Battling against customer churn is a perpetual reality that businesses have always had to face. But in a retail environment which has given customers more power and choice than ever before, keeping hold of your existing customer base is no easy task. Certainly, with a recent study by the Institute of Customer Services (ICS) revealing that British firms fear losing 10% of their customer base over the next three years, increased customer churn spells bad news for business.
What is customer churn?Customer churn – also known as customer attrition – is in its simplest guise, the loss of clients/customers. The logic behind customer churn is the notion that it costs businesses a lot less to retain a customer than it does to attract a new one.
With the same ICS study placing the cost of replacing that customer in excess of £6,500 as of 2011, there’s a strong incentive for British businesses to centre their efforts on maintaining their customer base rather than simply adding to it.
But why is this now such a problem for businesses?The concept of customer churn is nothing new, with the loss of some customers an unavoidable reality for businesses of all sizes. But with customers now possessing an abundance of choice in the digital age and a stronger resistance to more traditional forms of marketing, the retailer is no longer in complete control. When you add to this the challenging economic circumstances that British enterprises have had to deal with, retaining customers has become increasingly difficult.
ICS’s study also underlined exactly why businesses’ shouldn’t be underestimating the power of customer retention. Nearly 65% of customers are spending less with 86% admitting they now take a lot more time to shop around and research the best deals available before they purchase. Once they’re gone, winning back defecting customers has become an almost impossible task.
So what’s the key to preventing customer churn?Nearly two thirds of UK business leaders agree that customer service is likely to be a key market differentiator over the next few years. Poignantly, this is something that customers are also in agreement with – a staggering 83% identified quality of service as an important driver of loyalty.
But here’s the disconcerting truth that businesses have to face up to - the vast majority of customers believe that their defection to another company could have been prevented.
Customers are loyal by nature, but are growing tired of poor and misleading customer service. With many companies sacrificing their investment in customer service as a result of the economic climate, the culture of unhelpful customer service has only been exacerbated.
What can I do to fight against it?It’s time for businesses to stop viewing customer service as an extension of their business and start viewing it as an integral element that’s imperative to growth.
Look to place an emphasis on making your customers feel valued at every single touch point. Optimising your existing service network is always the best place to start. Ask yourself the following:
How long is it taking us to respond to enquiries?
Are we dealing with those enquiries in a clear and coherent manner that always offers customers the solutions that they need?
Are we equipped to adequately respond to these enquiries across all possible channels?
Whether you’re a fledgling SME or an established high-street retailer, the changing balance of customer power ensures that doing the bare minimum simply isn’t enough anymore. Customers need to be treated as individuals and whether that involves something as simple as apologising for an error (and then fixing it) or a wow factor that’s a little more complex, always strive to create a positive memory during the service experience.
When broken down, the importance of maintaining and improving your customer service experience can feel like a daunting task. But taking stock of your current set-up and taking the necessary moves to solve any issues is vital in giving your business the edge.