It’s the common enemy lurking under the surface, ready to strike – no matter how big your business or what industry you’re in…
Building brand loyalty and high Customer Lifetime Value depends on avoiding churn. This is vital for any business, whether you’re a subscription video provider, an eCommerce retailer or a B2B service. Given that it can cost up to 5x more to acquire a new user than to retain an existing one, seeing users constantly churn can be devastating.
So what impact does a high churn rate have on your bottom line? And most importantly, how do you stop it?
A High Churn Rate Will Eat Away At Your Bottom Line
Maximizing CLV isn’t just something to aim for from a generic ‘brand loyalty’ standpoint. Loyal customers often form the backbone of your business’s revenue:
- Typically, 20% of your customer base (i.e. your most loyal customers) accounts for 80% of your revenue
- The chance of selling to an existing loyal customer is up to 70%, but to a new customer it is closer to just 10%
- Increasing customer retention rates by just 5% can increase profits by anywhere from 25-95%
Given how much more valuable loyal users are, and how much cheaper they are to maintain, it’s a no-brainer that keeping an eye out to prevent churn from surfacing and snatching away your user base is vital to your business’s health.
Churn can happen for any number of reasons – not showing customers the content they’re most interested in, failing to keep them engaged across emails and push notifications, charging too much, and so on. But the bottom line is simple: customers who churn no longer see value in your brand. And often times, once someone goes too far into the deep end, there’s little you can do to win them back.
How To Prevent Churn: Why A.I. Is Your Liferaft
Successfully retaining your customers allows you to cash in on the investment you made getting them in the first place. But keeping track of millions of customers and endless amounts of data and behavioral signals is a daunting task – let alone identifying the behavioral patterns that lead to churn and finding automated solutions to prevent it from happening.
That’s where Artificial Intelligence comes in. By leveraging A.I. and machine learning frameworks, you give yourself the opportunity to comprehensively understand your customers and the big data they bring with them, when they might otherwise remain anonymous. This will allow you to:
- Centralize your user data and create a comprehensive view of each customer
- Determine the loyalty of each of your customers and predict their next move
- Identify and diagnose customer behaviors that lead to increased CLV, in an actionable way
- Automatically engage each customer in a personalized way and boost their loyalty
These 4 steps are key to navigating your business away from having churn grab hold of your customers. And by placing A.I. at the heart of it all, you’ll have the tools to grow each customer’s CLV and ultimately, boost your bottom line.