It’s a focus for every company: How to prevent customer churn?
Following the philosophy that customers are easier to retain than they are to convert, over the past decade, companies have created escalation “saves” desks manned by staff empowered to do almost anything (read: offer discounts, refunds, or other financial incentives) to retain a customer once the customer says the magic words, “I’m leaving your company.”
The only catch is the cost to run these “saves” operations. Not to mention the looming question whether such moves actually drive long-term, quality relationships with customers (or merely set precedent for customers to argue for major discounts year after year).
So how to save customers without having to offer sweet monetary incentives? Certainly many companies have built comprehensive, predictive models to identify potential customer churn. Such models of course can be helpful, but these models are resource intensive, and many organizations fall short in how they execute on the intelligence—they’re often too late.
In fact, it’s not just about modeling customer proclivity for disloyalty but proactively reaching out to customers before they actually become disloyal.
Companies Conducting Outbound Service Outreach to Customers Who Had a Poor Experience
Surprising but true, a recent CCC survey finds that only 43.8% of companies in our sample proactively reach out to customers enduring a poor experience.
Most companies are sitting on a rich data set that has sufficient predictive indicators, primarily in the form of issue resolution, satisfaction, or Customer Effort Score™ metrics. The data serves as an indicator that the customer endured a frustrating experience, but as the service and support world knows well, the end result of poor, high effort experiences and lack of issue resolution: disloyalty.
In short, reaching out to customers to resolve the issue and understand what went wrong in the interaction can actually serve to recover customers before they require hefty discounts.
The catch is the timing for proactive outreach—recovering customers who are trending disloyal but not yet disloyal. Customers who are already disloyal actually require the “saves” desk. But for customers who are merely trending disloyal, companies have a good opportunity to save them by simply resolving the issue. Acting fast is critical, however: CCC research finds that customers start to trend disloyal after five days of an unresolved issue.
The reason the new proactive strategy targeting customers trending disloyal is so effective is two-fold:
1. The focus of the interaction shifts from $ to issue resolution—Conversations now revolve around resolving the root cause of the issue, not the resulting symptom. Also, service and support is best positioned to solve problems, not necessarily negotiate payouts with customers.
2. Scalable improvement opportunities surface—Numerous research studies indicate only a small percentage of customers experiencing a problem actually complain about it. Proactive outreach surfaces information about problems and enables service to feed these improvement opportunities back into the business, resolving the issue for the entire customer base.
Suddenly a last-ditch effort to throw cash at one customer doesn’t seem like such a good deal.
CCC Members, to read all of CCC’s research on recovering at-risk customers, please click here.
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on December 9, 2010
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[...] most common strategy to do this is typically outbound calls to the customer at strategic points during the customer relationship. Yet while outbound contacts are certainly [...]