The average business loses about 10-25 percent of its customers every year. Unless you're a first-time business owner, you certainly know that losing customers is part of the game.
However, one of your primary objectives is ensuring that your business gains far more customers than it loses; otherwise, revenues will decline sharply. So, if you're currently losing customers at an alarming rate, you must be worried about the situation and trying to find ways to remedy it.
To find effective solutions, though, it helps to understand why your customers are leaving in the first place. In this article, we're fleshing out some of the common causes of customer attrition.
- Product Quality Issues
The product or service you sell is the link between your business and the customers. They buy it because they have a need that your product solves. You want them to keep coming back for more.
There are a couple of reasons customers stop buying your product or service, but the biggest one is quality concerns. If your product's quality has gone down lately and you haven't done anything to correct the issue, your customers will start leaving. They will especially leave in droves if there's a better alternative on the market.
Don't wait until several customers are complaining about the quality of your products to correct the problem. Look into product quality issues as soon as they arise and fix them immediately. If you're outsourcing manufacturing, don't shy away from switching to another manufacturer if the current one's production quality isn't up to par.
- Bad Customer Service
In a 2022 customer experience survey, 60 percent of respondents said they have switched brands after a negative customer service experience.
There's no doubt that the modern consumer expects to get excellent service when they visit or contact a business. And, considering that consumers have multiple choices, you can see how easy it is for them to move on.
If your business's customer service isn't satisfactory, customers will flee.
Depending on the nature of your business, there are a couple of customer service areas that will need improvement. If your business has call center operations, for example, you need agents with great customer service skills. Not only that, but you must ensure more than 80 percent of the calls are answered in under 20 seconds.
Also, make a habit of collecting customer feedback. This way, you'll be in a better position to know what areas of your customer service delivery need to be improved.
- Unmet Expectations
Sometimes a business can sell great products and offer excellent customer support services and still lose customers at a high rate. If you're in this situation, perhaps it's because you're setting expectations and failing to meet them.
The end result? Customers who feel short-changed.
While it's great to set high expectations for your business, you could easily make promises that you won't deliver in the process.
For example, let's say you own a home internet company that guarantees its customers high-speed internet. You will raise customers' expectations most will buy your service because of it.
Now, if the customers don't get high-speed internet as promised, it won't be long before they start feeling your company isn't meeting their expectations. Perhaps the same customers would be content with regular internet speeds.
It's prudent to be careful with the promises and guarantees your business makes. It's in the best interest of your customer retention efforts to underpromise and overdeliver than to overpromise and underdeliver.
- Uncompetitive Pricing
Customers want the most bang for their buck, so they're always conscious about how much they want to spend on a product or service. As such, your pricing strategy could be the reason you're experiencing a big loss of customers.
Of course, if you're in a monopolistic industry or the dominant player in your market, you've got greater control over how you price your products. In theory, you can increase your markup per item and customers will still have no choice but to buy.
However, in a crowded, competitive market, your pricing has to follow market trends. Going significantly above the average market price, even when your product is superior to the rest, can have a negative impact on customer attraction and retention. Price-conscious consumers will prefer to buy the more cost-effective option.
Instead of using price as a differentiator, there are other strategies you can implement, such as implementing a loyalty program. Read this article to learn more about how to design a program that will enhance customer loyalty.
- Company Values
Most shoppers won't purchase from a brand whose values don't align with theirs!
What does your brand stand for? If it hasn't officially communicated its values (through a mission statement, for example), attracting customers is going to be challenging. And if your brand's values keep changing or you don't practice them, customer loyalty will become elusive.
If you want to minimize customer attrition, ensure you have a good understanding of your target market. What values do they hold?
With this information, you can then build a brand around those values. For example, if most of your target customers are environmentally conscious, they're going to look for brands that support environmental conservation. All you will need to do is build an eco-friendly business and the customers will come.
Put an End to Losing Customers
Although losing customers is something every business owner expects, you want to retain as many of them as possible. After all, it takes a lot to attract a new customer.
If an increasing number of your customers are leaving, don't sit back and hope the attrition will stop. Seek to understand what's pushing them away, and address it promptly.
All the best and keep reading our blog for more business advice.