Would you pay 40p to retain a customer?
I recently heard a story about a customer who left his energy supplier over an incorrect charge of 40p. After contacting them numerous times to try to get a resolution and becoming increasingly frustrated at their lack of care and empathy, the customer looked around for a better deal and switched energy providers. For the sake of 40p, a very small amount on this customer’s account, they lost an otherwise happy paying customer in an industry where competition is fierce and the cost of acquisition far outweighs this kind of small charge. Not to mention the cost of servicing multiple calls from the same customer over the same issue.
These kind of stories are becoming more and more common, and not just in the energy industry. Increased competition and improved systems are making the process of switching suppliers for goods or services easier for consumers meaning they are less likely to put up with poor service. In the banking world, the ‘Current Account Switch Guarantee’ helps make it easier for consumers to switch banks without hassle which is leading to increased competition in the retail banking space. In retail, online shopping makes it simple for consumers to simply go elsewhere.
Customer loyalty is no longer a certainty and to earn loyalty, we must listen to our customers and the relationship needs to be nurtured. Whether your business is, energy, banking, finance, telecommunications, pay TV, insurance, retail, etc. there will always be someone willing to step in and take your customers if you don’t listen to their needs and take action.
Above: Three Mobile’s new ad campaign.
Often the products we sell and support are no longer a differentiating factor, especially in mature markets. As the economy improves, trying to retain customers on price alone won’t be enough to prevent customer churn and companies are starting to recognise this. Mobile operator Three just launched their “When stuff sucks #makeitright” campaign which is aiming to portray the company as a customer champion and focuses on how different they are from the rest of the pack. It’s a great example of a customer-focused approach to both attract new customers and retain existing ones.
Above: Recent research findings from the Harvard Business Review
According to Harvard Business Review the average business loses 50% of its customers every five years! When you consider that research has shown that attracting a new customer costs between four and ten times as much as retaining an existing customer, plus existing customers often spend more with your business than new customers, the impact of customer churn on your company’s bottom line is significant. Looking back at my earlier example of the customer wanting his 40p, this customer could have been saved for a very small investment of good will.
So what can you do to prevent customer churn?
1. Measure your churn rate
What gets measured, gets done. It’s difficult to make an impact on a metric if we don’t even know what it is. There are many ways to measure churn, but the simplest is to use the number of customers lost in the month divided by the number of customers at the start of the month. No matter how you choose to calculate churn, monitoring your results is vital.
Understanding your churn rate will also help you understand its potential impact on your bottom line and how big the problem is that you’re facing.
2. Create a self-correcting service environment
Harris Interactive found that 86% of customers leave an organisation due to a poor service experience. Therefore it is important to have a process in place to identify the people, processes or technology that is impacting service delivery.
Surveying your customers after they contact you using a voice of customer (VOC) solution is a fast and cost-effective method of gathering customer feedback. Ensuring that your feedback is granular enough that you can map your customer’s comments back to an individual or department, as well as providing people access to the feedback is vital for creating a self-correcting environment.
If an agent can see customer’s feedback about them, they can adjust their behaviour to improve. Team leads and managers can utilise VOC feedback to identify where they need to focus their coaching and support also.
Additionally, if a department has visibility of what process or technology is impacting on the customer experience, they can direct their efforts where it is needed most.
3. Listen to your customers and intervene
Keeping customers happy and listening to their feedback is important to prevent churn in the first place, but intervening when something goes wrong is equally as important.
Bright’s Navigator Voice of Customer solution provides real-time alerts based on customer’s comments and scores. For example if a customer mentioned words like “cancel”, “leaving” or “complaint” an alert is triggered allowing team leads, retention or quality teams to intervene and resolve an issue before the customer churns. These kind of closed-loop feedback techniques not only help to resolve the customers issue but help to build trust and loyalty with customers when they see someone taking their feedback seriously.
If your voice of customer solution doesn’t offer real-time alerts, keep track of your Customer Effort and/or NPS metrics as these will be lag indicators of potential customer’s likelihood to churn. Customers with “Promoter” NPS scores are less likely to churn given they are already advocates of your brand. Therefore you need to delve deeper into your “Neutral” or “Detractor” results to understand what is driving these results.
In the age of social media, customers are often more than happy to share their poor experiences with you…and everyone else on Twitter or Facebook! Make sure your social media team is adequately resourced to step in and resolve customer issues quickly.
4. Empower your agents
There is nothing worse for both the customer and the agent when your agents can’t resolve a customer’s issue. Ensure your agents are both adequately trained but more importantly, empowered to be able to solve customers’ issues. Agents need to be skilled at handling difficult callers, using empathy but also taking ownership to resolve customer issues.
Agents will only take ownership if they feel empowered to be able to resolve a customer’s issue. Therefore give your agents appropriate latitude and authority to resolve a customer’s dispute in the first instance to prevent escalation. By setting appropriate controls and limits, as well as clearly defined resolution paths with other departments/teams (not escalation paths).
This will help reduce costs through avoiding repeat calls, ombudsmen fees, reduce handling time, but most importantly improve customer retention.
Empowered agents who feel they can take ownership are also shown to be more engaged, and engaged agents are more likely to go the extra mile to keep customers happy. Remember to recognise and reward your high performing agents for their efforts.
5. Implement a dedicated retention team
Implementing a dedicated team of specialist staff who are skilled in both sales and retention strategies is a highly effective way of reducing customer churn by providing the business one last opportunity to attempt to “save” the customer. Not all contact centre staff will have great skills to resolve difficult customer issues from day one so these kind of teams can be effective while also providing some career path opportunities for your best sales and service people.
While this may be a costly method as it involves an additional team, it can be a very worthwhile strategy provided there is a return on your investment. Therefore you need to understand what the value of your customer is and how many customers you need to retain in order to make this a profitable investment. It is important however that your retention strategy is addressing customer issues and isn’t solely focused on providing them with credits or refunds in order to retain them.
6. Don’t make the cancellation process the deterrent
Ever had to cancel a subscription or service by putting it in writing? While this may be a deterrent to reduce customer churn, it usually doesn’t address the fundamental issue that someone is unhappy, and most importantly, it gives the customer the opportunity to churn without giving you the opportunity to “save” them. By implementing an onerous and inconvenient process for the customer, you also could further add to any issues making retaining the customer even harder.
Finally, every organisation, no matter how big or small, wants to grow and attract new customers, but it’s so important not to forget about retaining your existing customer base by ensuring you deliver on your customer expectations. Constantly review your customer feedback to ensure that once you have drawn them in that you are not creating issues that cause them to leave. Especially not over a 40p charge.
Client Relationship Manager
Bright UK Ltd