What Really Drives Customer Churn and How You Can Avoid It

Visionary co-founder and former Apple CEO, Steve Jobs, challenged, “Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” 

Too many businesses take a reactive approach to customer service. But one of the most successful companies in the history of the world has a different priority: Push yourself to innovate the best possible experience for your customers. Understand your customers’ desires and motivations, without losing sight of the fact that you are the expert. The secret of Apple’s strength and the source of its innovation and success are found in the interactions with their customers—not in technological leadership.

Customer Satisfaction, Customer Expectations, Customer Loyalty…

Any way you look at it, it boils down to the experience a customer has when interacting with your company and brand. Today’s distracted consumers, inundated with information and options, often struggle to find the products or services that best meet their needs. With increased competition and saturated markets, it becomes imperative for not just customer experience personnel, but for everyone associated with your brand to know what customers think about it.

Customer Experience Plays a Vital Role in Customer Retention

Companies have been trying to perfect the most appropriate means and measures, and are constantly debating, on how to consistently deliver unsurpassed customer experiences. Consumers typically respond to an “outstanding” customer experience by making a mental note to buy from the company again, telling friends and family, and commenting on social media. In an Economist Intelligence Unit (EIU) study, 45% of respondents cited that, in consumers’ eyes, the obstacle that most prevents companies from providing an “ideal” experience is a lack of interest in customer satisfaction. Make your customers feel special, loved and valued, connect with their emotions:

  • Bring the wow factor every time
  • Always know your churn and retention
  • Be the one to reach out first
  • Follow-up with what you’re doing to improve

Empower Employees to Rapidly Address Customer Feedback

Even the best systems that support efforts to reduce churn aren’t enough to curb the tide of customer defections. Companies need highly engaged employee teams with the right data and customer feedback, and a culture that focuses on their customers’ priorities. Successful companies also encourage cross-functional collaboration to make changes leading to a great experience for customers.

For employees to effect change, it’s imperative to build customer feedback into daily operations and quickly share comments with the employees most responsible for the experience. That feedback supplies the data for a root cause analysis of problems that could eventually lead to churn.

Customer Experience Surveys

To improve customer retention through better customer experience, companies must understand the loyalty of their customers. By listening to customers you gain an understanding of customer perceptions. Being innovative and assuming what customers need or want is essentially a stab in the dark. By talking to customers, querying them, and listening to them, you gain the best possible insight to show them just how valuable they are to you.

There is an array of methods that gauge customer experience. Surveys can provide a lot of feedback from customers, but they have to do be done right. While you probably have no shortage of potential questions, keep it simple or people will view it as work; you won’t get accurate data because people will “fatigue” and think less and less about the questions as they just want to complete the survey. Keep it short, and you’ll get better responses and more accurate data.

Companies that utilize a Net Promoter Score (NPS) regularly ask customers one question: “On a zero-to-10 scale, how likely is it that you would recommend this company to a friend or colleague?” The companies sort their customers into promoters (9s and 10s), passives (7s and 8s) and detractors (zeros through 6s). The NPS is the percentage of promoters minus the percentage of detractors.

Through a series of follow-up questions, companies gain valuable customer feedback to quickly identify what they are doing right and where improvement is needed. The company can then take action to improve the experience, which helps to turn customers into promoters who don’t want to leave for a competitor. Many companies find that improving their NPS relative to competitors’ correlates with reduced churn.

The longer you retain customers the more loyal they become, and the more valuable they are to your business. Loyal customers also tend to spend more over time because they are less sensitive to changing prices. So, find out what your customers really value—ask for feedback and turn loyal customers into advocates.