Every business owner knows they need to attract new customers. For many that’s where the idea of sales and marketing stops. In reality, to have a successful and profitable business as much effort needs be put into customer retention as customer acquisition. We sat down with Patrick McCarthy, Fractional CFO of My Startup Consulting, to discuss the impact customer churn has on a business.

Why retention efforts are important:

  • To begin, it's 5 times more expensive to acquire a new customer than to sell to an existing one. If all your marketing efforts are geared to customer acquisition, it will put a huge burden on your bottom line.
  • Existing customers are 50% more likely to try new products and spend 31% more compared to new customers
  • Increasing retention rates by 5% increases profits by 25-95%

Here's a scenario:

Let’s say you run a CSA with 120 Customers, and the weekly share price is $30

Your monthly revenue from CSA sales will be about $14,400/month or $86,400/year assuming your CSA runs for 6 months.

How churn affects your business - If you lose 50% of your customers next year, you’ll need to find 60 new customers just to stay level. The average cost of customer acquisition for CSAs is $100 so you’ll need to spend $6000 just to maintain your business.

If you reduce your churn by 5% down to 45% you’ll keep an additional $8640 of revenue in the business without spending any money.


How to reduce churn?

  1. Establish a good communication channel that includes a feedback loop - so you can gather insights on what delights or frustrates your customer.
  2. Acknowledge and address concerns. Let the customer know you’re listening and care about their experience.
  3. Product is the #1 reason for CSA churn. Consider implementing some customization and provide ongoing support for using your product.
  4. Capture leads from all sales channels and nurture them.
  5. CSA’s aren’t for everyone. Try to move customers that are likely to churn from your CSA to another sales channel.

What to track and measure:

You can't manage or improve your business if you're not tracking and measuring effort and results. Getting your marketing right requires experimentation which can feel overwhelming, especially if you have no way of knowing what's working, or not. It's important to track and measure results against effort. Start with simple and basic processes.

  1. How much you spend on marketing (including the value of your time)
  2. Number of customers by channel
  3. Sales by Channel (Farmers Market, CSA, Online, Farm Store)
  4. Retention by channel

Watch our recorded webinar, "The Real Cost of Churn":


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Our Next Webinar will be on Oct 17, 2022 at 4:00PM EDT

"Know Your Customer"

with Guest Speaker: Raechel Lambert

Founder of Olivine Marketing and the Founders Marketing Playbook