Why Your Business Is Losing Customers (And 6 Ways to Pivot)

customer retention

Many companies spend years successfully growing their customer bases. Then, often without warning, it becomes apparent that those businesses are losing current customers or not gaining new ones. Here are six common reasons why that happens and, more importantly, how enterprises can fix the problem.

1. Marketing Personalization Attempts Make Customers Wary

Many business experts promote personalization as a primary strategy for keeping customers interested. The options for doing that are on the rise but succeeding in the aim is not as easy as it may seem.

Research published in 2019 by Gartner showed what can happen when personalization efforts go too far and seem creepy. The results indicated that 38% of consumers would stop doing business with a company that overreached with its personalization attempts. Similarly, more than half would unsubscribe from a company’s communications.

When marketing personalization fails, a company could become irrelevant or annoying to an audience. Even worse, people may feel uneasy if they believe an organization knows too much about them.

How to Pivot

Transparency is a crucial ingredient when it comes to earning back customers’ trust. Organizations could start by creating dedicated website sections that explain how they use people’s data and why.

Another tactic is to only send personalized communications related to recent activities. For example, if a person browses scented candles on a website, they might receive an email the next day that includes a 20% off coupon for those products.

Most people know that e-commerce companies track metrics about which pages they look at on sites. Sending them emails about products they browsed should not upset them, and it could drive purchases.

Companies could also explicitly state why people received certain communications. A sentence such as “You received this email based on your recent purchase history” would do the trick. Including a link to unsubscribe if desired also reminds customers they are in control and may make them feel more comfortable.

2. Competitors Lure Customers Away

Attracting customers to a business is only half the battle. Companies must also keep those people convinced that competitors do not offer superior choices.

A survey of American consumers found that 63% expected to permanently change brand preferences before the COVID-19 pandemic ends. Additionally, 45% reported they had already switched brands.

How to Pivot

The statistics above suggest that a growing number of consumers realize they could get their needs met elsewhere. However, reaching that conclusion is not sufficient for companies to move forward with customer retention strategies. Representatives must look deeper and determine which specific factors caused people to embrace competitors or might make them do so soon.

Many companies — particularly those offering subscription services — ask customers to complete exit surveys. These let people explain what influenced their decisions to leave. However, not all organizations have such records to check.

In those cases, the best approach is to re-emphasize the things a company does well that appeal to the masses. When a global 2019 survey investigated the top factors that cause company loyalty, the results showed that people care about numerous things. However, some carry more weight than others.

More specifically, 74% chose product quality as what kept them loyal, while 66% picked value-for-money. Then, 65% prioritized the consistency of the goods.

Company representatives should first ensure they excel in these areas. The next step is to tweak customer-facing messages to remind people of those qualities. Taking this approach could convince people to give a company another try.

3. People Feel Unsafe at the Business

Before the novel coronavirus became a global public health threat, business decision-makers did things like installing adequate lighting, utilizing security cameras and keeping the premises well-maintained to help customers feel safe.

However, the COVID-19 pandemic necessitated other measures specific to stopping virus transmission. They included using plastic shields at checkout counters, frequently disinfecting shopping carts, enforcing mask usage and requiring social distancing.

A recently published survey of U.S. consumers indicated that 80% still feel somewhat unsafe doing activities that were normal for them before the virus disrupted their lives. Moreover, safety is the top factor convincing people to shop with different merchants this year than last, the research indicated.

How to Pivot

Safety-related customer retention strategies are all about proving to customers that organizations are doing everything possible to ensure safe operations for consumers and employees alike. Conveying that could mean creating store walkthrough videos that show people the new precautions or writing a blog post that describes them.

Pivoting may also require launching or enhancing e-commerce services that help people decide when and how to make their purchases. For example, California’s MainPlace Mall debuted the Shop Now! platform. It lets consumers search all products and inventory levels before arriving. They can see options that help them order online, schedule curbside pickup or plan their in-store visits.

When enterprises consistently demonstrate a commitment to safety, people should feel more willing to stay loyal or come back after first giving up on a business. However, succeeding in this area requires an all-encompassing effort.

