Top 5 Reasons Customers Churn

Have you calculated your customer retention rate lately? Because all data points in one direction: your business' most profitable source of long-term revenue isn't new customers. It's keeping and maximizing the ones you already have.

For instance, acquiring a new customer costs 6-7 times more than retaining and selling to an existing one. Moreover, on average, loyal customers are worth up to 10 times more than their initial purchase. Both those powerful stats come directly from the White House Office of Consumer Affairs. This means that no matter how many new customers you have coming through the door, if they are leaving as quickly as they came, you have a serious problem on your hands.

Even businesses with the best of intentions can lose customers quickly if they don't know why their customers are leaving.

To remedy this pressing problem, here are the top five reasons customers churn:

1. Bad Service

Many companies believe that customers leave because they found a better deal elsewhere or the product wasn't good enough.

The truth is, the majority of customers leave because of bad customer service.

Instead of paying way too much attention to functionality and pricing, focus directly on your customer experience instead. Businesses that can't afford to hire full time customer service representatives can use autoresponders to their advantage.

For example, start by identifying the top five complains in your industry or the top five FAQs from your own business. Instead of creating a static webpage, get proactive and head off those issues before they even come up.

Advanced autoresponder tools enable you to create preloaded email sequences that your visitors trigger by filling out a contact or question form, signing up for a free offer, or even abandoning their shopping cart.

Be careful, however; it's easy to overdo it, especially with upsells. For instance featuring a competitive product or something the customer's already purchases are the top two mistakes that can turn proactive service into a bad experience.

2. Broken Promises

If you're making grand gestures and promises to get customers to sign up with you or buy your products, and then you fail to deliver, customers will feel no guilt walking through the door.

The fix for this is as simple as it gets: don't make promises you can't keep to lure people into your doors, and follow through to ensure they get what they expect.

Zappos, for instance, is one company that has built it's entire brand around delivering on the promise of happiness. Here's except straight from Uncommon Service that highlights their commit:

If [Zappos] doesn't have the shoe you want in stock or in your size, a Zappos call center employee will go to three competitors' sites to try to help you locate what you want to buy. Seventy percent of its business comes from repeat customers, despite the fact that its prices are far from the lowest.

3. No Loyalty

Unless you happen to own one of the few monopolies that exist in today's world, you're very aware that your customers have choices. So even though they might be buying from you today, there's no guarantee about tomorrow ... unless you have their loyalty.

Loyalty isn't easy to earn, and traditional loyalty programs like "buy 10, get the next one free" at the local coffee shop don't work as well as you would think. Customers would much rather run over to Starbucks and use their My Starbucks Rewards cards to get their freebie now.

The key to keeping customers is to not make them wait for the benefits of loyalty. So be sure to include an instant gratification element in your next loyalty program and you're much likely to see them sticking around.

4. Pushed Too Hard

People buy products and services for two reasons: first, to solve a problem, and, second, to make themselves feel better. Neither of these motives is encouraged by being annoyed or harassed.

When a company constantly tries to upsell a customer who doesn't want to buy anything else, or send them nonstop emails about a different sale every day when they are clearly not interested, it can drive them over the edge and straight into the arms of your competitor.

Make an effort to get to know your existing customers, observe their purchasing habits -- what they buy, when they buy -- and create offers and loyalty programs based on their behavior.

The easiest way to find out if you're pushing too hard is to track email open and click habits. If your customers aren't clicking through, either they want something different or they are simply not interested. Continuously sending them similar offers won't change anything, so save them the trouble of having to unsubscribe, or worse, report you as spam.

5. Unexpected Inconvenience

You might remember the time Netflix got into some serious hot water with its customers when it tried to split its DVD and streaming services, and hike up the prices in the processes.

Or more recently, when popular Instagram analytics tool, Iconosquare, decided they would start charging customers $199 per month for a service they had offered for free.

In both cases, the customer response was so overwhelming that the companies had to reverse their decision. Not only were there complaints, many of their customers abandoned ship and sought out alternatives.

Don't shock your customers with negative news -- particularly anything related to price increases. Instead, seek out some willing customers to give feedback through a chat app like tlk.io or voice-of-the-customer tools like UsabilityTools or Feedbackify. Always test out new structures at a small scale first and offer incentives for switching over time, rather than blindsiding your customers all at once.

It's important to remember that not all customers are created equal. Some customers do more harm to your business and your employees than good. If so, feel no guilt in letting them go. But for the customers that mean the most to you, make sure you're doing all you can to keep them happy and satisfied. After all, your customers -- not your prospects -- are what make or break success.