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September 24, 2012

No level of customer churn is acceptable: make it so !

by Tom De Baere

image source: Wikipedia

What would happen if your business ran out of viable customers? What if the pipeline of new blood permanently dried up?

The continuous rotation of campaign taglines, creative messages, and clutter-busting noise helps to keep a baseline level of acquisition activity. OK.

And somehow along the customer life cycle, we loose them. They churn, churn, churn.

I think the starting point of doing business should be:

NO LEVEL OF CHURN IS ACCEPTABLE.

The cost of acquiring new customers

Companies today are using advertising, promotions and lead generation campaigns to attract new customers. All these tactics take a big chunck out of your marketing budget. I’m not going to repeat that acquiring new customers is more expensive, we all know that.

So we use these tactics to attract new customers, because we know they work.

The problem with these tactics is that they are not working anymore, or not working as good anymore as they used to do:

  • 86% of TV viewers admit to skipping advertisements.
  • 44% of direct marketing doesn’t get opened anymore.
  • 99,9% of on-line advertising is not clicked upon.

Additionally, sometimes your budgets are cut because of a multitude of reasons, giving you even less arm-length to reach our to buyers.

Why do companies churn?

Usually companies switch because of the following reasons:

  • From lack of caring or simple neglect
  • By giving poor customer service (response and responsiveness)
  • By losing touch with our consumers
  • From lack of innovation

Embedding a “no churn allowed” mentality

Every CEO of a company perfectly understands that avoiding churn is better for his company. And I am sure that this is also the daily concern of many CEO’s.

But I am not sure how many CEO’s have specific measures in place to strategically embed a number of “churn-reducing” or “churn-avoiding” measures.

But, I am sure that every organisation is capable of implementing measures that provide an answer to these questions:

  • How does your organization operate with respect to acceptable levels of churn?
  • Do you have specific resources dedicated to preventing churn and/or countering attrition?
  • To what extent do you court lapsed or lost customers in a concerted, intense effort to get them back to your brand(s)?

Investing in a “no churn allowed” organisation

If you are accepting certain levels of churn, you are accepting that your organisation is built to be a reactive organisation, combatting churn.

Every reason for customers to churn should be hunted down, understood, and acted upon:

  • Implement a listening process along the complete customer life cycle so you better understand the world of your customers.
  • Seeing each customer touch-point as an area to constantly challenge how you touch your customer and where you can improve.
  • By seeing customer service as your most important assignment, and structurally spending more CEO time to improving the total customer experience.
  • By having a structural process that drives innovation. The objective of this process must be to always exceed the innovation expectations of your customers and have that attitude ripple throughout your organisation.

Once again, that’s it for this post. I certainly hope it triggered some thoughts, or gave you some ideas.

As Gene Roddenberry first used the phrase in the Star Trek episode “Encounter At Farpoint” and thereafter used in many episodes and films, instructing a crew member to execute an order: “make it so !”.

What will you do today to retain your customer?

 

Thanks for reading.

Warm regards,

Tom De Baere

 

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