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Why your clients are leaving and how to stop them

When most people hear the term “churn rate” they probably think it is a measure of how quickly an elderly Amish lady whips up old-fashioned butter.

However, in regard to subscription and many service industries, churn rate is the percentage of clients that leave the business within a given time period. Something much less sweet or buttery indeed.

The truth of the matter is that most businesses simply don’t focus on client retention nearly as much as they should. Here’s why:

  • They are laser focused on acquiring new clients
  • They are laser focused on acquiring new clients
  • They believe retention is a natural byproduct of good customer service

I agree: zeroing in on new clients is important for new and mature businesses alike. After all, if you do not bring in new blood the only way to increase commissions is through cross sales. It’s a no brainer. But, if your existing clients are dropping like flies it makes it even more difficult to grow an company and increase profits.

Research shows that, on average, it costs 6 to 7 times more to acquire a new client than retain an existing one.

This is not groundbreaking news for some companies. They have done the math and understand the importance of keeping their clients for the long haul.

In fact, many companies pride themselves on customer service and go above and beyond to convert clients into ambassadors. They have excellent producers and service personnel that genuinely care about their clients.

Why clients are leaving

Preview-microThe truth is, you can care about your clients and give them the best service and price available and still have a high churn rate. This is because, regardless of how much you do care, over time clients start to feel like you don’t genuinely care about them.

In fact, this is by far the number one reason why clients leave. The American Society for Quality references a study which indicates that 68 percent of customers defect through perceived indifference. The next closest reason at 14 percent left because they were dissatisfied with some aspect of the service.

For many businesses this will turn the notion of client retention upside down. Great service only prevents 14 percent of those clients that would defect from doing so.

The perceived indifference that accounts for an astounding 68% of client loyalty is due to the lack of regular meaningful communication from the company.

How to stop the bleeding

1. Send periodic Net Promoter Score (NPS) surveys
2. Ask for testimonials
3. Send personalized loyalty cards

NPS Surveys are the quickest and most effective metric to gauge client loyalty. They are excellent at identifying promoters and uncovering detractors. They show clients that the company cares about what they think of them. This survey should be sent to each client every 4-6 months.

Asking for testimonials strengthens the bond between loyal clients and the company. After they make the commitment to promote a business to others it becomes part of their self-image. When asked to further show their commitment (sticking around) they will be far more likely to do so – rather than conflicting with this shared belief and developing a dissonant state.

Loyalty cards are a simple way for businesses to let existing clients know they still care about them. Handwritten and unexpected cards fill the communication void that happens between significant events in the relationship. What better way to eliminate perceived indifference by telling your clients personally that you care about them and thank them for their loyalty?

These three touchpoints go a long way to increasing client retention and are rather easy to implement. Remember that in this game stellar service along is not enough. Your clients need to feel loved or they walk.

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