How to reduce the abandonment rate in your business

The abandonment rate is the percentage of customers who stop purchasing your products or services in a given period. This is a metric that reflects the level of satisfaction and loyalty of your clientele , and that has a direct impact on your income and profits.

Reducing the churn rate is one of the main objectives of any business, since it involves retaining existing customers and avoiding losing them to competitors.

In addition, acquiring a new customer is usually more expensive than maintaining an existing one, so reducing the churn rate also saves resources.

But how to reduce the abandonment rate in your business? What factors influence customers' decision to continue purchasing your products or services or not? What strategies can you implement to improve your customers' experience and loyalty?

In this article we will give you some keys to answer these questions and help you reduce the abandonment rate in your business.

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What is the churn rate and how is it calculated?

The churn rate, also known as churn rate, is a metric that indicates the percentage of customers who have stopped purchasing your products or services in a given period.

It is calculated by dividing the number of clients lost in that period by the total number of clients at the beginning of the same period, and multiplying the result by 100.

For example, if at the beginning of the month you had 1,000 clients and at the end of the month you had 900, your monthly churn rate would be:

Churn rate = (1000 - 900) / 1000 x 100 = 10%

This means that you have lost 10% of your customers in one month.

The churn rate can vary depending on the type of business, the sector, the market, the life cycle of the product or service, etc. Therefore, it is important to compare it with the sector average or with that of your direct competitors, to have a more precise reference.

It's also important to keep in mind that not all customers have the same value to your business. Therefore, you can segment your abandonment rate according to different criteria, such as purchase volume, frequency, channel, demographic profile, etc. This way you can identify which segments are most likely to abandon and which are most profitable for your business.

What factors influence the dropout rate?

The reasons why a customer decides to stop buying your products or services can be very diverse and depend on both internal and external factors to your business. Some of the most common factors are:

• The quality of the product or service : If your product or service does not meet the customer's expectations, does not solve their problem or does not provide added value, it is very likely that the customer will look for other alternatives in the market.
• Customer service : If your customer service is poor, slow, unprofessional or unempathetic, you can generate customer dissatisfaction and frustration, which can lead them to abandon your business.
• The price : If your price is too high compared to the competition or the customer's perceived value, you may lose their trust and loyalty. The opposite can also happen: if your price is too low, you may convey an image of low quality or little differentiation.
• The competition : If your competitors offer products or services similar or better than yours, with more competitive prices or with better conditions, they can attract your customers and make them switch to their offer.
• Changing needs : If the customer's needs or preferences change over time and your product or service no longer adapts to them, the customer may no longer consider you relevant or useful to their situation.
• Lack of communication : If you do not maintain constant and personalized communication with your clients, you may lose contact and interest with them. You may also miss opportunities to offer them new products or services, promotions, discounts, etc.
• Lack of loyalty : If you do not offer incentives or benefits so that your customers repeat their purchases or recommend you to others, you may lose their loyalty and commitment to your business.

How to reduce the abandonment rate in your business?

Reducing the abandonment rate in your business requires a prior analysis of the causes that cause it and an appropriate strategy to prevent and reverse it. Some of the actions you can implement are:

• Improve the quality of the product or service : You must ensure that your product or service meets the needs, expectations and desires of your customers, and that it provides them with differential value compared to the competition. To do this, you can do satisfaction surveys, quality tests, market studies, etc.
• Improve customer service : You must offer fast, professional, effective and empathetic customer service that resolves your customers' doubts, queries, complaints or suggestions. To do this, you can use different communication channels, such as telephone, email, chat, social networks, etc.
• Adjust the price : You must establish a fair and competitive price for your product or service, which adjusts to the value perceived by the customer and the positioning of your business. To do this, you can do an analysis of the competition, costs and profit margin.
• Analyze the competition : You must be aware of what your direct and indirect competitors are doing, what products or services they offer, at what prices, under what conditions, etc. This way you can identify your strengths and weaknesses, and look for ways to differentiate yourself and stand out.
• Adapt to changing needs : You must be attentive to market trends and changes in the needs or preferences of your clients. This way you can innovate and improve your product or service, or create new ones that adapt to new demands.
• Maintain communication : You must maintain constant and personalized communication with your customers, informing them about news, offers, promotions, discounts, etc. that may interest you. You should also take the opportunity to ask for their opinion, thank them for their trust and encourage dialogue.
• Build customer loyalty : You must offer incentives or benefits so that your customers repeat their purchases or recommend you to others. To do this, you can create loyalty programs, customer cards, redeemable points, gifts, raffles, etc.

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Written by Moises Hamui Abadi : I am an entrepreneur, founding partner of Viceversa and SoyMacho. After leading several digital businesses and advising several other businesses; I decided to form MHA Consulting, a digital marketing consultancy dedicated to growing and enhancing digital businesses in more than 7 countries and generating more than 1,500 million pesos.