Customer churn is a significant challenge for organizations striving to maintain growth and profitability.
In fact, an article in Forbes noted that increasing your customer retention rate by 5% can lead to a 25% – 95% increase in profits. That’s a huge impact.
Fortunately, CRM can help businesses like yours overcome many of the challenges that lead to customer churn.
In this article we will explore the issues that cause customer churn and outline ways that CRM can help you overcome these challenges and improve your customer retention rate.
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 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 customer and employee 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.
