- Strategies for Reducing Customer Churn
- But be mindful of External Factors
- Implement Effective Complaint-Handling and Service Recovery Procedures
- Ending Remarks
During one of the weekends, we went to one of our signature corporate dinners in a particularly upscale neighborhood. We have all heard glowing reviews about the restaurant’s signature dish: meat. Doesn’t matter whether you pick chicken, beef, or lamb; they really know how to make a culinary party in your mouth! As awesome as the food was, a quick survey of #TeamAxilweb led to a unanimous conclusion: we’ll never eat there again. We’ve successfully become what the marketing world calls: customer churn.
The chances are always high that your customers might not always be satisfied with at least some of your services. How do you respond to dissatisfied customers who are so unhappy with your services that they have started to abandon your business and opt to spend their hard-earned money on your competitors? I guess you can decide to become really generous and let them get away with your money.
If you don’t want to turn the other cheek and do want to put up a fight, then you’ve come to the right place.
Strategies for Reducing Customer Churn
The first thing that we have to understand is that your customers are turning away from you for a particular reason. It’s not like they decide to wake up one fine morning and think out loud, “No! I’ll never go there again!”
The good thing is that there are actually ways to understand why customers do the things they do. And once you do, you can just as well figure out stop them from leaving your business. There’s no golden rule towards solving the problem, but a complementary approach is recommended to help your business return back to the glory days.
Understand the Reasons for Customer Churn and Monitor Declining Accounts
As stated before, you MUST figure out why your customers are turning away from you. An academician named Susan Keaveney did the hard work for us and conducted a large scale study across a range of services and found several factors as to why customers would deflect. The study shows that core service failures (the primary service that you’re selling) affected nearly 44 % of the customers to leave the service.
She also suggested that businesses should also pay special attention and monitor declining accounts. In the telecommunications industry, for instance, marketers constantly try to figure out customer churn rates, i.e., the annual rate at which customers would stop subscribing to their service.
Reflecting back on the corporate dinner, we mentioned that we loved the food, which meant that their core service remained miraculously intact. But I also mentioned that we would not go back there again. Surely we aren’t the only ones who think like that. It’s a high probability that there were other people who faced similar experiences on a repeated basis.
You might not have an army of MBA graduates working for you, but you can surely figure out how many customers avail your service on a weekly basis and monitor the changes on weekly or monthly reports.
Address Key Customer Churn Drivers
Keaveney’s findings also addressed other important factors as well. You have to analyze key customer churn drivers, i.e., the primary reasons why your customers are turning away from your business. Some generic issues as to why customers might abandon your business might be because of service encounters (the personnel who are in charge of actually delivering the service to your customers).
For us, we found out that that was one of the contributing factors to our decision to never return there. Going back to the restaurant scene, the food that was delivered to us was given to us out of order. They served the main course, one dish at a time, with at least 10 minutes in between dishes. The bread came to us when we were almost done with our dining, accompanied by some appetizers. Who in the right mind would start with the main dish and then deliver the appetizers later? It’s called appetizers for a reason, guys!
Be mindful of External Factors
Each industry has its own challenges to deal with, and the challenges vary greatly from industry to industry. In the case of the restaurant industry, consumers are less brand loyal because the barrier to switching to another restaurant is really low. All they have to do is walk over to the next restaurant to fill their stomach.
However, businesses can increase the perceived exit barriers such as increasing their value proposition, playing around with pricing, and a change of location along with moving to a low-competition area to attract (and to keep) customers.
Implement Effective Complaint-Handling and Service Recovery Procedures:
Effective complaint-handling ability, along with service recovery (the thing you do to make up for your poor service), is crucial factors that can contribute significantly to reducing your customer deflection.
Take our encounter with the restaurant. When we saw that the servers were horribly inept at being waiters, constantly missing orders, messing up the food serving process, or downright spilling drinks on yours truly, we were quite upset about it.
Naturally, when we are upset, we want to get up and do something about it. And that we did, we issued a complaint to them. But hold on, that’s not even the full picture! There was no manager stationed at the eatery who would listen to our complaints.
They were running on a skeleton crew comprised of a handful of inexperienced waiters and a cashier. It’s not like their business was bad; in fact, we saw many people over there when we were leaving late at night.
The complaints that we made fell on deaf ears. Only the cashier was there to listen to our woes and sufferings. Now ask yourself a question: Would a cashier whose sole responsibility is to be a cashier be able to understand and convey the message to the owner of the business as we could? The cashier did not face the problems; we did!
It was fresh in our minds when we received the abysmal service. But we couldn’t issue a complaint to any person. There was not even a sign of a complaint box!
The only thing the cashier could do was give us a free pitcher of Coca-cola. Yikes! Talk about poor service recovery procedures.
Do you do what it takes for your customers to make it easy for them to voice their concerns to you? Do you have proper service recovery procedures to follow in case you fail to deliver service in a way that can make your customer happy? Often times you’ll find that there are common recurring service delivery problems that your customers encounter, and you can plan accordingly to solve the problems.