FILLING THE BUCKET
It’s a Saturday afternoon and you have decided to task yourself with washing the windows at the front of your home. You get all your tools together, the garden hose, bucket, sponges, window soap and a big can of elbow grease. You work hard at it for hours, changing tools every so often. You even rope in other people to help. It takes so long, too long so by the time the windows are fully clean it’s time to start again. On closer inspection it turns out that some of the tools you were using were old and obsolete, the bucket had a hole in it and the windows you were working on weren’t even the dirtiest ones – it was the ones at the back of the house you were supposed to clean.
Ok, I exaggerate to make a point. None of us would wash our windows like this would we? Yet as marketers we often manage our brands and customers like this? Using the incorrect tools in not the optimal way in the hope that it will all just work? There is no point in “just trying harder”. If you are the metaphorical fly trying to escape through a window (different ones this time, a side window perhaps), flying into a closed window, won’t make it open. The fly would do well to sit back (can flies sit?) survey its options, and choose the open window.
That is the role of brand management – to be the clever fly. Or to be the guy or girl who has the right tools for the job and knows how to use them. We could cover many topics on that basis but the one that concerns us most in LifeStars HQ at the moment is the hole in the bucket. A simplistic way to describe Customer Churn.
Marketing writers today, most notably Jenni Romaniuk in her book “Better brand health” suggest that building penetration is the holy grail for marketers. If you haven’t read the book, I recommend it as it covers many pertinent topics such as category entry points, mental availability, and the rise of AI. However, in terms of penetration, I can sum up what she says as “Brands grow by having many more buyers who buy the brand a little more”. So, more penetration is required. Big brands get this. You can imagine the conversation in St. James Gate with the Guinness team “We’re selling more and more Guinness, but we can’t reach a certain cohort who just don’t want to touch any alcohol” 30 years ago that was just a fact of life. Now Guinness Zero is one of the quickest growing beer brands in the UK and Ireland. Brands also build penetration by international expansion – Lidl and Aldi, German retailers, have approx. 25% of the Irish market. More buyers buying the brand a little more – hence the Go Full Lidl campaign. To bring it back to our bucket analogy, this is the equivalent of filling the bucket. It is essential. If you stop filling the bucket will eventually empty as customers churn.
THE LEAKY BUCKET
Churn is the rate at which customers stop doing business with a company over a given period. It is a key metric for measuring customer retention and business health. Let’s look quickly at the types of churn and how to measure them before getting to what is important, in our opinion, anyway: how to mitigate churn!
There are broadly speaking two types of churn: voluntary and involuntary.
Voluntary churn is the one that companies need to have a strategy in place for. This is when Customers actively choose to leave, often due to dissatisfaction, pricing, or better alternatives.
Involuntary churn happens when companies get a bit sloppy – for example, customers leave unintentionally, such as due to expired payment methods or service disruptions. It happened to me recently for an app I was happy to stick with. Did I then go back and sign up again? No. I’ve churned but that wasn’t my intention.
If you are reading this as a Brand Manager – please take 2 minutes to calculate your churn rate – assuming you don’t know it off the top of your head.
Here’s how.
X divided by Y, then multiply by 100.
X = number of customers lost during a given period.
Y = total customers at the start of the period.
E.g. Brandco has 120,687 customers on January 1st, 2024. It has 111,659 on Jan 1st, 2025.
Not everyone likes figures, so I’ll work this one here for us all.
- 120687-111659 = 9028
- 9028 / 120687 = 0.748
- 748 * 100 = 7.48. Or we might be kind to ourselves and round to a 7% churn rate.
Is this good? It’s average. Since we are dealing with people, some churn is inevitable. You can’t please all the people all of the time.
A “good” churn rate depends on the industry, as different sectors naturally experience varying levels of customer attrition. However, as a general rule:
- Below 5% annually → Excellent (High retention, strong customer loyalty)
- 5%–10% annually → Healthy (Typical for many industries)
- 10%–30% annually → High churn (Common in competitive markets – monitor!)
- Above 30% annually → Problematic (Likely unsustainable for long-term growth)
If we look at a global level the churn rates for specific industries are as follows:
(Source: Billingplatform/customergauge/seoandswitch)
High churn can indicate customer dissatisfaction, competitive pressure, or service issues. Acquiring new customers is more expensive than retaining existing ones. Reducing churn leads to higher customer lifetime value (CLV) and sustainable growth.
