Churn is stealing your business

 While digital marketing has evolved over the years, as service providers adapt nimbly to shifting consumer expectations, one denominator has largely remained constant: the high rate of customer churn.

Industry analysts say the annual churn rate hovers around 50 percent, while other experts say that figure underestimates the loss rate. They say that client churn rates fluctuate between 50 and 90 percent. That, obviously, cuts into profits, as studies show that landing new customers is much more costly than holding on to existing ones.

Turnover factors are as varied as the customer base itself, though common pitfalls include poor performance, inefficient ROI measurements, and imperfect onboarding processes that fail to transmit the potential benefits of the product to the customer.

And then there is pricing. Companies with lower monthly prices tend to experience lower churn rates. Of course, services models also play an important role. Regardless of a company’s model—whether it’s Do it Yourself, Do It With Me, or Do it For Me—traditional broadcaster’s digital marketing services divisions need to offer acceptable price points.

There are three drivers to keep pricing in check while making comfortable margins.

Price points vary on the models, of course, and what each of them includes. And while monthly prices can range from $10 to $1,000 and more, your marketing execution platform pricing should scale and offer discounts for volume.

Second, your marketing framework should support multiple models, from subscription, to pay-per-lead/performance, to usage based services that also allow for Product Qualified Leads opportunity creation. A flexible marketing platform guarantees that you will adapt your offers and strategy to your market, both at launch and over time.

Lastly, strategies that rely heavily on paid search are also replete with pitfalls. Truth is, advertising budgets are growing at dismal rates, while marketing and promotions budgets have surged lately.

Marketing service offerings that simply repackage Google Adwords or Facebook advertising offer customers questionable value. When companies markup these services, they also price themselves out of the small business market. There is no economy of scale because pay per click pricing is linear, and reverse auction mechanisms favor inventory holders, namely Google and Facebook.

SeoSamba’s media clients, on the other hand, optimize reach organically, the search that Facebook and Google do not monetize. They pay SeoSamba to license its unique hub and spoke technology, and then monetize search results they’re not paying for in a linear way. These costs and value curves further diverge over time as domain assets accrue organic ranking value, making them more valuable to both media companies and small businesses. So, in addition to creating more room for margin, they also reduce the rate of churn and increasingly engage customers over time.

Inefficient reporting measurements, which fail to integrate reporting with marketing execution, also tend to increase churn rates. To combat this trend, SeoSamba employs tools to connect reporting to marketing execution so that small business clients see clear results, like dashboards optimized to specific metrics, emails and phone calls received from a website’s contact form, and visibility metrics that tally site visits and total brand impressions. Providing search ranking evolutions over time, and allowing clients to easily visualize the progress, such as giving them a sense of broadening appeal on Google, has proved to be an invaluable tool.

Digital marketing platforms have leveled the field for small businesses. In the end, pricing points and optimized search, especially organic, matter. But marketing platforms that rise above the competition are scalable to increase capacity when needed and flexible to manage growth and work with large platforms, whether your campaign budget is large or small. Give the customer the flexibility to use what they need when they need it. This, more than any other factor, will help reduce churn rates and increase the bottom line.