No business wants to lose customers, but it happens. People unsubscribe from your mailing lists, stop visiting your store, and return your products. It is a fact of business. However, if you aren’t tracking those instances, you are missing out.
Defining Loss
When a customer ends his relationship with your store, it’s called “churn,” and it’s usually represented as a percentage called the “customer churn rate.” There are lots of different churn rates. Some include the present value customers bring, while others refer to the lifetime value of a customer. Examples include the percentage of customers who don’t come back, the percentage of sales you lose from those customers not returning, the percentage of people who unsubscribe from your email list, the percentage of people who unlike your Facebook page, and the percentage who stop following your company on Twitter or Instagram, but there are many more. And it all matters.
The Importance of Churn Rate
Churn rate matters for many reasons. For one, there is the cost of acquiring a customer. Marketing can be expensive. If you are losing customers soon after acquiring them, you may not be seeing a return on your marketing dollars. You also have to remember growth. Simply holding steady on revenue means that you will eventually go in the red as your expenses increase with inflation and the general cost of living in your area. Lastly, and perhaps most importantly, tracking your churn rate helps you spot issues before they become problems.
Using Retail Churn Rate
This last one is extra important in retail. You can use your customer churn rate in a couple of ways. You can use it to see whether you are meeting customer expectations — that’s a given — but you can also use it to see whether the efforts you are taking are working. For instance, if you change the format of your email newsletter and your churn rate rises, it is a sign that your subscribers are not a fan of the new format or content.
Difficulties With Churn
However, there are some difficulties in using churn rates in retail. Unlike some other businesses, tracking your customers can be tricky. For example, certain types of businesses have account managers and salespeople who have direct relationships with clients. In these cases, you have a point of contact for talking about what your customers like about your business or what efforts you could take to retain the business of a customer getting ready to churn. Most retail businesses do not have this luxury.
Depending on your business, you could have a large amount of foot traffic or customers who pay cash. As such, in order to use churn rates in retail, you must rely on sources of business intelligence information, such as having staff survey visitors, or more subtle ways, such as free WiFi.
Solving the Retail Churn Dilemma
When you use an intelligent business service like Bloom Intelligence to provide free WiFi service to your patrons, you get a range of marketing and analytics tools that are perfect for brick-and-mortar locations.
The Bloom Intelligence dashboard displays a wealth of data like how often customers visit, how long they stay, and what time of day they shop by WiFi logins. It also includes a Churn Rate Indicator. Monitoring customer churn and ensuring that the rate stays low is one way to ensure that your customer base grows and adds to sales and profits in each successive period.
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