Customer Churn vs Customer Retention
The only way to build a long term viable business is to nurture your relationship with your customers. It’s especially important online where things move so quickly you can be forgotten in an instant. In fact, as I’ve spent more and more years online, this is one of the aspects of online businesses that has shocked me the most…
Everyone says to build lists because “the money’s in the list”. Well, it may surprise you to know that your lists have a massive churn rate… they are most definitely not stable or permanent. Don’t think that you can build your list to 20,000 people and retire.
The people who joined your lists 6 months ago may well have abandoned that email address… and if they joined 12 months ago or, shock horror, 2 years ago, they’re almost certainly just a dead email address. So, in my opinion, you’re looking at a 2-year viability of an online business. That means, if you come back after 2 years, your lists will be almost stone cold.
(I know one guy who had a great list… his writing was superb, insightful and helpful. He came back to the list after 18 months and asked people to resubscribe… and got an 18% response. He only got that because he had a great relationship with his list initially… I expect most people would struggle to get to double digits!)
So how do you keep your business going? Well, here are some ideas…
1: have a constant influx of new customers/subscribers… just don’t think of retiring early!
2: make your business indispensible to your customers so that they won’t ever leave you… and if they change email address they’ll notify you of the change.
3: Stay in contact with your customers often… recommending products of value, offering quality reports, tips and help. Build a solid relationship with your customers and they’ll repay that effort by being loyal repeat purchasers.
4: Recognize the fact that your list may have a 2-year lifespan and act accordingly. If you haven’t emailed your list for a month… do so! Give them a quality freebie just to say “hi” and keep people interested in you and what you offer.
Here’s a personal example of how I decrease customer churn (thereby increasing customer retention). When someone cancels their Private Site account, my server automatically sends them an email…
> Hi ,
>
> I just saw that you cancelled your membership.
> I’d really like to know why…perhaps I can make
> changes and improvements to win you back 
>
> Please let me know when you get a few seconds.
>
> Regards,
> Neil Shearing, Ph.D.
That email has got some interesting replies… such as…
> I had to change my credit card details to Paypal
> I had maximized the one they were taking money out of.
> I did not relies it would cancel my subscription to you.
> I will join up again immediately.
> I cancelled the old credit card in my Paypal account, but
> please send me a link to renew it.
> the only reason I cancelled was because pay pal deducted
> money from my checking account and I was $2.00 short. So
> I am going to sign back up again.
> Made mistake and need to reactivate.
> Please resend membership
How many of those people would’ve noticed that their membership had been cancelled and rejoined if I hadn’t sent the little note asking why they’d cancelled?
Probably none.
So try to consider ways in which you can create your online business with built-in methods for keeping your customers happy and minimizing your customer churn rate. It will go a long way to improving your long term business success.
