Customer and employee churn is a significant challenge for organizations striving to maintain growth and profitability. Just consider these 2 stats:
- Increasing your customer retention rate by 5% can lead to a 25% – 95% increase in profits
- The cost of replacing an employee can range between 1/2 to 4 times their annual salary
As you can see, the impacts of customer and employee churn have massive impacts on a business’s bottom line.
Fortunately, CRM can help. CRM enables organizations to cultivate stronger relationships with their customers and employees alike.
In this article we explore the issues that cause employee and customer churn and outline ways that CRM can help you overcome these challenges and improve your employee and customer retention.
What is CRM?
A CRM (customer relationship management) platform is a software toolset that assists businesses with managing their people (customers and employees), work processes, products, and projects on a day-to-day basis.
Once thought of primarily as a tool for the sales team, CRM has evolved to address the needs of many different business aspects, including marketing, customer service, and HR.
Through the use of advanced automations tools and data centralization, a CRM system can help businesses improve communication (both internal and external), work more efficiently, and track performance.
What is employee churn?
Employee churn — sometimes referred to as employee attrition — refers to the rate at which employees leave a company over a given period of time. Employee churn includes voluntary departures, such as resignations or retirements, as well as involuntary departures, such as terminations or layoffs.
High employee churn can negatively impact recruitment efforts, institutional knowledge, productivity, and employee morale. Addressing the factors that contribute to employee churn is critical to building a stable and productive workforce.
Top 3 causes of employee churn
Employee turnover can be influenced by various factors, both internal and external. We’ll focus on the most common internal issues here since those are the factors you can control.
- Poor management- Poor management can contribute to a lack of clear direction and goals, leading to confusion and uncertainty about your employees roles and responsibilities
That said, poor management is rarely the fault of the managers themselves and is more often a result of disorganized process and misalignment across departments.
Consider these findings from a report by Oracle — Managers account for 70% of the variance when it comes to employee engagement scores but managers themselves suffer from high levels of burnout and low engagement.
- Poor communication- Poor communication between management and employees can result in misalignment around responsibilities, priorities and expectations.
This can be a motivation killer and is one of the top causes of employee attrition. In fact, according to an article in the Harvard Business Review, more than 80% of employees would rather work for an organization that values open communication than one that only offers perks like free meals and great health plans.
Common causes of poor communication include:
- Inconsistent messaging
- Limited access to information
- Lack of clarity and transparency
- Insufficient feedback mechanisms
- Inadequate communication channel
- Ineffective training and development- Inadequate training can leave employees feeling unprepared and unsupported, leading to frustration and dissatisfaction (to say nothing of the consequences to your customer).
What’s more, a lack of development opportunities can hinder employees’ ability to advance in their careers within the organization which can hinder motivation and buy-in.
Check out some of these stats from a report by Lorman:
- Employee retention rates increase 30-50% for companies with strong learning cultures
- 86% of millennials wouldn’t leaving their current position if training and development were offered by their employer
- 76% of employees say that a company would be more appealing if it offered additional skills training to its staff
- 76% of millennials believe professional development opportunities are one of the most important aspects of company culture
Using CRM to reduce your employee churn rate
CRM can help you significantly reduce employee churn by providing your team with the tools and resources they need to thrive.
- Improved internal communication- CRM platforms improve internal communication and collaboration among team members and departments by providing a centralized platform for sharing information, tracking progress, and coordinating activities.
Plus, real-time updates and notifications for stage changes or approvals help employees stay informed about customer statuses and ongoing projects. This can greatly reduce process bottlenecks.
Additionally, with role-based access controls, your information can be protected in accordance with strict industry guidelines such as HIPAA. Of course these same tools can also protect your own proprietary information as well.
- Performance tracking and recognition- CRM platforms can help you track KPIs, such as:
- Sales targets
- # of calls/meetings
- Lead conversion rates
- Average resolution time
- Customer satisfaction scores
This provides your employees with visibility into their performance and progress. It can also help you create more effective compensation plans that actually motivate your team and drive results.
For more on creating better compensation plans check out our article, Rewarding Sales Success: SPIFFs vs. Commissions.
- Training and development opportunities- CRM platforms can be used to track employee skills, training history, and performance feedback, enabling you to identify training needs and provide personalized development opportunities.
Additionally, a CRM platform can store all your training materials, resources, and documentation, allowing employees to access tutorials, videos, or manuals quickly and easily.
What is customer churn?
