These tips help any service based business with a recurring model. You want to do everything you have under your control to keep your customer happy thus paying for your monthly/yearly fees.
What percentage of your customers are staying at your business?
For example:
- 3% monthly churn, means you are losing 3% of your customer every month.
- 97% (1- .03) of your customers are staying per month
- 30% of customers are being lost every year (1 - 0.97^12)
If you had a 9% monthly churn:
- 91% (1- .09) of your customers are staying per month
- 68% of customers are being lost every year (1 - 0.91^12)
How much are your customers worth?
For example:
-
Your monthly service fee is $100 and your monthly churn is 3%
- LTV = Life time value you will be able to collect from this customer
- $3,333 LTV (100/.03)
- You will get around 33 months on every customer (100)
-
Your monthly service fee is $100 and your monthly churn is 9%
- LTV = Life time value you will be able to collect from this customer
- $1,111 LTV (100/.09)
- You will get around 11 months on every customer (100)
-
Your goal is to reduce your monthly churn
Tips to deliver great customer service:
- Track and focus on metrics
- What is your monthly churn
- What is your LTV
- How much is your monthly fee
- How much life time value will you get from each customer
- How long will each customer stay with your business
- Have multiple strategies to combat churn
- If someone missed an appointment, has not used your service in a few days
- Contact customer and find out why
- Have exit interview
- Require all customers to have an exit interview before they cancel services with you
- This will tell you what is wrong with your business
- People will vent and will let you know what they really are looking for. Sometimes they just needed to be placed in a higher priced product that will suit their needs.
- Do member only events (quarterly is a good start, but no set rule on this, just make it consistent) to bring the community together
- Hand written letters to each customer
- Make sure they are all personalized
- You can include gift cards to invite friends
- They can just be an appreciation card
- Contact customer every two weeks
- Independently of the service being provided
- It can just be a text or a call. Just to make sure they are doing ok. Make yourself available to see if there is anything you can do to help them reach their goals
- This makes the customer feel that the company they are paying for actually cares about them. People pay you to pay attention.
- Avoid any automated messages (customer needs to actually be reached, you actually have to really care about their success). As soon as the customer realizes communication is automated (human touch is gone), the customer will stop paying attention to you.