Is churn undoing your business wins?

By Charlie Williams

People often ask me whether a CX programme will help them to grow their business. I would answer that yes, because a well-executed CX plan will get customers to stay longer, buy more and refer others.

What I can firmly say is that growing business is not about just winning new customers. After all, winning new customers in today’s competitive landscape takes time, expertise and money. Obviously when it happens, it’s a great feeling of accomplishment.

But what if those new wins are simply replacing customers that are being lost? Growth slows down. Customer value decreases. The negative impact of not retaining customers permeates the company culture. I’d advise companies to consider this: on average it’s six times more expensive to win a new customer than it is to retain and grow an existing one. So much effort and emphasis can be disproportionately applied to winning new business rather than serving those that have already been invested in.

Where are the holes?

Churn is the term we use to describe losing existing customers. The biggest cause of churn according to the Rockefeller Corporation is how the customer feels. They claim 68% of customers leave because they don’t believe a company cares about them.

The chart below shows how this reason stacks up against the other factors influencing a customer’s decision to switch:

Churn, or attrition, stunts growth, creates a negative organisational culture and decreases customer lifetime value, which pushes up cost of sale significantly.

Get the balance right

So how can you stop the leaks? I’d say that to address churn effectively, a combination of insight (understanding what’s happening in the organisation), improvement (programmes that tackle the issues identified) and innovation (creating competitive advantage through brand, communications and technology) is required to demonstrate a fully customer-centric approach.

Tackling churn, and the root causes of it, will help to rapidly develop the business. As a result this can open up exciting new revenue streams, through retaining existing customers, encouraging them to stay longer, spend more and refer others. This approach surely has to be the number one priority for any organisation with an eye on growth.

Charlie Williams is CEO of CXCo. He has a wealth of experience in implementing customer experience and customer retention strategies for companies including Gallagher, TUI and SSE.


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