Mitigating customer churn requires a strategic approach that focuses on customer retention, satisfaction, and proactive engagement.
FIXING THE LEAKY BUCKET
You have a penetration strategy: how to get more buyers buying your brand over time but have you got a retention strategy – one that boosts customer loyalty and means that your brand ‘bucket’ stays fuller for longer?
At LifeStars we enjoy the theory but only as long as it concludes with practical application on how to make it work! Theory without practice is just waffle. In that vein, here are the top ten strategies for reducing Customer Churn /Boosting retention. Hopefully your business can harness these strategies to make a difference in terms of your overall brand strategy and brand growth.
1. Elevate your customer experience
Every interaction with your brand is an opportunity for you as a brand owner to add value to that customer’s experience. It’s true that this is easier for high-involvement categories such as food or luxury items; however, even the most seemingly mundane product can create a positive customer experience that leads to higher retention. I’m sure we’ve all heard of the brand Scrub Daddy https://scrubdaddy.com/. This is a sponge, with a face cut into the sponge, which encourages you to ‘smile while you scrub’. If you walk into your local Tesco today, you can highly likely buy 5 sponges for a couple of pounds. Or you could buy a Scrub Daddy for approximately £5. Just one sponge. Does it scrub your dishes any better? I’ll let the people who spend £5 on a sponge be the judge of that. Either way, people who buy Scrub Daddy aren’t just buying a sponge are they? They have bought into the customer experience that Scrub Daddy promises. They’re unlikely to churn out of the brand and are happy to keep on paying over the odds to be part of this club. The brand might seem simple, but it has been created based on a deep understanding of the customers it targets. It uses its customer data to personalise interactions where it can, and it always sets out to deliver value-driven experiences for Scrub Daddy customers. Value, not low cost.
Great customer support is a must. Use customer data to personalise interactions and create seamless, value-driven experiences.
2. Strengthen customer engagement
When I started off in the world of FMCG over 20 years ago, this was called relationship marketing. There is no doubt that relationship marketing is making a comeback, although it’s less likely to be called that these days. Brand owners must communicate frequently with their customer base. The communication needs to be meaningful, engaging with customers on matters that mean the most to them. This of course can be product-specific such as understanding how customers use your product or service and how it can be improved. It can also be more tangential; you use our service, but what else do you do? This is not seen as being nosey if it’s done in the correct way. More importantly, if the customer understands that by engaging with the brand, then it is more likely to result in a better experience for them.
3. Address specific issues such as price sensitivities
Supermarkets and also subscription services such as TV or telecoms are very good at this. We will talk about subscription services later on, so let’s look at supermarkets for now. You walk into your usual supermarket, let’s say it’s the Sainsbury’s on the corner. You go to buy a certain type of bread that you really like, but you see that it’s out of stock. What do you do? Rational marketing, which is rarely the best way forward might suggest that you go elsewhere to get the bread that you really want. People are rarely rational. Most people in this instance would look for a substitute product. If the supermarket, Sainsbury’s in our example, is aware that they had been out of stock on a certain product, they will have highlighted this and offered this substitution that they feel is of similar value. That way you feel as a customer, that you are valued, and you keep shopping at Sainsbury’s.
Let’s look at another example. Perhaps a change in my circumstances has led to the fact that I can’t afford to buy my preferred bread anymore. You can bet that Sainsbury’s has an everyday range that is now more in line with my new price scale. In fact, as harsh economic realities hit many consumers across the UK, last year Sainsbury’s realised that it didn’t have sufficient range to cater for everybody. People were churning, so they fixed it. Read about it here: https://tinyurl.com/lifestarssainsburysvalue
4. Make switching a non-issue
Sometimes, when we talk about customer retention, we very quickly move to loyalty. That should be the ultimate goal. However, in order to reduce churn, we need to ensure that our product or service stays within the customer’s repertoire. We may not be #1. That said rewarding loyalty in a way that makes staying with your brand feel effortless and beneficial is extremely worthwhile. Your customers should feel like “why would I ever want to leave this amazing brand?” I recently called Sky TV to cancel my subscription and I was told by the person on the other end who was probably in their early 20s that I’ve been with Sky TV for 26 years. Clearly Sky has been doing something right for me. Did I leave? I planned to, but no I didn’t because Sky recognised the loyalty that I had shown them and now I’m probably on one of the best Sky packages for the least amount of money of any of their customers – so why would I bother leaving?
