Customer Churn

What is Customer Churn?

Customer churn, also known as customer attrition, is a term referring to a percentage of customers who have stopped doing business with a company during a specific time frame. For companies that rely on loyal customers, such as restaurants or retail stores, a high customer churn rate can be devastating for business on many levels.

In the restaurant industry, which is heavily dependent upon customer loyalty, reducing customer churn rates is an absolute necessity. Competition in the industry continues to grow at a record-breaking pace from new concepts, technology, and delivery. This means that consumers have more choices than ever before when it comes to where they choose to dine. So, if you want to be successful in today’s competitive environment, you need a way to identify churning customers and get them back through your doors.

Why do Customers Churn?

There are many reasons restaurant customers might have for churning. Often times it is because of poor customer service. Other reasons may be that your restaurant food quality and choices are below par, or are overpriced. Or perhaps the level of cleanliness in your restaurant could be improved upon.

Whatever the reason, it will typically come down to one general explanation. They did not have a great customer experience and they do not have incentive to return. Consequently, they decided that one of your competitors is better worth their time and money.

Why Is Reducing Churn So Important?

Retaining loyal customers is much less expensive than acquiring new ones. According to the Harvard Business Review, acquiring a new customer can be anywhere from 5-25 times more expensive than retaining a current one. Add to that the time between losing one customer and gaining another, and you can quickly see that an out-of-control churn rate can be devastating for any business.

Worse, if you do not recognize it, it will only continue to climb. Unfortunately, many restaurateurs do not know what their churn rate is, or which way it is trending. Likewise, they do not have the technology to monitor this vital business metric. Customer attrition will occur naturally in business. But when churn rates begin to climb with no intervention, it can quickly derail any momentum your business has generated.

Loyal customers are more valuable to your business, the longer they remain loyal, the higher your customer lifetime values and the lower you can maintain your customer acquisition costs.

How to Measure Customer Churn Rates

Unless you have a photographic memory and you see every single customer who ever walks into your place of business, you’re going to need an alternative way to measure customer churn.

For ecommerce businesses and subscription-based companies, measuring customer churn is as easy as plugging in a number and doing the basic mathematical calculations. Restaurants, on the other hand, do not have the ability to accurately identify individual customers. Add in passers-by and out-of-towners, and coming up with a number of loyal customers becomes next to impossible.

Without the ability to identify the visits of these individual customers, any calculations made will be skeptical, at best. Therefore, churn calculations become extremely difficult to tally accurately for restaurants and other brick-and-mortar businesses.

That is, unless you are using the DIGIMAX Intelligence WiFi marketing and analytics platform.

How DIGIMAX Intelligence Identifies Churning Customers

Every WiFi-enabled cell phone or device is constantly sending out a signal looking for WiFi access points. This signal contains a unique code that the restaurant’s WiFi access point sensors will log into its database. From that point on, DIGIMAX will know when that device comes into range. This is how individual customers and the frequency of customers will be identified. The customer doesn’t have to log into the WiFi, they just have to be within range of the guest WiFi.

Among other important customer key performance indicators provided by DIGIMAX , you will now have a much more accurate understanding of the number of customers and the frequency of your customers to your locations. DIGIMAX automatically monitors your customer foot traffic or individual presence analytics for you, and how that behavior changes over time. We then analyze and clean all this raw data to provide you an easy-to-see graphical representation of customer behavior.  One of the most important indicators is how your churn rate is trending by month, quarter or year. This will allow you to quickly identify at-risk customers, and create an automated marketing strategy – campaigns based upon different scenarios with the goal of saving your at-risk customers.

DIGIMAX’s intelligent algorithm sets monitor each customer’s frequency distribution, individually and as a whole, to understand your customer attrition rate. By analyzing customer frequency, the platform is able to accurately predict when a customer should be returning for another visit. If the customer does not return by that date, they are identified as “At-Risk” of churning.

You can then take steps through DIGIMAX’s automated marketing suite to persuade the at-risk customers to visit your location(s) again.

Using WiFi Analytics to Reduce Customer Attrition

Using WiFi analytics to monitor and report on your customer churn rate, you’ll be saving money compared to hiring a third-party to do this for you. Plus, with DIGIMAX, it is completely passive. You don’t have to lift a finger to see your customer churn rate, which is updated in real time. Plus you’ll be collecting data from a very large sample size of your customer base giving you the ability to spot trends quickly.

If you notice an immediate spike in the metric, or a trend up or down, it will be much easier to identify the possible reason for the change. Then, you can take steps to stop negative movement, or reinforce the things that may be driving it in a positive direction.

Ways to Stop Customer Churn at Restaurants

As we mentioned before, customer attrition boils down to guests having negative customer experiences. If you notice an increase in churn, you’ll need to implement customer service training and operational procedure adjustments. However, even if you have the cleanest restaurant with the most cordial staff and the most reasonable prices in town, it won’t help much if your churned customers don’t know you’ve made efforts to improve.

This is where the DIGIMAX Intelligence automated marketing suite of tools can truly help your business grow. DIGIMAX allows you to set up an automated, or triggered, marketing campaign. All you need to do is create a single message to send your churned customers, or even customers who gave you a bad rating, ideally containing an incentive to return, such as a free drink or appetizer. When DIGIMAX identifies a customer who is likely churning, the system will immediately send that message to the churned customer.

Clients all over the country are running this type of campaign using the DIGIMAX platform. And they are seeing impressive results leading to strong business growth. For instance, a Florida-based restaurant chain began running an at-risk campaign several months ago. They have seen a whopping 38% of these customers return to their restaurants.

Additionally, their customer attrition rate has dropped every month since executing the campaign. To see the details, download the report here. This is just one of countless campaigns that can be executed through DIGIMAX’s intelligent marketing suite.

See DIGIMAX Intelligence In Action!!

If you’d like to see the DIGIMAX WiFi marketing and customer intelligence platform in action, and discover how you can grow your business through WiFi marketing growth tools, schedule a free demo or call 215-528-8410.