Customer Churn: Why Are Your Customers Leaving You?

As a sales manager or business owner, the concern of losing customers is always at the forefront of your worries. Maybe they’re leaving for a competitor, or maybe they just don’t need what you offer anymore.

In either case, if your customers are walking out, you need to understand customer churn and its reasons! In this blog, we’ll explore what is customer churn, Plus, we’ll talk about how you can prevent churn as well! Ready to get started?

What is customer churn?

According to Hubspot, customer churn is the percentage of customers that stop using your product/service at a given time period. Also known as customer attrition, you can calculate customer churn as follows:

Here is an example: if you have 50 customers at the start of the year but by June, you notice that only 35 are paying for your service, you lost 15 customers. Hence, your customer churn would be 30%. Regardless of industry, every business must treat customer churn as a top priority and keep it as close to 0% as possible.

❓Why is high customer churn bad for your business?

Before we get to reasons why your customers leave, it’s critical to know why it’s harmful to the business. A high customer churn rate can be negative to your business, especially sales for more reasons than one.

Here are a few of them:

Customers take a chunk of your revenue stream with them when they leave. And the more the churn rate, the higher the loss in your revenue.
One of the reasons customers leave is a poor experience; by leaving, they are likely to share those negative experiences with others. This can harm your industry reputation and make it challenging to gain new customers to replace the lost ones.
Once a customer is lost, companies will need to increase their marketing and advertising budgets to gain new customers. According to Invesp, this is five times as costly as simply retaining your customers!
High customer churn can be off-putting for employee motivation, workplace productivity, and morale as your employees can feel like their efforts are wasted.

6 reasons why your customers are leaving you

A customer leaving is bad news no matter what. But why are they leaving? Here are the top 7 reasons for customer churn that you can target for better customer retention, starting today:

1. You attract the wrong type of customers

Are you constantly battling with disappointed customers who always want more? And they’re the ones leaving huffing and puffing?

Chances are, your company is attracting the wrong type of customers, creating unfit leads for your offerings. These customers are likely to not need whatever it is you’re offering and hence lead to high churn rate, dissatisfaction, and negative reviews.

💡 Tip: Create a clear ICP and buyer persona for your customers, using the help of an aligned sales and marketing team.

2. Customers are disappointed with the product or service

Now, what if you are attracting the right type of customers, and they’re still leaving? This might happen because these customers were promised the world and that hasn’t been delivered to them.

There are many reasons why your customers might be disappointed:

A steep learning curve and poor onboarding practices can disappoint users from the get-go because they are searching for a quick, simple, and easy solution to their problems.

There is a genuine lack of features because of a closed product development process. Users are not finding all the features they need to solve their problems, which makes them leave your business and search elsewhere.

Hence, if you notice that your customers express disappointment, you should make proactive decisions and ensure no false expectations are being set. Customers should be involved in active feedback to improve the product and the onboarding process should also be as smooth as possible.

3. Your customer service needs serious help

It’s no surprise that every customer wants special treatment. They want to feel valued, seen, and understood by every employee in your company— and that journey starts with your customer service reps.

In fact, 96% of customers believe that customer service is the main factor in determining customer loyalty. Increasingly, more and more customers are looking for clear and easy communication, especially via social media.

So when these customers leave, you’ll want to look into your customer service quality. As a sales manager, you want to ensure the following in your support teams:

Wait times are no longer than 4 hours over email, and quicker over calls.
Support requests aren’t answered with generic support links to knowledge centers.
Solutions provided by customer service reps are effective in solving the problem.
You are offering multiple platforms for communication, including email, WhatsApp, Facebook, and more.

4. Your customers find the competition’s offer to be better

When customers leave your company and move to a competitor, they often have 2 magnets pulling them there:

The competitor’s pricing is more appealing, or
The competitor offers more features than you do.

Many times, changing the price is not viable or possible— and it’s the value of the product/service that really counts. If your company’s offering provides value, customers will be willing to pay copious amounts for it.

And in this case, one of the best ways of winning your customer back is to build the value of your product. You can do that by evaluating what your customer needs and creating an ISP that highlights how your offering can fulfill that need. Top that off with an easy explanation and onboarding procedure, and you’ll be ahead of your competition in no time.

Here is an example of how you can simplify your offerings while ensuring the value remains the same:

5. There is a lack of rapport

Rapport and trust are the backbone of a loyal customer base. If your customers feel like they can’t trust you with their data or problems, they’ll leave. For example, distrust in data privacy can make customers choose a competitor that offers transparent privacy rules and encrypted data protection!

That said, there is a way to increase rapport and trust in your business. You should consider heavily investing in account management and your customer support quality. Ensure your customer support reps are personalized in their conversations and regularly check in with customers proactively.

You can also celebrate milestones by hosting Q&A sessions, publishing blog posts, or creating tutorials to help customers who don’t reach your customer service reps.

6. Payment issues are common

Issues in payment methods or transactions are one of the top drivers of customer churn. If customers can’t make payments with ease, or have to retry payments often, they’ll end up feeling resentment and frustration.

And in turn, those feelings are going to become the reasons why customers leave you and your business. To reduce billing issues, you should implement automated reminders through an automation platform. You should also focus on offering multiple widely-supported payment options such as:

Paypal,
Direct bank transfer,
Apple Pay,
Google Pay, and
Stripe

Final Thoughts

To summarize, customer churn is a big problem for any business across all industries. As a business owner or sales manager, it is your job to consistently analyze and optimize the rate at which customers are leaving your business.

In this blog, we uncovered the 6 most common reasons why your customer churn might be too high. Whether it is a lack of rapport or plain ol’ disappointment, you now know what the main causes are and how to fix them!