In these times of economic uncertainty, keeping customers happy has never been more important. Accenture estimates the cost of lost business due to customer churn or switching to a competitor at $1.6 trillion.
If your firm is already experiencing high churn rates or low NPS scores, time is of the essence. Customer retention efforts are critical to reducing churn and to protect against negative impacts to business goals. Brand loyalty is intrinsically linked to financial metrics, such as acquisition costs and revenue targets.
PwC surveyed 15,000 consumers and found that 1 in 3 customers will leave a brand they love after just one bad experience, while 92% would completely abandon a company after two or three negative interactions. Yet, many companies fail to identify and address the root causes for customer dissatisfaction.
In this article, we will focus on the challenges of customer retention, plus both short and long-term solutions to decrease churn, impact business outcomes, and improve experiences that are reflected in our NPS scores.
Impacts of Customer Churn
The statistics about customer churn are sobering:
- Up to 80% of customers that churn had low or no engagement with the company
- 61% of customers report they would switch to a competitor after just one bad customer service experience
- Studies show that more than half of all efforts to respond to customer complaints actually reinforce negative reactions to a service
- Recently, reports detailed that 23% of customers churn due to a poor onboarding experience, 14% leave after a poor customer experience, and 16% depart due to a lack of customer loyalty
However, the benefits of focusing on retention are just as clear:
- 67% of churn can be avoided if an issue is resolved on the first encounter by a company
- 82% of companies state that retention is cheaper than customer acquisition
- Bain & Company notes that a 5% increase in customer retention can increase profitability for a company by as much as 95%
[Read More: Goodbye Isn’t Forever — Building Effective Customer Re-engagement Programs]
Short-Term Solutions: Outlining a formal Save Program
Given the staggering cost of acquiring new customers compared to retaining existing ones, here are some short-term steps that you and your company can take to control customer churn:
Build a Business Case for Change
- Calculate your Customer Lifetime Value and Customer Churn Rates
- Use competitor success stories to support your business case
- Evaluate metrics to ensure they support the intended experience
Align Customer Support Resources to include proactive outreach to dissatisfied customers
- Based on churn rates assign the right amount of team members to support the proactive outreach
- Create communication strategy and support options needed based on your organization’s unique needs
- Create executive escalation resources if the customer needs additional support
On the reactive front, transfer dissatisfied customers to a customer experience (CX) Save Team based on:
- Survey Feedback
- Customer support agent escalations
- Negative web or digital interactions tracked by customer digital journey technology
- Trigger words in phone or chat transcripts
Train the Save Team on options to save customers:
- Segment customers by Lifetime Value
- Based on customer segments and lifetime value, have multiple options for the Save Team to support your most valuable customers
- Design support language to ensure success in saving customers, restoring trust, and building loyalty.
To keep churn rates low, your company will need a sustained cross-functional effort to resolve customer issues as they arise. By creating a continuous closed loop service recovery program with behavior-based coaching, you are better able to impact experiences and business outcomes. Examples of this include:
- Programming customer survey software, call center devices, websites, and mobile apps to generate “tickets” when customers express high levels of dissatisfaction
- Using benchmarks against your competitors to set goals and evaluate future progress
- Creating a governance framework for operational change enablement based on feedback, which ensures that CX analytics data is being actioned upon and holds leadership accountable.
Create a dedicated Customer Recovery team
- This team must be experienced and knowledgeable in any issue your customer’s may face
- Purpose is to “close the loop”, i.e., resolving the issue and preventing it from happening again.
Evaluate the latest CX Technologies
- Customer Journey optimization technology can change the journey in real time, and has an ROI within 3 months
- Utilize the latest AI, Machine Learning, and Natural Language technologies to discover customers that are a high-risk for churn across multiple channels such as call centers, social media, survey comments, mobile app feedback, or web-based contact forms
By creating both a short and a long-term focus on customer retention, your company can take charge over churn, even during times of economic downturn. RevGen Partners can support your short- and long-term goals for your CX Program including maximizing your customer recovery efforts! Learn more about what we do by visiting our Customer Experience site.