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What are some signals for banks and financial institutions that your customer churn rate needs improving?

Customer churn is not as sexy as sales, but it can hurt your business’ bottom line just as much. The best sales person can’t fill a bucket made entirely of holes, after all.

Thankfully, there’s a few signals you can look for, some are pretty obvious, others you’ll need to dig a bit, but all are incredibly valuable in proactive customer retention;

1. Complaints, negative feedback, low NPS, etc.

This one is incredibly obvious, but your customer having bad experiences = your customers leaving. Has there been an increase lately? Or worse, has there been a consistently high number of complaints? Listen to your customers, if they share reasons with you before walking, you’re one of the lucky ones, so listen closely!

2. Amount of activity

Life happens; if Sally is on a holiday she’s not going to keep using her business expense card (probably…), regardless of how much she loves it. Likewise, business customers are unlikely to continue doing business over major public holidays. But beyond that? Seeing a downtick in usage can be a strong indicator there’s some changes happening in your customers life, one of which may be looking at alternatives.

3. Abandoned products

If your customer completely stops using a facility, you can be sure they’ve found a replacement elsewhere. It’s certainly common enough for consumers to move one part of their finances across to a different organisation – perhaps there was one very attractive introductory offer.

4. Communication breakdowns

When your customer doesn’t return calls, stops responding to your inquiries, or is simply ignoring contact.. it’s probably a step too late, but you can still understand what went so sour and hopefully prevent it for future customers, if not fix it and save your current customer.

5. Decrease in CLV (Customer Lifetime Value)

If you begin to see changes in this important metric, it’s almost certainly related to another item in this list, but it’s easier to look for from your data set so it’s worth calling out.

6. Customer tenure

Your longer standing customers are less likely to leave, but that doesn’t make it impossible. If you have mostly new customers, there could be a big underlying problem worth investigating.

What’s next?

There’s a lot of subtleties to customer churn and the more time you spend, the more of these early signals you can identify. The more you can identify, the more opportunities you have to retain your customers. The quickest and most successful way is to get personal with your customers and anticipate their needs – sounds easy, right? Not so much, not at scale. Thankfully, there are a number of tools and techniques to get on top of churn, which you can read about in our next blog post.

Of course, there’s always the option to build an ML model and let that do your identifying, but that’s a whole different topic.