Some churn is inevitable, but there are steps to take to minimize churn and improve the client experience.
It’s a fact of business: some clients come and go. Sometimes there’s nothing you can do if a client is moving away or has a busier life/work schedule. There are steps, you as a business owner can take to minimize churn, and it all starts with measurement and monitoring. This post offers a plan of action to measure and gather feedback from your client base, and tips for retaining clients based on your client intelligence.
What is your rate of churn?
Churn, or attrition, is the number of clients who leave your business in a given time. Understanding your normal rates of churn - your baseline - is critical for your business. You need to be able to recognize if the churn is within reasonable bounds or if something is not quite right and needs fixing.
Here’s the formula for churn:
# of clients lost last month / # of clients at the start of last month = Monthly Churn Rate
Usually the time period is a month, but churn can also be measured quarterly. A quarterly measure is useful for businesses that have a high degree of seasonal variability. If churn predictably spikes from one month to the next, using quarters will smooth the spikes.
What causes clients to churn?
There can be any number of potential reasons for why the client is leaving. Some examples:
- Not getting results
- Increased family or work obligations
- Moving out of the area
- Financial hardship
- Poor service
- Not a fit
A useful exercise is to survey lost clients and ask why they left. Keep a log of the lost member’s name, the date they started their membership, the cancellation date, and the reason why they left.
Analyzing this data may provide insights into your business and areas for improvement. If cancellations are because of “poor service” or “not getting results” you have information that something needs fixing to improve your business.
Don't let churn surprise you: Survey clients at key intervals
Don’t wait to survey only those on their way out the door. It’s important to periodically survey your existing clients to collect invaluable insights. These insights are the anecdotal and qualitative data that can answer the “what and the why” questions when paired with the churn rates.
Research tells us that only 4% of dissatisfied client actually voice their complaints. Catching annoyances early means you can stop them from becoming real problems. If you resolve a complaint quickly there’s a good chance that you may create an extra loyal client.
Soliciting client feedback:
- creates an opportunity to earn more referrals
- reduces the risk of increased churn by knowing where to improve experiences
- gives unhappy customers an outlet, preventing them from complaining publicly
A good time to survey is one to two months after a client has started. This period is early in the client’s relationship with your business, but enough time has passed that they will have formed opinions.
The first step is to decide what to ask in the survey. Keep it short, with a maximum of four questions that address areas important to your business. Focus on discovering two things: how happy are your clients and how can you improve your services.
Some ideas for questions:
- How likely are you to refer someone to our business?
- What can we do to improve your experience?
- Are there other services you would like us to offer?
Avoid asking for feedback on specific staff members. Most clients are uncomfortable with overtly personal questions and it can significantly reduce your response rate.
Lastly, use an email marketing service like MailChimp or Emma to simplify distribution and send out emails in bulk. Email services typically have the ability to allow for some automation and to schedule survey requests at regular intervals during a client’s tenure with you.
Go beyond the survey and create a great client experience
Nothing can replace personal interaction.
A great client experience starts with feeling of belonging. It’s often as simple as being greeted by name in a professional and friendly manner when walking through the door. Ensuring that your environment is representing your business and is clean and free from clutter is equally important.
Making your clients feel “at home” will create a feeling of trust. Trust them to share honest feedback that allows you to make positive and impactful change to your business. Remember, being present and available to engage with your clients is important. If you're not there then they can’t tell you when something is wrong!
Not all the feedback you are going to receive in person or through a survey is going to be pleasant. How you deal with the issue is vital to the long-term perception your client has of your business. When a client leaves your business upset, the negative feel will stay with them for a long time. Worse, they will tell other people about their negative experience.
However, if managed well, a negative situation may turn into a long-term loyal client. Because you addressed their concern, they know they are important to you.
This short article from Harvard Business Review covers why it’s important to listen carefully, not to get defensive and ask for time when receiving negative feedback: How to Handle Negative Feedback.
Avoid churn by leveraging attendance data
Clients with poor attendance are at a greater risk of churn. Those who attend irregularly see very little results. The rest of life gets in the way and starts to take priority. They soon have second thoughts about staying and paying.
Before this happens, contact a regular client who has gone quiet and see what’s going on. Engaging your clients lets you know if they need a pep talk, if another class is more suited for their needs, or if there is something else going on.
Build a committed team of retention specialists
Your employees have a massive impact on your client’s decision to stay or go. When hiring, make sure new members will be a great cultural fit. For example, are they personable and will they quickly learn your client’s name and goals?
Fill your business with employees who are:
- Goal orientated
Create a business environment where you employees are encouraged to share feedback. This can take place during 1:1 meetings or your team meetings. Your employees have close and personal interactions with clients and they are bound to have input on the client experience, what is working well, and what could be improved.
A business full of retention specialists will keep your churn to a minimum.
Churn is a natural part of business but it can’t be left unchecked. As a business owner, you need to be vigilant in monitoring the reasons why clients leave. Be honest and reflective. Consider whether your processes and services are part of the cause. As an owner, you have the control in the tone you set, the environment you create and the staff that you attract and hire.
Pike13 reporting tracks business churn, as well as the attendance data that can help you minimize it.
See Pike13 in action by requesting a free 20-minute demo.
Feature Photo Credit: Nick Youngson
5 client engagement hacks: A cheat sheet for increasing client retention
As we head into 2013 you’re likely gearing up for increased signups from the ever-motivated New...
Improve Client Retention at Your Gym with Skills Tracking Software
As a gym owner, you’re always looking for ways to improve client retention. One effective way to...
Why You Should Celebrate Your Clients' Birthdays
Celebrating your clients’ birthdays is an easy and effective tactic for client retention. By...