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How top MBA school graduates think about & manage customer churn

03/21/2018

How to handle this phenomenon for optimal long-term results

A man is looking at his phone
Customer churn can impede a business's growth and progress.

Customer churn, or the loss of customers, is something that all businesses should expect to experience to some degree. This can happen for any number of reasons. A customer might decide they no longer want the product or services provided, or that the price point is no longer workable, or there might even be some philosophical or practical difference that makes exchange difficult.

 

Understanding that this is a normal occurrence in business doesn't negate the fact that losing customers means losing income, and this is something that can harm a business or slow its growth.

 

Curious about how best this issue might be managed? Here's a look at how executives with MBAs tend to think about this problem.

 

MBA school graduates can take greater control by calculating the churn Rate

For top organizations, it's not enough to have a vague idea of how many clients are lost and how often. Instead, they take a bit more control of the situation by quantifying the churn rate the business is experiencing. This can be used to determine the seriousness of the problem, and how much time should be spent to address it.

 

It's important to note that there is no single method by which churn rate can or should be calculated. Some, for instance, just divide the number of churned customers by the total number of customers. Others prefer more complex calculations that take into account the cumulative number of days that all customers spend with the company, with the churn rate based on the number of lost clients against that time frame.

 

The specific methodology used does matter, and should be thought about carefully, but the most important thing is the basic act of turning churn into usable data. Graduates of an EMBA program will know that data is one of the best drivers of decision-making, and do their best to quantify business performance whenever possible.

A man is working on some data
Turning churn into data helps MBA graduates moake informed decisions

When possible, Global MBA program grads should incentivize loyalty

Often, the motive behind customer churn comes down to money. Perhaps a business is raising its prices and a particular customer no longer feels it can continue to pay, or a customer just feels that the current level of service or product is not worth their expense. Either situation, or many other financially rooted situations besides, could easily lead to churn.

 

Executives with an MBA tend to be all too aware that the cost of retaining a customer is usually far lower than the cost of acquiring a new one, and so they tend to be amenable to working out a deal to keep longstanding customers on board. It might mean a free upgrade to a different service package, a general reduction in rate, or any other incentive that helps to keep them happy.

 

Determining exactly what a business can afford to give away in this manner can be difficult. MBA graduates will likely fare better than most, though, thanks to their broad skill in finance and accounting. By doing their best to find an appropriate and financially responsible manner of meeting customers halfway, they often find success in reducing churn.

 

Executives with an EMBA may decide to prioritize the best relationships

When faced with an unreliable or churn-heavy customer base, one response could be to expend a great deal of effort addressing the concerns that exist between the business and its weakest links. But is this the optimal choice? Might it not be better to spend the same time and resources on developing deeper relationships with the most stable, productive, and likely lucrative customers on the roster? It's a question that will likely depend on the specific circumstances of the business, but is once again something worth exploring.

Two people shake hands
MBA graduates might find greater success by strengthening ties with their best clients

To graduate from a Global MBA program is to acquire the knowledge needed to run a great business. At top schools like WU Executive Academy, these concepts are taught by leaders drawn from the upper echelons of the business world, further ensuring that executives leave with strategic minds that are poised for success. Complete this type of education yourself and you can build the skill set needed to consistently make optimal choices relating to customer and churn management in your own career.

 

Are you ready to deepen your knowledge of business management?

Get your Executive Master of Business Administration from WU Executive Academy!

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