Every business knows the value of keeping their customers.
Yet despite companies’ best efforts customers still leave, and the reason often feels like a mystery. Why do they go?
They experience a problem
This is by far the biggest reason customers move on. 68% to 73% of customers stop doing business with companies because they experience a problem according to Forum, Bain, Verde customer research.
Many companies place a huge focus on fixing the problems they hear about from their customers. It’s a logical action, yet it misses the mark. In fact, more customers will leave for problems companies never hear about — the ‘silent killers’.
You have become irrelevant
This happens when you’ve stopped delivering a product or service that the customer feels is appropriate. Either another company has taken your place, or you’re no longer communicating with the customer in a way that’s meaningful to them.
This last point takes on more significance in the era of data-sharing and personalized social media. Customers assume that when companies take their data, they’ll use it to customize and improve the customer’s experience.
Companies continue to ignore this at their peril. For example, if a customer doesn’t have children but a company promotes online offers at them for diapers, soon the customer may begin to question that company’s relevance in their life.
They don’t need your product or service
Perhaps the customer no longer uses that type of product. More likely, however, they no longer view you as competitive — with your price, your customer service, or the freshness of your product offering.
Reading The Signs
There are clear signs that customers may be headed for the exit. Shopping frequency declines. Share of customer spend drops off. Surveys show a spike in customer problem experiences. Separately or together, these signs all point to a significant risk to the business.
What actions should companies take? They need to engage with their customers and relate to them in a meaningful way, invest in what the customer wants, and understand what those customers are buying from other companies.
Companies should understand that from a customer experience perspective, they’re not just competing with others in their segment. The last, best experience a customer has will become their new benchmark — their expectation for a buying and service experience they now demand from everyone. Fair? Maybe, maybe not. But is it the reality? Yes.
Companies cannot afford to simply react to systemic customer problems. Even if the company recovers, there’s still a permanent dent in customer loyalty.
Recovery systems aren’t enough. With today’s multi-channel businesses and mobile, online and in-store customer interactions, it’s almost impossible to build and maintain a consistent, flawless recovery system. Companies can’t rely on them alone — they must also identify and understand potential ‘iceberg issues’ and do their best to steer clear.
The Uber Effect
Many companies are looking at more radical approaches to transform the customer experience and maintain or increase relevance with their customers. They look to Uber as an example where a technological innovation (in this instance, one that dynamically matches consumer demand to driver supply) has transformed the customer experience, disrupted an industry and allowed Uber to take huge market share from traditional taxi companies.
Companies going down this path will want to look outside of their existing businesses to incubate and innovate. If a transformation is attempted in-house and within the trappings of their industry, the most likely result would be a cycle of continuous improvement, not innovation.
Paula Courtney is Chief Executive Officer at The Verde Group and Product Founder at WisePlum