being somewhat ornery, I call it what it is, losing customers.
It’s generally accepted that the cost of retaining customers is far less than the cost of acquiring customers, hence the need to motivate them to stick around. According to the Pitney Bowes research, even if you lose zero customers to customer service or production problems, you still need to focus on communications or your customer base will erode month by month.
It’s my experience that most owners focus on the customer service problems in order to prevent the loss of customers while ignoring the communication issues.
So how, exactly, are we supposed to talk to our customers, to have good communication? Certainly there is no excuse not to communicate with your clients when you consider the media and technology available today:
- social media
- fax (yes, you can still use fax)
- direct mail
- sales people
- customer service reps
- and more…
Ideally you should use as many media as possible to communicate with your clients as part of an overall marketing strategy to reduce your customer churn rate. As you know, clients each have their own unique preferences for communication.
For more how-to techniques and strategies for getting and keeping clients, get our free weekly, Andre Palko's Small Business Rainmaker.