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Creating a Customer Churn Research Program

Following up on our earlier discussion (issue #8), customer churn rate is a measure adopted by many service industries to describe the percentage of deactivated customers divided by total customers. A two percent change in churn rate realistically translates into six months of service per customer, so measuring churn rate and the factors that lead to customer churn can be critical to the health of a company.

If you are like most companies, you have a good understanding of what your churn rate is, but do you know which key factors are affecting customer churn and to what degree?�

If your company is truly dedicated to customer retention and decreasing customer churn, what are the logical steps you should take? Below is a quick list of action items that you can take in helping to improve. Many larger service oriented companies take each of the steps below, but other companies can clearly benefit from a scaled down program.�

  • Company Data -- Calculate and baseline churn rate by dividing lost customers by total customers.

  • Marketing Research -- Benchmark survey of lost customers about why they left, where they went, etc.

  • Marketing Research -- Create a vulnerable "lost customer" profile and map that profile to your current customer database in order to flag vulnerable segments.

  • Marketing Research -- Create a monthly/quarterly ongoing tracking survey programwith lost customers to track performance on key measures over time.

  • Marketing -- Develop special marketing programs targeted to vulnerable customer segments.

  • Company Data -- Track performance and retention rates for total and vulnerable customers over time.

  • Marketing Research -- Survey vulnerable customers well before they become lost customers about their satisfaction, to find out what makes them stay and what makes them go.

  • Marketing -- Take all of the knowledge you've developed and make changes.

  • Marketing Research/Marketing -- Revise and refresh survey programs with lost customers (and vulnerable customers if applicable), and continue to re-segment and recreate new marketing to help in customer retention efforts.

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