How Customer Churn Can Lead to Better Sales

It sounds illogical and contradictory, right? Customer churn, or the rate at which your company loses customers, can lead to more customers and more sales. But it's true: Using the customer churn metric in the right way can help you achieve your goals of significantly enhanced performance by your customer-facing teams, higher quality and more loyal customers, and, subsequently, higher sales than ever before.

Traditionally, organizations have monitored sales based on profitability or productivity—purely quantitative criteria. Customer churn, however, can monitor sales based on  a sales team's quantitative success as well as the quality of their work (determined by customer life span, etc.). What's more, churn, when teamed with other metrics that monitor performance quality, can provide insight into every aspect of an organization—from sales to the product team to customer service and more.

Customer Churn Defined

What is customer churn or churn rate? The broadest definition suggests a measurement of the number of individuals that cut ties with your brand. More specifically, it's calculated by the number of customers you have lost over a certain time divided by the number of new customers acquired during that same time.

Customer churn is significant because it's far less costly to retain good customers than it is to capture new ones. Monitoring churn allows you to consider what you're doing, or what can be done, to keep the customers you have. It lets you set internal goals that can be very specific.

Incorporate a Net Promoter Score

How can this be accomplished? When evaluating customer churn, focus on the numerator: the number of customers that have been lost or that you are in the process of losing. Then incorporate a Net Promoter Score (NPS) to find out very specifically why they left or are unhappy with your brand.

NPS is a great tool to gauge the strength of your customer relationships. As many are already aware, it is discovered by surveying with the question, "How likely are you to recommend us to a family member or friend?" Customers are most often asked to rate their likelihood to do so on a scale of 1 to 10, with higher numbers reflecting loyal enthusiasts and lower numbers representing unhappy customers. A popular frame of reference is that a score over 7 signifies that a customer that will shop with you again.

Your NPS paired with your customer churn metric can provide highly valuable and completely actionable insight into why customers may be unhappy, and what you can do to change your organization so it doesn't happen again. It turns customer churn from a concept of failure into one of great opportunity to develop meaningful goals within your organization that can be reached—and adjusted repeatedly—quite quickly.

The Survey Is the Key

Surveying customers—and gathering useful results—can be quite challenging. In the past, one-on-one sessions or focus groups were used to discover exactly what was in your customers' hearts and minds. New technologies now enable online, email, or text surveys, but still require your customer to take time out of his or her day to sit at a computer or use a device to respond.

Numbers of respondents gathered through these vehicles tend to be low, and not representative of a significant percentage of customers. With today's connected consumers being bombarded with messages from every channel and point of contact, getting them to respond to such surveys is no easy task. Brevity and convenience is key to surveys that are accurate and useful.

Personalized, automated voice solutions are showing great promise in gathering survey information that is of very high quality. A call on a phone—land line or mobile—is immediate, and not as likely to be ignored or turned off as email or, especially, text. It can leverage the power of the human voice to create messages that carry high levels of trust and validity, resulting in higher attention spans and response rates. It can generate more, and therefore higher-quality, data by being able to better answer the "Why?" aspect of customer churn quickly, accurately, with little time commitment from the customer.

Actionable Insights

High-quality survey data can then be used to pinpoint precisely where on your customer's journey with your brand he or she experienced displeasure. Was it online? In your store? On a mobile site? In shipment? Once you zero in on the problem, you can make plans to adapt internal procedures and policies so they are more in line with customer needs and desires. That done, customers will be more likely than ever to give your brand a high NPS and follow up by convincing new, high-quality customers like themselves to try what you have to offer.

Pairing customer churn with NPS metrics, then, lets you to get the most out of big data. It can help you create an organizational environment where your staff is uniquely empowered to deliver on your brand promise at every point of customer contact. It can facilitate the constant crafting and changing of your business to best serve the customers you have—and find more customers who are as excited about your brand as you are.

Isn't that type of interaction why you started your business in the first place?