Beware of Churn

Damen Jackson > Blog > DJ Original Blog > Beware of Churn

Churning milk or cream into butter is a glorious thing, as everything is better with butter.

However, Churn for businesses is not good. Churn means the loss of customers over time, which weakens the brand and causes revenues to decline. For service businesses, like financial services or mobile phone providers, churn is a critical issue and a key metric reported in all financial results.

For product brands, the best way to control churn is to make your offering best in class. Thus, there is no incentive or reason to switch or stop buying your brand. Easier said than done, no doubt! Put on your consumer hat and objectively assess if your brand hits on all key buying criteria for your core customers. If not, or if your competitor has introduced an impressive innovation, it is time to get going.

How to reduce the risk of churn.

Simply stated, do what you do better than anybody else. Deliver a superior product with flavors and variety that covers most consumer needs and usage occasions. Design your package so that it is easy to use, easy to open or close, easy to store, easy to find product information, easy to dispose of. Provide usage or recipe ideas that are quick, fresh, healthy, and satisfying. Make it straightforward for consumers to connect with you for questions, concerns, or help with how to get the most value and best user experience from your brand.

Stay vigilant on shifting consumer trends or risk being left behind. Sometimes what was hot cools off, like low fat products or diet fads like Atkins or Keto. More often, it is a new product that offsets category consumption declines—like baked snacks that are flavorful yet healthier than traditional fried snacks. As an example, Ritz has done a nice job of launching flanker brands that meet consumer needs with its Toasted Chips. Tate’s cookies offer great tasting varieties in premium packaging that live up to their tag line: Uniquely crispy. Deeply delicious.

Customer churn is even worse.

Losing a retail or distributor customer is a big deal. You spent lots of money to get in the door, from slotting allowances to new product spiffs, volume-related deals, or special discounts. If sales of your brand(s) become weak, or if a new brand disrupts your product category, you may be at risk of losing distribution. Or, if you have a supply or service problem that persists, you must pull out all the stops to fix it fast with a durable solution. No doubt it will be costly to lose that volume or to attempt to put together a pitch to regain a lost customer.

Contractual arrangements or service agreements can be a barrier to churn, and this works at both the trade and consumer level. The mobile phone providers address this with their multiyear phone purchase deals, as well as their usage plans that tend to “lock in” subscribers. If a consumer wants to switch, it can be costly and a hassle.

For consumer brands, some companies offer loyalty or rewards programs to reduce churn. To be successful, these programs have to offer enough value to be motivating for end users. That means including rewards that are relatively easy to qualify for and redeem, in addition to those that require lots of time and purchases. In our experience, rewards programs are expensive and hard to link to incremental sales.

Other brand strategies include pantry loading through BOGO (buy one, get one) deals, or in-package coupons good on next purchase. These approaches encourage consumers to buy in quantity and help to maintain product loyalty through monetary incentives.

Employee churn.

One of the biggest churn issues is related to employee turnover. You’ve invested in recruiting, onboarding, training, and growing your employees. Losing key employees is a problem that requires root cause assessment so that you can address causal factors. Compensation is often an issue, as is having the tools and resources to successfully do the job. A flexible work schedule and the availability of tools and programs to enhance the employee’s skill set are increasingly top factors. Likely, it’s impossible to get employee turnover down to zero, but retention (especially among your leadership team) makes a meaningful difference in your results.

At Damen Jackson, we have the benefit of 24 years of working with almost 800 clients to help your brand thrive, which mitigates the negative impact of churn. Our sweet spot is helping you stand out with powerful messaging and design that sells. And we are here to fully leverage and enhance your brand value.

Importantly, we stand ready to help you grow your teams and your business. We are deep thinkers with the courage to tackle challenges large and small, whether you want an outside look at your brands, a focused project for a product launch, or a tune up for your messaging or look. Our fresh eyes are there to supplement and augment the experience of your leadership team, while multiplying the odds of discovering meaningful new revenue growth or sources of competitive advantage.

Let’s get some great work done!

Take the first step to a more successful business today.

1.    CLICK HERE to schedule a free 30-minute discussion. No pressure – we promise.
2.    We’ll provide real-world case studies showing the process in action.
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