Customer churn—sometimes called customer attrition—refers to the loss of customers or subscribers as measured over a given period. It is a KPI (key performance indicator) most important to businesses that use a subscription or ongoing service model, but it can be used by any organization to evaluate how many customers discontinue purchasing their products or services.
Reducing your customer churn rate is critical to maintaining sustainable growth and fostering long-term success.
Top 3 causes of customer churn
Customer churn can be caused by many factors. While specific causes vary by industry and the unique circumstances of your business, the following causes are universal.
- Poor customer service- Poor customer service is perhaps the most significant driver of customer churn. It is also one of the hardest to come back from.
According to a report from Bain and Company, a customer is four times more likely to move to a competitor if an issue they are having is service-related rather than price or product related.
Common causes of poor customer service include:
- Poorly trained staff
- Inadequate resources
- Negative company culture
- Inefficient work processes
- Lack of business alignment
- Poor communication- Poor communication can make your customers feel neglected and undervalued. It can also greatly impact the perception of your company, products, and services, leading to poor reviews and word of mouth.
According to research by the Qualtrics XM Institute, consumers who rate a company’s service as “good” are 38% more likely to recommend that company.
Common causes of poor communication include:
- Lack of engagement
- Long response times
- Inconsistent messaging
- Inadequate communication channels
- Negative experiences—Shipping delays, product defects, and unmet expectations can leave a lasting negative impression on customers, which can ultimately have negative effects on your bottom line.
According to a survey by Gladly, 68% of consumers are willing to pay more for products and services from a brand known to offer good customer experiences.
Common causes of negative experiences include:
- Shipping delays
- Product defects
- Billing/pricing errors
- Hidden fees and costs
- Complex or convoluted procedures
Using CRM to reduce your customer churn rate
CRM can help you significantly reduce customer churn by enabling your team to better engage and support your customers.
- Streamlined customer-facing processes- Through automation and data centralization, CRM platforms can help you streamline all your customer-facing processes.
For example, leads can be captured from various sources, such as webforms, emails, and social media, automatically. These leads can be segmented and assigned to your sales reps based on criteria you set including demographics (age, location), behavior, or purchase history.
By targeting specific customer segments with tailored messaging, a sales rep can more effectively engage customers and encourage purchases.
With CRM, all your customer data can be centralized, providing your customer success teams with access to all relevant information, including past interactions, purchases, support tickets, and feedback.
This 360 degree view of the customer journey enables you and your team to identify patterns based on past customer behavior, anticipate customer needs, and personalize each customer interaction, fostering stronger relationships and building customer loyalty.
- Enhanced customer engagement- By automating routine tasks such as follow-up emails, you can create consistent communication cadences and ensure timely responses, enhancing the overall customer experience.
Additionally, a CRM system enables you to communicate with your customers across various channels, including:
- Phone
- Live chat
- SMS/text
- Social media
Timely and personalized communications can help your customer-facing teams demonstrate the care and attention required to build a lasting customer relationship, reducing customer churn.
- Comprehensive customer support– Modern CRM platforms include ticketing systems that enable you to manage customer support requests more efficiently.
Tickets can be categorized, prioritized, and assigned to the appropriate customer support agent automatically based on various customer needs, ensuring that no customer issue falls through the cracks.
What’s more, many CRM systems include knowledge base functionality that enables businesses to create and maintain a repository of FAQs, troubleshooting guides, video tutorials, and other support resources.
An existing customer can access this self-service information to find answers to common questions or resolve issues on their own, reducing the need for direct support interactions. This can even speed up your new customer onboarding.
FreeAgent CRM is the best CRM for reducing employee and customer churn
FreeAgent CRM is a modern work management platform that provides top-of-field software tools for organizations of all sizes and technical proficiency.
FreeAgent is the best CRM for reducing churn because FreeAgent is:
- Easy to use- FreeAgent’s modern user interface is quick to learn and easy to use, encouraging teams to work within the platform and providing you with a comprehensive and accurate accounting of sales activities.
- User-configurable- With FreeAgent, the power is in your hands. You can customize and personalize FreeAgent to fit the specific needs of your business and teams without external support.
Plus, FreeAgent offers:
- Robust integration- FreeAgent’s flexible toolset and extensive integration library support teams and businesses of all types and structures.
- Generative AI- Uplift your work with Generative AI-powered features. With FreeAgent, you can access AI across any app, allowing you to get the information you need faster.
With FreeAgent, it’s really that simple.
To see FreeAgent in action, get a demo, and discover for yourself how we are leading the way to a better workday.
