Our best customers are the ones who stay with us.
The proof is in the numbers: a 5% increase in customer retention can lead to a 25-95% increase in profits, according to a Harvard Business School study. One Temkin Group study concluded that loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 4x as likely to refer, and 7x as likely to try a new offering.
The bad and the ugly of high churn
Decreasing customer churn leads to more than repeat customers and referrals. It also avoids customers spreading bad press, making it more difficult to get more new customers in the future:
- 95% of consumers have taken action as a result of a bad experience.
- And of those consumers, 85% wanted to warn others about doing business with the company.
- 63% of consumers read negative reviews via social media.
When a customer has a bad experience, it can spread throughout their network. You might think customers are forgiving of a bad experience or two, but for 58% of customers, it only takes one bad customer experience to never use a company again. While you might be tempted to blame high churn on other factors, a reported 67% of consumers list bad customer experience as one of the main reasons for churning.
Competition is only increasing as business raise the bar for customer service. So how do you decrease churn for good?
Why systems beat out tactics
If you have a consistent churn rate that’s higher than it should be, that means there’s systemic issues in your customer service pipeline. Once you identify and improve those areas in your customer service system, you’ll see a lasting decrease in customer churn.
If you’re looking for general, quick-fix tactics to improve your customer service, prepare to be disappointed. Trying to decrease churn by deploying random tactics will only waste valuable time, energy, and resources. Using general tactics to try to fix specific issues your customers are experiencing just doesn’t work.
To decrease customer churn in a way that lasts, you have to look at where in your system your customers are having issues, and figure out what those issues are—from their perspective.
Get the data you need to decrease churn
Knowing where your customers are having trouble and how they perceive your company will give you the knowledge you need to decrease customer churn for good. Here’s three things you can measure to get you the information you need.
1. Measure customer loyalty
If you want to confidently predict which customers will be referrers and which will repurchase, look no farther than NPS®, or Net Promoter Score®. NPS surveys ask, How likely are you to recommend us? on a scale of 1-10 to determine customer loyalty.
You can use NPS to segment customers into three groups: Promoters, Passives, and Detractors. For instance, you can offer extra TLC to customers who have a low Net Promoter Score (Detractors), offering to help right the wrong they experienced. If you want more information from your customers about what you can improve to decrease churn, you can tailor your NPS survey to include a follow-up question asking them to explain the reason for their score.
There’s other uses for NPS, too. For instance, you can also watch overall NPS over time to measure aggregate customer loyalty as you improve the customer experience. You can also use NPS segmenting in other ways, like releasing a product early to Promoters for positive buzz, or aiming a marketing campaign at Passives to turn them into Promoters. Doordash, PG Bank, Athenahealth, and other companies are measuring NPS surveys to help inform changes in customer experience.
2. Define your customers’ expectations from the get-go
Listening to happy customers will give you insight into what you are doing right. Likewise, listening to unhappy customers will help you figure out what could use improvement.
That’s is exactly what win-loss surveys are designed to capture. Once someone has made it through the sales touchpoint of their customer journey, your company can trigger a win-loss survey to be sent to them.
If the sale was a success, you can send them a closed-won survey that asks, Why did you choose us? You’ll learn directly from your customers what you have over your competition. If the sale was a bust, you can send them a closed-loss survey that asks, What’s the main reason you didn’t choose us? This will give you insight into areas you could improve upon.
While win-loss surveys will help your sales team, the knowledge you gain from them is invaluable for retaining customers. That’s because retaining customers is all about setting expectations for your customers, and then fulfilling or surpassing them. By learning how you got your customers in the first place, you’ll learn what they value specifically about your company, and what expectations they have about their future with you. Yelp, Houzz, and Caterpillar are just a few companies that use win-loss surveys to learn about their customers’ expectations upfront.
3. Find out why your customers are having a tough time
The newest type of survey is the Customer Effort Score survey, or CES survey. The CES survey is making waves because it measures how difficult it was for a customer to solve their problem. The CES survey question asks, Did we make it easy for you to resolve your issue today? after a support chat, a call, or after they accessed your online resource bank. A follow-up short answer question like, What could we have done better? gets to the root of the problem in the customer experience.
CES surveys help you get to the root of customer churn. Rather than asking customers how satisfied they are like the popular Customer Satisfaction (CSAT) survey does, CES surveys focus on the underlying factors that satisfaction depends on. If a customer had a problem and solved it effortlessly thanks to your help, they’ll be satisfied because it was easy and fast. If a customer had a problem and had a tough time solving it, even with your help, they might be feeling frustrated and confused, which could lead to customer churn.
CES surveys will help you figure out what’s making things easy for your customers, and where they’ve run into difficulties. By improving in the areas where your customers reported having a hard time solving their problems, you’re actively closing the gaps, preventing future customers from running into the same problems and churning.
Decrease customer churn with a customer journey map
NPS, win-loss, and CES surveys can provide the data you need to decrease customer churn. But first, you have to figure out where in your customer’s journey make the most sense to plug in these surveys. That’s where a customer journey map comes into play.
Customer journey maps show your customer’s journey from their point of view: what they’re thinking, expecting, and feeling at each stage in their journey as they try to solve specific problems. The “touchpoints” of your customer journey—whether the customer and the business interact—include corresponding data. Add in the right surveys at the right stages in your customer’s journey measure how your customer perceives your business at each stage.
The customer journey map is the perfect tool for systematically decreasing customer churn. Once you have your customer’s journey mapped, it’s much easier to see where you should put which surveys. Having the customer’s journey mapped out with a stream of incoming survey data makes it easy to see what changes you could make to decrease customer churn. After making changes to your customer’s journey based on insights from customer feedback, you’ll see a drop in churn.
But it doesn’t stop there! You can use your customer journey map and customer feedback as a continuous feedback loop. By repeating the process, you can continuously and systematically decrease customer churn with your customer journey map. Learn how to make a customer journey map and decrease churn with our new guide on customer journey maps.