Is your business losing customers at a higher rate than it’s acquiring new ones?
If the trend isn’t reversed, it won’t be long before your business remains without a customer. No customers mean no sales, which also means no business.
You’re probably doing all you can to arrest the customer attrition. Perhaps you’re ramping up your marketing and advertising campaigns or adding new products to your line.
There’s nothing wrong with that, but have you sat back and tried to figure out why you’re losing customers? If you don’t know the cause of the problem, it can be difficult to find an effective solution.
In this article, we’re fleshing out some of the most common reasons customers defect and what you can do about it.
Table of Contents
1. A More Attractive Competitor
Competition can make or break your business. Consumers are free to make a choice and buy the product/service that best suits their needs.
As a business owner, you have the responsibility to create a product that’s superior to alternatives in the market. If you don’t, customers will choose your competitors’ products over yours, and the business will collapse.
There are a number of reasons customers can find a competing product more attractive. For example, it might have a better build quality compared to yours. Or, it might be similar to yours in terms of build quality but selling at a lower price.
So, if you’ve established that customers are leaving because they’ve found a better product, what can you do to fix the issue?
Start by establishing why the competing product is better than yours. You can collect feedback from the customers who have defected or get the product and analyze it yourself.
2. Bad Customer Service
It’s a no-brainer that bad customer service is a turnoff for customers. However, some small business owners underestimate just how quickly a customer can leave. In a customer service survey, about 30 percent of respondents said they would consider switching companies after just one instance of bad customer service.
What’s the quality of customer services you’re offering in your business? If you’re getting plenty of negative comments and low ratings online, that’s a sign you need to improve.
Perhaps some of your customer/sales reps don’t have the best attitude toward customers. Or customers are kept on hold for several minutes when they call your business.
The list can go on and on, but the gist of it is your business must give its customer excellent and personalized services.
3. Lack of Social Proof
76 percent of consumers evaluate the online presence a business has before making a physical visit or making an online order.
If your business isn’t visible on the web, that’s one of the reasons your customers are leaving. A customer may have passed by your local store and made a purchase, but that’s not all; they may want to go online and see if it’s on social media, for example.
At a time when a vast majority of consumers are using the internet to shop and interact with businesses, your company cannot afford to be without an online presence.
If you haven’t already, build a professional business website and complement it with an active blog. Identify the various social media networks your target customers are using and create a company profile and keep it active.
4. A Price Increase
In business, it’s normal to pump up your prices in response to market conditions. For instance, if the cost of raw materials has gone up because of inflation, it’s acceptable to adjust your product prices as well.
Unfortunately, a price increase can have a negative impact on your customer retention efforts. Especially if there’s a cheaper alternative in the market, a good number of your customers can defect.
Navigating a price increase is tricky for any business owner. While it might be a necessary move to ensure your business remains profitable, strive to strike a balance between the financial needs of your business and the financial situation of your customers.
There are other pricing strategies you can consider if a price increase is hurting your business. If you have a product that’s sold in a pack of 5, for instance, you may remove one item and leave the price unchanged. Customers will notice, but they’re more likely to make do with the change, especially if you clearly explain the reason behind it.
5. Website Issues
If you run an online store, your ecommerce website is central to your operations. However, it can also be the reason why customers leave your business.
First, a slow website is a pain to not only your employees but also your customers. Google recommends a page load time of less than 3 seconds, and many consumers aren’t patient enough to wait longer than that.
Second, an unsecure website puts your shoppers’ personal and financial data at risk. If your business website isn’t running on HTTPS encryption, browsers are warning visitors about using it.
Third, a poorly-designed website puts off users. Customers might proceed to make online purchases from your store, but that’s likely because they don’t have a better alternative. But as soon as they find one, they won’t want to deal with the eye-sore that’s your ecommerce website.
There are several website factors, technical and non-technical, that will affect the experience of your users. Hire a professional web developer to iron out the issues and ensure you have a website that meets your customers’ expectations.
6. Broken Promises
A promise is a promise, whether it’s a parent making it to a child or a business owner making one to a customer. When a promise isn’t kept, one party is bound to feel let down.
In the course of doing business, you make many promises to your customers. Maybe you’re an online business and you offer same-day shipping. This is a promise, and it builds the customer’s expectations.
So, if the customer makes an online purchase, they duly expect to have their order delivered within the course of the day. If the delivery doesn’t arrive, the promise stands broken.
Depending on the situation, customers can be willing to overlook one or two broken promises. But if your business is in the habit of making and breaking promises, your customers will feel betrayed and take their money elsewhere.
Don’t promise what you’re unsure about delivering. It’s better to underpromise, but overdeliver.
7. Your Business’ Stand on Social Issues
It’s okay to build an apolitical brand; one that takes no position on various issues affecting the community in which it operates. However, 60 percent of consumers expect the brand they shop from to take a stand on issues like racial discrimination. Else, they’ll switch to a company that does.
Now, there are two ways this can affect your company. If it takes no stand, some customers will leave. If it takes a stand that’s contrary to the views of the target customers, some will also leave.
What should you do to avoid putting your business between a rock and hard place?
The key is having a good understanding of your customers and where they stand on various issues. While as an individual you may hold a view that doesn’t align with that your customers, the business has to have shared values with the customers.
8. Toxic Workplace Culture
Toxic workplace culture has many consequences, including low employee satisfaction, high employee turnover, and poor brand reputation. While the effect might appear to be mainly internal, it can spill over to the marketplace and cause a high customer churn rate.
What happens inside your workplace doesn’t always stay there. Things will leak and hit the news. Don’t be surprised to see a big drop in customer numbers when it becomes public knowledge that your company has a toxic workplace.
To avoid this, work to build a positive, diverse, and inclusive workplace. Ensure there’s fairness, transparency, and equality.
9. Lack of a Loyalty Program
It’s now commonplace for companies to have reward programs for loyal customers. If your business doesn’t have one or has one that’s inferior to that of a competitor, it’s easy to see why customers would leave. Everyone loves a discount or a sweet deal, and the ability to earn loyalty points can make all the difference.
To build an irresistible loyalty program, start by collecting customer feedback. What rewards would they like? There’s also loyalty program software that will help you get the job done.
High Customer Attrition Will Hurt Your Business
Customer attrition is part of running a business. Customers will always leave for various reasons. However, if your customer attrition rate is high, there’s cause for concern.
With this guide, you’ve learned some of the main reasons customers leave. Be sure to implement the solutions provided.
All the best and browse our blog for more business advice.
