Wednesday, 26 March 2008

Customer Churn – Not just Your loss, but Your Competitor’s Gain

Very few businesses can claim to achieve 100% customer satisfaction and 100% customer retention despite the fact that these - theoretically – would be the goals for any self respecting business. Given that you lose customers, the issue is how easily you can identify the real value of a lost customer. In these days where word of mouth marketing and social networking become more and more prevalent – does losing one customer result in a knock on effect? Could your ‘accepted’ customer attrition be hurting you more than ever before?

These questions may be difficult, if not impossible to answer. They’re the classic Economist’s Opportunity Costs. They are challenging marketing personnel the world over. However, there is a simple solution – real customer insight can enable you to pre-empt customer churn. If you had a means to identify that customers were about to defect, then you would take appropriate action to retain them. As we are always told – it is less expensive to keep a customer than it is to find a new one. So who has this magical crystal ball?

Many analysts assess customer profitability and make assumptions and calculations on ‘life time value’ – however, these become worthless if you lose the customer! You can’t implement your customer relationship management if you haven’t the customer to relate to anymore!

Remember, if your customer stops buying from you that’s bad enough, but what makes it worse is they are probably buying from your competitor. That’s lose-lose for you in anybody’s eyes.

No comments: