(From the Newsletter Marketing Systems Dec 2013 newsletter)
During these last 3 years, our printing turnover has been pretty stable, I noticed some customers had left, but I wasn’t concerned because my turnover hadn’t decreased much.
I always looked at the dollars (The P & L’s) rather than the actual number of customers, I figured that about 20% of the client base might have defected each year. But the other day I did take a look…
And, I’ve gotta say, it was quite a shock when I did the calculations.
As you can see, over the past two years 30-40% of our printing clients have left!
DOUBLE what my gut feeling was, and I’ve only added about half of them back through referral.
I like to use the analogy of a leaking bucket to describe customer churn.
Your business is the bucket, and the water you put in the bucket is your customers. Unfortunately every business has a few holes in it and some clients leak out, they go to a competitor, move away, are unsatisfied or there is something that stops them from continuing to purchase.
The bigger the holes in your bucket (business), the more water (customers) you need to add.
So what now?
What about growth for 2014?
I want to grow my print & design customers by 20%, I’m going to start marketing again!
My business has about 100 customers, so 20% growth would be 120 customers by December 2014. Typically, most businesses would think, okay we need to add 20 new customers…
But if we go by past churn stats, if I do nothing to combat it, I can expect to lose 30-40 customers over the next 12 months, which means I need to add 50-60 new customers this year to meet my growth goals.
I have 2 choices in 2014 to reach my goal:
- Keep my business as it is and just add more and more customers (60+), knowing that 30-40% of my existing customers will leave.
- Find a way to patch up the leaky bucket, so that I know the new customers I add are going to stay longer and less are going to leave.
We will be adding all my existing print customers to our monthly customer Newsletter list to build a relationship, deliver value and give them regular reminders that we are here.
They will receive our e-zines, make follow-up up calls, send greeting cards, reward them with after-purchase gifts and of course give them the best customer service we can deliver.
Hopefully your bucket isn’t leaking too much… Consider though, if you haven’t done the actual calculations, it could be DOUBLE what your gut is telling you!
I’ve made a churn calculator in excel – just use your book keeping software to get your purchase history so you can make sure you are on the right track.