According to research from Bain and Company, increasing customer retention by just 5% can lead to a whopping 25%-95% increase in revenue. To reduce churn, companies must analyze the most prominent reasons causing churn, and start taking actions to address them in their combat against high attrition rates.

Based on our experience of working with leading recurring revenue businesses from industries such as home security, telecom, and retail electricity suppliers, we’ve compiled a list of 10 common retention pitfalls these businesses must avoid.

Check if your team is a victim of any of these pitfalls:

1. Considering customer retention as the marketing team’s prerogative

Customer retention is not a prerogative of the marketing team alone anymore. Any customer obsessed business should make it clear across the organization that every department is equally responsible for overall customer retention.

One good customer experience can impact repeat business and diminish bad experiences, but repeated disappointments ultimately lead to cancellation. The bad experiences can happen at any touchpoint, such as during a call center or service experience, neither of which are owned by marketing. So, to improve retention, every customer-facing department must be involved.

2. Not deploying Risk/Value-based marketing

Companies usually don’t segment customers based on their level of risk. For effective risk mitigation or customer revenue mining, marketers must implement segmentation based on risk or value propensity because such categories help companies maximize customer profitability by running targeted campaigns. For example, low-risk segments can receive cross-sell/upsell offers, while high-risk segments can receive proactive offers and resolution to mitigate their higher churn risk.

3. Relying only on structured data for risk predictions

Traditional churn models only rely on structured data such as purchase history, billing information, etc. to predict risk. These models don’t make use of past and present events happening at multiple touchpoints such as call centers to understand customer behavior. Customer interactions collected in an unstructured format via agent notes are a goldmine of insights containing customer behavior patterns and emerging churn risk signals. On proper utilizations, inferred risk signals such as contract discussions, competitors’ mentions, or cancellation mentions can be used to mitigate risk early with proactive best fit offers.

4. Reactive measures for churn management

By the time many companies identify at-risk customers, it is already too late, and they get very little time to deal with such at-risk customers and fail to reach their retention targets. Retention efforts at this time prove to be harder and more expensive. So, proactive risk identification early in the customer lifecycle proves vital for effective churn management.

5. Not recognizing customer effort as a business metric

Reducing effort is the most important thing your service strategy should aim to accomplish. Never-ending IVR menus, ridiculously long response times, multiple call transfers, and failure to resolve customer issues on the first call are some of the typical events adding to customer effort and such customers get disappointed by the company’s indifferent attitude.

6. Giving more importance to speed over quality

Companies often equate the fastest service with the best service, but ticket times do not show how well your customers are treated or if the interactions are creating any goodwill or brand loyalty. So, when it comes to customer service, quality must be preferred over speed.

7. Ineffective loyalty programs

Loyalty programs are proven to have a powerful impact on retention. However, loyalty programs often suffer from low response rates which in turn are caused by low customer engagement and a lack of personalized offers. Using inbound channels such as call centers to reach out to the right customers can propel the effectiveness of loyalty programs to new levels.

8. Believing acquisition is more important than retention

Taking good care of your existing customers is extremely important so your competitors can’t steal them. However, many enterprises struggle at this. They tend to put most of their resources into acquisition and not enough into retention. It’s important for companies to realize that retention plays a key role in generating more revenue by increasing the lifetime value of loyal customers.

9. Ignoring opportunities to win back lost customers

Companies usually don’t try to win back their lost customers. They instead ignore them, thinking their efforts will be futile. However, their efforts are not wasted when there is a better win back opportunity. For effective win back, businesses must check the historical data of the customer, identify the root causes of their cancelation, and score every canceled customer for win back propensity. Then, marketers can run campaigns and provide tailored offers to each customer for effective retention.

10. Not deploying advanced technologies like AI, text analytics, and machine learning

Customers don’t decide to cancel overnight. A series of bad experiences and interactions lead them to take this drastic step. Earlier, companies didn’t have many options to keep track of all their customers. However, with the advent of modern technologies, tracking customers at scale has become easy. Technologies like text analytics can be used to mine insights from millions of unstructured text formatted customer interactions in real time. These inputs to AI-driven machine learning models can help uncover complex risk patterns and predict at-risk customers very early in the lifecycle so necessary actions can be taken proactively for retention.


The customer retention pitfalls above should give you fresh ideas for pulling up your sleeves and keeping your customers longer. A retained customer is happier, spends more, and needs lesser service over time. Planning your line of attack while accounting for these retention pitfalls in your strategy will help you save millions of dollars in revenue by improving the lifetime value of your customers.

Read more: Customer Retention: 3 Ways to Start Strong and Finish Stronger