Customer Satisfaction x Churn: How improve this relation

Customer Satisfaction x Churn: How improve this relation

The key to a good business is to make maximum profit. How do you maximise your profit? By keeping your customers so satisfied that they come to you over and over again. In the business industry, customer satisfaction is considered the key element when it comes to maximising your sales. Even though this is a key element, many businesses fail to keep their customers satisfied for long and end up having to shut down because of their sales drop.

What is Churn?

When a customer stops coming to you, this means that the customer has churned. The amount of customers that churn adds up to your good customer churn rate. The optimove defines customer churn as “when customers cease their relationship with their company.” Your customers lifetime value is important, and your customers churn rate impacts this head on. The longer your customer lifetime is, the more you can grow your business.


In order for any business to run and prosper, it must first measure its customer retention rate. This not only helps companies when they’re allocating marketing and other costs, rather, also help the owner of the company to see whether he should invest more in the business or not. Failure to take measures and negligence on the business man’s part can lead to huge financial losses so it is always best to know what you’re selling and to whom you’re selling.

Lifetime customer value and customer churn rate go hand in hand. When calculating your churn rate you must first know that there are various ways in which your good churn rate can be represented. Following are 4 ways in which it can be represented:

  • Number of the customers lost
  • Percent of the customers lost
  • Percent of the recurring value lost
  • Value of the recurring business lost

How to calculate Churn?

The next step is to calculate accurately your churn rate. As broken down by, this can be done by applying a simple formula. Let us say the clients you lost last quarter were “x” and the clients that joined your company are “y”. Then the formula that you’ll apply is:

(x) clients lost / (y) starting clients is equal to churn rate (percentage)

When you calculate accurately your churn rate, not only does this help you calculate accurately your customers lifetime value, rather, it is also directly proportional to the ability of your company to grow. Moreover, when tracking changes in the churn rate, companies can check to see if the policies or items that they introduced are working in their favour or not. Losing customers or clients clearly means they’re not helping as this is most important ever for most of the people due to this proper commodity that favors a number of across the world.

Customers satisfaction is very important because it provides business owners with a metric that they can use to manage and improve their business. Knowing your consumer is perhaps the first thing that you should do when you’re thinking about opening a business. This not only helps you identify your target audience, rather, it helps you reach out to your customers through indirect means which help them stick with your company for longer.

In order to retain customers, a business owner should always provide more and more incentives. Providing incentives can range from offering your customers better deals or offering them new terms, revising the contract, one that would encourage customer loyalty and help you keep your customers like bees to honey as this is most important ever for a number of people across the world.

Why is customer satisfaction important to control Churn?

Customer satisfaction is also important since it acts as a verifier of the fact that the customer would definitely come back to you again, it also acts as an indicator of consumer repurchase intentions. If you keep your customer happy and satisfied, he’s bound to visit again, and that helps in building customer loyalty. A loyal customer is definitely your best friend in the business industry and the more you have the more chances you have to expand and grow your empire.

Another reason why customers satisfaction is vital for a business is the fact that it reduces customer churn and in turn increased customer lifetime value. Benefiting your business to a great degree. It is also always better to retain customers rather than going out and finding new ones. Not only does acquiring new clients becomes a costly endeavour through intensive marketing, rather, it is harder to calculate the customer lifetime values of clients who are new and if you have a mobile clientele, you never know how long a customer is going to stick with you.

Now that we’ve talked about why customers satisfaction is very important, let us talk about how you can boost it. One of the major and easiest ways of boosting up your customer satisfaction is to interact and talk to your customers. Where many customers would just be concerned with the product itself and would want nothing to do with the company, many customers would want to reach out to your company for queries and helpful suggestions. These queries and suggestions not only help the customers but also help you in analysing where you should make changes in order to maximise customer satisfaction.

When you establish a contact base with your clients via emails/intermittent emails and the social media, you can actually ask your customers why they are planning on quitting with your company through customer feedback. When you ask outgoing customers on why they cancelled, you’re not only aware of why they cancelled but are also fully capable and informed to prevent the same from happening in the future with other clients.

Lastly, it is always incumbent that you avoid making decisions that would cost you a fortune which also include decisions that earn you bad PR. Even though you earn the spotlight for about a day or two but after that, every one moves on and you’re left with little or no customers since nobody wants to be affiliated with a company whose name is being tarnished everywhere.

I understand that behind a happy consumer, there is always a team working hard to make it possible. As an entrepreneur, I want to facilitate and provide ways for companies to deliver an incredible experience for their customers.

Willian Becher – who has written posts on loyalnow.

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