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5 Fresh Ideas for Reducing Customer Churn

Posted on  20 August 13  by 

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People with arrowsCustomer churn is a perennial problem, particularly for those in service and utility businesses.  When it comes to solutions, it’s easy to get into an internal rut.  Practices, processes and metrics build up over time to support a particular worldview of churn.  The worldview works for a time, but retention gains inevitably flatten as competitors replicate the approach and the business evolves.

We often find that fresh ideas from outside the industry can catalyze new, healthy thinking about churn.  Here are a few ideas to hopefully freshen your thinking:

  • Remove disloyalty drivers by reducing customer effort—MLC’s sister program, the Customer Contact Council, has done groundbreaking work looking at the amount of effort customers must put forth to engage with brands.  It turns out some touchpoints, especially transactional ones, have very limited ability to drive loyalty, but can certainly drive disloyalty when they force customers to exert too much effort.  See the quantitative data here, and then determine which of your customer experience touchpoints may be inducing too much customer effort.
  • Take pre-emptive action based on predictive churn modeling—many organizations pore over retention numbers to analyze churn drivers, and end up putting in place retention patches that come too late for many customers.  Instead, focus data capture and analytics on happenings earlier in the customer experience.  Through predictive analytics, Cablecom, a Swiss telecoms firm, reduced churn from 20% to 5% annually (detailed in the Economist’s report on managing information—for the report highlights, see this previous blog post)
  • Focus the wider organization on the one or two top churn drivers—if retention efforts are the sole domain of retention marketers, upside gains will be severely limited.  MLC members, see this case study that shows how one company is using Loyalty Barrier Maps to pinpoint and rally cross-functional efforts around specific factors that keep customers in high churn risk categories.
  • Build a “shared value” to deepen the customer connection—MLC’s study of the characteristics of high-loyalty brands revealed that low-churn brands connect with customers around a belief or passion that rises above the category itself—a so-called “shared value”.  Shared values not only create richer opportunities for connecting with existing customers to help retain them, but also increase the likelihood of acquiring customers who are more likely to be loyal from the start.
  • Use social media to enhance emotional connections to customers—assuming you’ve mostly removed transactional irritants (see #1 above), enhancing emotional connections with customers is a powerful lever to boost loyalty.  What better role for social media, especially for companies that rely on broker networks?  Consider investing resources to equip brokers with the social networking tools that can create those strong emotional connections with and among customers.

Would this strategy make sense for your company?

MLC Members, use the Social Media Strategy Builder to consider this question in a principled way.

What other approaches are you using to reduce customer churn?

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