Customer churn means your customers are unsatisfied in some way. Usually, this discontent comes from collapses in customer experience. Identifying what is causing collapses in customer experience is key to reducing customer churn and increasing your revenue.
Just because customer churn is always going to be there doesn’t mean your business can’t get it as low as possible so revenue will increase. To do that, a company must focus on solving six smaller problems that all feed into customer attrition.
Before going into the four subproblems, let’s discuss why customer churn can rise to uncomfortable levels all too often. Ultimately, it comes down to one factor: customers feeling valued. Not just satisfied. Valued.
A satisfied customer is the one who gets off the phone with a customer service representative or purchases a product that has no issues and walks away with a smile on their face. While this kind of customer satisfaction is rightly sought after by companies, it will not ensure they are loyal to the company or customer churn reduction. Only a valued customer will demonstrate consistent loyalty and lessen customer attrition.
In June of 2007, Apple announced the release of the first iPhone. While the iPhones were revolutionary in and of themselves, there are two factors that keep their customers coming back for the next model whether they know it or not: ease of use and presentation.
The iPhone was one of the first to offer the simplistic, minimalist full screen phone with only a single button on the face. Once turned on, the phone was easy to navigate and could be customized to a customer’s liking. It was also one of the first phones to offer digital maps and destination assistance as we know it today. Everything about the phone was and is designed for ease and simplicity. After blocky cell phones and number pad texting, iPhones were readily accepted by the general public and still are.
Additionally, Apple’s presentation of the iPhone is still one of the best packaging examples of today. From the simple box to the white colors to the iPhone seemingly floating above it’s packaging, Apple provides a superior sensory experience.
Alessandra Ruggeri explained, “‘Sensory experience’ might not be the first thing we have in mind when we think of Marketing strategy. Yet it is the first experience customers have with your product: how the package looks. Packaging can indeed be just as important as the item it contains. The sensory experience continues as they touch it and look at the images and text. The label may help customers decide whether to buy it or not, but if the packing doesn’t engage them, chances are that they aren’t going to buy it.”
The ease of use with iPhones answered a customer's needs many didn’t think could be solved at the time, and getting what they needed through such a sensory experience just made it all the better. Many recognized that Apple’s effort to go above and beyond with packaging and presentation was an effort to please and delight customers. And it worked. Apple’s customers felt and still feel valued with every purchase and update.
Creating this value is the culmination of efforts aimed at providing high-caliber customer experience. Customer experience is the difference between customer satisfaction and customer significance or value. It is what provides customers with the sense of valuation from a business and their efforts.
In this era of social media, customer experience extends beyond packaging or an upbeat customer service representative. While those things are still important and should not be undervalued, a company's presentation and services must be of equal caliber, if not more, on social media. Social customer experience is about presenting your company positively online just as you would in a physical location. In fact, many customers will go to social channels to observe or contact a business today rather than call.
With the social customer experience in mind, let’s jump into the four subproblems.
It almost goes without saying, but when customer attrition is high, customer lifetime value (CLV) is low. When relationships with customers tend to last through only a single purchase, it’s expected that the net profit attributed to that customer would be low.
Low CLV could be attributed to many factors such as unsatisfactory products, a negative experience with customer service, or a poorly written advertisement. The only way to truly know what factor or factors are causing low CLV is to perform market research. However, there are two commonalities that companies nearly always find are the root of the problem: lacking social customer experience and poor online presence.
Luckily, the solutions to both are fairly similar.
One of the best ways to improve social customer experience and online presence is to be aware of your audience’s sentiment and needs with real-time social insights. With those insights, you will be better aware of customer concerns and better enabled to reply to voiced concerns quickly. You will be able to track their sentiment and know if a crisis is starting to show its colors.
As social listening provides you with needed insights, your company will identify the right topics and tone for content that resonates with your customers and will motivate them to share and promote your brand. And to further motivate them, engage with them. Talk genuinely with them through comments and social posts. As they come to know you, they’ll trust you more and be much more willing to send friends and family your way. This kind of positive activity and interaction between a business and its customers on social media will generate loyalty in current customers and attract potential customers.
Yet, despite how solid a social customer experience strategy might be, nothing is perfect. There will be collapses in customer experience. There will be an advertisement worded wrong, and there will be porch thieves or bad weather. Whether or not a company is at fault or not, collapses in customer experience that lead to customer churn happen all the time. When they occur, companies need a strategy for recovering customers.
The first and best way to ensure customer recovery and even a decrease in customer churn is to create a social customer experience strategy that strengthens customer trust in you before a crisis. If businesses can do that, they will have a lot less work to do when a collapse or even a crisis occurs because those customers will be much more likely to stick around.
Another way to prevent a crisis is to see it rising and get ahead of it. With social listening, companies can see rises in negative sentiment and even set alerts when that sentiment gets too high. Diving into the social data, businesses can identify the cause and address it. Quickly addressing the issue will likely stop it from growing into a full blown crisis and will likely inspire customers to come to your aid as you share your side of the story. By engaging and resolving problems online, a company will build and regain trust through effective communication.
As you build trust with your customers, you’ll create and discover brand advocates and influencers that can assist you during a crisis. They can inform you of their perception of customer concerns and help you push out messaging that aid in rectifying the crisis.
We understand and empathize with how hard a crisis can be, however, your company must keep their audience at top priority. You must understand who’s been affected (including your employees), why and where you can reach them. Define your stance with these insights and act.
As you utilize social listening, influencers, and advocates, along with keeping your audience at the forefront of your efforts, you'll see a decrease in customer churn and quicker resolutions to crises.