Churn Management in E-Commerce

👤 Julia Konieczka

📖 2022

According to Burtch Works, employment in artificial intelligence and data science in 2022 “is solid.”

A survey by Burtch Works found that AI management specialists’ salaries increased from 11% to 13% in the annual period through April 2022. An executive recruiter reported the biggest salary increases for AI and data analytics professionals since he began publishing the report in 2013.

The survey was conducted among 1,841 AI employees from May 2021 to April 2022. The median salaries of basic AI professionals increased significantly compared to the same period a year earlier. This was especially true of management positions. For AI professionals, median base salaries ranged from $ 105,000 for level 1 individual associates to $ 275,000 for seasoned managers.

Photo source: Burtch Works

AI maturity: only 12% of companies are “AI professionals”

Accenture research suggests that only 12% of companies have developed their AI maturity enough to achieve better growth and business transformation. These companies are “AI professionals” and spend an average of 30% of their total revenue on AI.

What is AI maturity? Artificial Intelligence Maturity measures the extent to which organizations have mastered AI capabilities in the right combination to achieve high performance for customers, shareholders and employees. It comes down to mastering a set of key capabilities in the right combinations of data and AI, but also organizational strategy, talent and culture.

• AI Achievers: show advanced AI maturity enough to achieve ‘superior growth’ and business transformation,
• AI Builders: show strong foundational capabilities and average differentiation capabilities,
• AI Innovators: show strong differentiation capabilities and average foundational capabilities,
• AI Experimenters: those with average capabilities in both categories — make up the majority (63%) of those surveyed.

Accenture claims that 75% of companies have already integrated AI into their business strategies and have reworked their cloud plans to achieve AI success.
Almost (30%) of all AI pilot initiatives are subsequently scaled to deliver wide-range outcomes, with 42% of business leaders noting that AI projects exceeded their expectations.

Churn Management in E-Commerce

Churn management is one of the most important aspects of any e-commerce business. Churn can be defined as the percentage of customers who leave a business each month. Churn is a major problem for e-commerce businesses because it can lead to decreased revenue, lower customer satisfaction levels, and a negative reputation. If there is no plan in place to manage churn, a business will not be successful in the long run. This article will discuss how churn affects e-commerce businesses, and ways to reduce churn rates. Examples of businesses that have had success with churn management will also be provided to show how these businesses reached further success after managing their churn.

How Does Churn Affect E-Commerce Businesses?

E-commerce businesses are particularly vulnerable to churn because there are often many competitors offering similar products or services. Many businesses, especially subscription-driven ones, can be heavily affected by churn since there are usually multiple vendors. If a customer is unhappy with their purchase from one e-commerce business, it is easy for them to find another business that offers the same thing. This can lead to a decrease in customer loyalty and an increase in customers leaving for other businesses. Churn also affects e-commerce businesses because it can lead to a decrease in revenue. If customers are leaving a business, that business will have fewer customers to make purchases. This can lead to less money coming in and a decline in profitability.

Churn can be especially debilitating to companies that do not have high customer acquisition rates. Without the ability to acquire more customers to replace any that are lost, businesses can lose their customers at rapid rates; these high churn rates can quickly snowball and become debilitating in the long run. Customer acquisition is important for all companies, especially e-commerce companies, but studies show that customer retention is more important, since it can lead to greater revenue. As such, businesses must find ways to acquire new customers, but more importantly, it is crucial that they maintain multiple methods to keep their old ones.

Ways to Reduce Churn Rates

There are many ways that e-commerce businesses can reduce their churn rates. Some of these methods include providing excellent customer service, offering competitive prices, and having a clear return policy. By providing great customer service, e-commerce businesses can keep their customers happy and prevent them from leaving for another business. Offering competitive prices is also important because it can prevent customers from leaving for a cheaper alternative. Having a clear return policy can give customers confidence in making a purchase and prevent them from being unhappy with their purchase.

Customers leaving does not mean that these customers are gone forever. It could be that they are just taking a break from a business, or it could be something more serious, and they are no longer satisfied with the quality of a e-commerce business. Either way, it is still possible for that customer to return to the business; it just takes effort and determination to convince the customer. Businesses should offer competitive prices and other benefits to entice these customers back, or take a look at their manufacturers or products if the problem that customers remark on is product or service quality.

Businesses That Have Succeeded with Churn Management

There are many businesses that have been successful in reducing their churn rates. One example is Amazon.com, which has an excellent customer service team and a clear return policy. This has helped them to keep their customers happy and reduce their churn rate. Another example is Zappos, which offers free shipping and returns to its customers. This makes it easy for customers to try out products and helps to reduce the number of people who leave the site without making a purchase. By implementing these methods, these businesses have been able to reduce their churn rates and reach further success.

Another example of a business that has succeeded with churn management in e-commerce is Apple. Apple has been able to reduce its churn rate by offering a great customer experience, competitive prices, and a clear return policy. By offering all these different solutions to any problems that customers might have, Apple has managed to reduce their churn rates, which in turn has allowed them to gain more profit due to more repeat customers.

Disney+ has shown itself successful in keeping their churn rates low at 3.7% from 2019 to 2021. But what was the secret to their high customer retention rates? They have done this through providing great customer service when consumers find themselves with questions or facing issues, offering a diverse range of content and updating that range of content frequently with new and constantly improving material, and having innovative shows and movies produced. By doing so, they find themselves ahead of their competitors in the streaming industry, such as Peacock, HBO Max, and Paramount+, in terms of customer retention rates, which has allowed them to be more experimental with their content and innovation. This, in turn, has allowed for more exciting show and movie ideas to be produced for their customers, which continues the cycle of customer retention.

All of these companies have shown that churn management can be successful in e-commerce. Businesses must follow these examples because churn management has become more and more important as industries expand and more competitors offer similar products or services. If a business loses its customers even for a short amount of time, there is no guarantee that these customers will return.

Conclusion

Churn management is a vital part of any e-commerce business. By understanding what churn is and how it affects businesses, e-commerce businesses can put methods in place to reduce their churn rates. E-commerce has become increasingly widespread following the pandemic and e-commerce businesses continue to form and grow. But for each one of these businesses to succeed, churn management is a must.

Sources

Returnlogic

Revechat

Thestreamable