4. Customer Service Shortcomings Cause Disappointments

Customers want assurance that if things go wrong during their experiences, businesses will make the situation right whenever possible. Many lose patience if customer service efforts fall short. Some get so fed up that they ultimately decide to take their patronage elsewhere.

An initially small problem can become much more significant in a matter of hours due to social media’s reach. An influential person may air their grievances with a business on a public platform. Then, a situation where one individual decides to leave a company could turn into hundreds or thousands of others taking their comments to heart and following them.

How to Pivot

Customer retention strategies should ideally focus on keeping people happy so that they don’t want to leave. Fortunately, excellent service makes that outcome happen frequently. Research proves that people are five times more likely to forgive a customer service mishap if they’re generally satisfied with the company’s touch points and previous efforts.

Once company representatives are in the position of trying to convince customers to return, they could start by enticing them with substantial discounts. They might include messaging such as, “Give us another try and get 50% off your next order.”

Getting to the heart of what made customers upset is also vital. Perhaps a company received feedback that customers disliked the service they got from a particular courier the brand previously used. In that case, the messaging might acknowledge the comments and clarify that the company ended its relationship with the shipping company.

5. Business Offerings No Longer Fit Current Circumstances

The drastic societal charges necessitated by the COVID-19 pandemic mean that many people think twice before doing activities they loved not long ago. Even if a theme park, cinema or music venue reopens, is it worth the possibility of contracting the virus by visiting them? Many people would rather wait until those activities feel safer and will avoid visiting them now.

Customers could also leave companies if they feel those entities no longer match their situations. If a person starts eating an exclusively meat-free diet, they’ll stop ordering food from restaurants that don’t have vegetarian options. If their income changes due to job loss, they’ll likely weigh more factors before making non-essential purchases.

How to Pivot

Pivoting requires figuring out what a company could do to show customers that it fits with their changed circumstances. Australia’s largest Pilates franchise had to temporarily close its 67 studios due to the COVID-19 pandemic. It pivoted by offering more than 70 on-demand workouts through its app, plus providing live virtual exercise classes. These additions showed customers that the brand still had a place in their lives, even outside the gym.

Company representatives should also examine relevance more broadly. Which business or market factors changed recently that could make consumers leave? For example, internal research might reveal that more than half of current customers classify a brand’s meal delivery kits as luxury items and say they’re one of the first things they would drop if their budgets changed.

Then, the company could publish blog posts and social media content to remind people of the nutritional value and convenience associated with their products. They could also tweak the service to allow people to buy single kits or only sign up for a week at a time instead of committing to longer agreements.

Those choices could alter the total amount of money generated by some customers. However, they might also prevent people from leaving or make new subscribers more interested.

6. Customers Feel Blindsided by Price Increases

Price hikes are part of operating a business. Company leaders often discover it no longer makes sense to provide products or services at the current rates — especially if the brand intends to expand into other markets or offer new features.

Customers may feel so displeased by the higher prices that they decide to take their business elsewhere. However, company representatives can reduce the likelihood of that outcome.

How to Pivot

Clear and honest communications play a massive role in customer retention strategies associated with price increases. People want sufficient warning of the change so they can adjust their budgets. Getting word that a streaming service will enact a $5 price increase a week before it happens is more likely to upset customers to the point of abandoning the company than hearing about the change six weeks before it occurs.

Company representatives should also justify the price increase with specifics. Instead of merely telling customers that the hike will help the brand develop new products, they should give them a preview of some projects in the works.

Delivering the messaging to make the change seem less problematic is crucial, too. Could people save 25% off a monthly subscription rate by signing up for a year? Perhaps there’s a two-month grace period for customers who have been with the company the longest.

Customer Retention Strategies Require Proactivity

These six situations emphasize that business decision-makers should not feel doomed after noticing declines in total customers. Solutions exist for retaining new and existing customers. However, responding proactively to identified issues is crucial for fixing them.

Why Your Business Is Losing Customers (And 6 Ways to Pivot)
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