Churn and growth

Most businesses have a steady stream of new customers replacing customers who left. That replacement is called churn.

In some instances that churn is nearly 100% as is the case with much retail and restaurant business. In other instances there is very little churn as is the case with telephone contracts, utilities and accounting firms.

Businesses such as banks, department stores, shopping centers and coffee shops are in the middle with churn as a definable reality of business.

In my first post-college job, starting the marketing research department for the Bank of America, I noticed that churn for this largest California statewide bank was very high. Nearly 1/3 of customers  opened and closed accounts every year.

I pointed out to management that simply reducing the number of customers leaving or finding a way to get them to return to the bank would be a major source of customer growth. Management had no interest because most of the churn was in retail customers and only corporate customers were considered important.

For most of my clients, over the past 40 years, retaining customers became the most important source of growth.  That is why Marketing without Advertising puts so much emphasis on helping customers explain their problems to the business management before they leave and giving them vast recourse opportunities if anything goes wrong. Don’t let them leave because of dissatisfaction, if possible.

Think about how fast your business could grow if the number of customers leaving were cut in half. In this era of Internet business it should be even easier to reduce churn.

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