What is customer retention or churn rate? It’s the ability of a company to keep customers repetitively purchasing products and services they sell. At the same time reducing/preventing customers from leaving and purchasing competitive products or services. So we are talking about retaining repeat buyers and keeping them as loyal customers. Many CRM systems can track when the last time a customer purchased and how often they purchase by combining the information from invoicing and historical annual/quarterly sales in the system.This is the easy way for sales to generate new purchases from existing customers each month. Instead of trying to find new prospects they can convert to customers.Not only should sales be connecting with lost customers but review the buying habits of existing customers. What they will find is a customer may be buying less or has just stopped buying. Some of the reasons are obvious to a sales team that knows its products, time line to repurchase and the buying of patterns of existing customers.
Here are some reasons customer sales decrease or stop:
So how does sales decrease customer churn rate? In the CRM system sales can generate reports of customer buying habits. Sales can look for longer than usual timelines between repeated sales. These reports will also show the churn rate of customers monthly, quarterly and annually. Sales should have a goal of keeping the churn rate at under 5%. Obviously the lower the better but 5% is considered a “good churn rate” in any industry.If your customer churn rate is averaging over 10% you’re in trouble! Just think about what results this has on your company’s sales and profitability. We know it is more expensive to generate and convert more prospects to customers. Now your sales team is working over 10% harder to find more customers above the monthly customer generation rate in your industry. It means longer hours, extended time to convert to customers and increase expenses to go through your sale funnel to conversion. Don’t know your retention and churn rates? Ask us and we’ll help you find them and work with you to reduce your churn rate and increase repeat customer purchases. Call us at 508-226-4565 and ask about our Marketing Discovery Session where we’ll outline how to increase sales and profits.
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