How to find out the reason for customer churn?

How many times have you been able to figure out the exact reason for losing an existing business? Rarely right?

reasons for customer churn

There are no tools out there that can help you do this. Well, if you are an online business, you can use SEO tools like SEMRushSimilar webGoogle search console etc to analyse your traffic to derive reasons for customer churn. But that wouldn’t give you the expected results.

In this article, I would like to discuss an approach you can use to understand the business scenario and determine why your customer left.

Reasons for customer churn

There are usually three major categories of reasons why customers leave:

  1. Customer service: This is obvious. Poor customer service creates unhappy customers and acts as a strong reason for them to look for alternatives.
  2. Strategic reasons: It would include budget cuts in the customer organization, building the service in house, focus on other service lines etc.
  3. Political reasons: Here I refer to the politics or preferential treatment within the customer organization. In a B2B scenario, I have seen different stakeholders favoring different vendors.

But is there a method to find out the reason?

The answer is yes.

Aforementioned are the broad categories. But you need to figure out which category does your problem belong to, and even more importantly the exact reason. Following are a few ways to do it:

  1. Ask the customer directly: This might sound crazy. But it is a very effective and fast method. In more than 80% of the cases, customers will let you know the reason if you ask. So give it a shot
  2. Check with your peers in the analyst world: Every industry has a bunch of analyst firms which assess the performance of service providers in that industry. And these firms seem to have a lot of insider information. So if you have any reliable contact in such firms, utilize that.
  3. Discuss with your colleagues: This is at times helpful, as during any of the customer interactions, your peers in your organization might have got a hint as to why customer is not interested in working with you.
  4. Stay in touch with the customer even after the churn: This technique will not give you an answer right away. And you have to be tactical about this. Don’t just send communications for the sake of staying in touch. Give something of value to them. Maybe free access to a webinar or newsletter. In the course of your conversation, it is very likely that the customer will tell you the reason.

None of the above methods might give you a guaranteed result. You can choose to try the one you think will work, or you can try all of it. You never know what works.

Those are my tips on how to find reasons for losing your customers. Which one is our favorite? Leave that in the comments section.

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