The economy is buoyant at the moment, yet many companies are experiencing customer defections and losing current customer revenue at a rate that causes concern in the C Suite.
Line of business and sales leaders readily offer reasons why a customer or revenue stream is lost, but they struggle to identify systemic issues or at-risk customers.
Here are a few straight-forward actions that firms can take to combat customer churn:
1. Understand why the churn occurs — Don’t look to your sales or operations teams to tell you why revenue walked out the door. Instead, somebody else should talk to defecting or lost customers to understand why they are leaving.
In many situations, you may have to consider a 3rd party to conduct a lost customer interview to obtain an objective understanding of what happened. If you choose to manage it in-house, make sure it is someone skilled at asking questions, listening, and conducting these type of interviews. It’s not as simple as asking, “why are you leaving us.”
And please, don’t send an email exit survey.
2. Identify At-Risk Customers — There is always a group of customers more likely to leave than others — so it’s in your best interests to know who they are, sooner rather than later.
Start by asking the sales and operations team to identify a reasonable size list of at-risk accounts. There are several ways to do this but start with a simple list of account names and a rating between 1–5, where five is the most at risk. Have them include a few sentences as to why they think the account is at risk to frame the conversation during a review of at-risk accounts.
Also, after analyzing the reasons for churn, you may become aware of attributes or actions, that churned customers made. This insight will help you anticipate if a customer, who is now behaving similarly, is at-risk.
3. Profile your most valuable customers — Valuable customers deserve special care because they bring in the biggest revenue or are growing the fastest.
You should segment your customers into groups of profitability, at-risk rating, and their likelihood to retain them. This segmentation will help you better predict customer churn.
4. Pay attention to complaints — Complaints are like tips of the icebergs — they suggest that a more significant part of the problem is hidden from view. Research indicates that 96% of unhappy customers don’t complain, and 91% of those will leave and never come back.
Take complaints seriously and act on them, and in this way prevent customer churn, because, dissatisfied customers whose complaints are attended to are more likely to remain loyal, and even become advocates, than other average customers.
Preventing customer churn and lost revenue requires a multi-faceted proactive approach, one that does not need to be complicated to get it off the ground. Start with the at-risk customer list — once you’ve captured the first pass of at-risk accounts you’ll realize that your teams know who they are, yet there is no plan in place to mitigate the risk. Next step is to do something about it.