5. Gather customer feedback and ACT on It
Asking your customers what they think of your product or service is something that most of us marketing people do often. However, for reasons that I detailed in a previous blog, Rage against the (market research) machine, we don’t do it as often as we should. Even when we do, there’s a good chance that we are guilty of not acting on the feedback we receive in a timely manner, so that it is effective for our customers. Building a strong brand relationship means actively listening and responding to customer needs. If you respect your customers’ time, then show it by making improvements based on their input. Customers, particularly brand loyalists, will always value being part of the brand solution. LifeStars can help you make this a reality.
6. Improve onboarding
The shampoo brand Head and Shoulders, in the 1990s, was keen to tell us all “you never get a second chance to make a first impression”. It’s still a great line. And in a marketplace where churn rates are on the increase, it’s never been truer either. If you are a service provider, how do you ensure that the first time a customer uses your service they feel a little bit special? Many online retailers will include a little treat with the first delivery. Other large service companies will offer discounts to new customers. Always a risky one that, in that it could also serve to alienate your existing customers. Either way, first impressions count. Set the tone for lasting relationships by making onboarding as smooth and as engaging as possible. The stated objective should be to create advocates for your new customers. New customers will talk to old customers. In this way, you increase penetration as well as reduce churn. Win-win.
7. Use technology to predict and prevent churn
If you are selling your brand or service online then there are many different predictive analytic systems that can be put in place to spot early warning signs of churning customers. This will enable you to segment these customers and apply various retention strategies to them. The earlier you can spot that a customer is starting to wane, the better chance you have of proactively addressing the potential issues and retaining them. While it’s easy these days to do this online, let’s face it, even in a face-to-face environment we know when customers are starting to fall out of love with us. Basket sizes get smaller, shopping trips get quicker, our brand is no longer loved but still liked. Be needy. Spot these trends and intervene to reduce churn.
8. Offer flexibility
Instead of letting customers cancel outright (think of my Sky TV example above), offer downgrades, pauses, or any other alternative option. Cancellation should only be reserved for customers who are extremely dissatisfied with your product, and even then there could be plenty of opportunities to get that customer back on side and understand what has caused their issues. The most important thing is to keep customers in your ecosystem. Perhaps it’s not you at all, and something has changed in their circumstances. How many of us would love to be able to pause gym membership? Pay 10 months gym membership but be allowed to use it over 12 months? Brands need to work with their customers to offer flexibility. In the world around us, that which is not flexible often breaks.
9. Benchmark constantly
I’ve said it before, but no brand is an island. Brand owners need to understand not just their customers but also their competitors’ customers. Customers could decide to leave your brand because they’ve spotted something better elsewhere. This is the very nature of what we do on a day-to-day basis. The trick as brand managers is to spot this trend, this product, or this benefit before too many of your customers do. The simplest way to do this is to keep your customers close, engage with them frequently, and ensure that if they spot something new, they are the first to tell you about it so that you can assess the competition and react accordingly to reduce any potential churn.
10. Lean into the power of community – this year’s Meta trend.
Community is the Meta trend for 2025. Customers are uniting around brands and using brands to signpost not just their consumption experiences but also their day-to-day life experiences. To create loyalty and ensure customer retention, brands should encourage customer testimonials, reviews and word-of-mouth recommendations. Some brands can even go further by creating and hosting events that their customers are invited to. The brand becomes the curator of a life experience where customers feel valued and connected. Is this customer going to leave your brand for another one just because that brand is now a little bit cheaper or a little bit bigger? I don’t think so.
Hopefully, this article demonstrated how constantly striving to increase the number of customers who buy a little bit more is especially important, but it’s not the only thing that a brand must busy itself with. Filling the bucket is pointless if there’s a hole in the bottom of the it. Customer churn is on the increase across the UK and Ireland and as brand managers, it is our job to understand the reasons for this and to mitigate against it.
At LifeStars, we understand how critical customer closeness is in terms of reducing churn rates. Our platform provides always-on fully incentivised research that makes it easy to engage with customers and colleagues, ensuring you stay ahead of the curve. Talk to us now about how we can help you implement a LifeStars system quickly and easily, to put you ahead of the pack in terms of customer retention and brand growth.