What is a Customer? Part 3
Past or Cancelled Customer (aka Exes)
Sometimes companies miss the mark or their product/service is no longer a good fit for a customer. A cancelled/churned customer is a customer or subscriber that stops doing business with a company or service.
Churned customers are most commonly described in the context of a subscription or membership business. However, this concept can also be extended to e-commerce businesses. My colleague always provides this example when she describes the impact of a poor customer experience. Back in the 50’s, her father stopped at an ExxonMobil for gas and had a disagreement with an employee. Til this day he has yet to return to an ExxonMobil, customarily announcing it on every family roadtrip. As another example - I recently bought a dresser from Walmart. The package was divvied between two shipments, and unfortunately only one was delivered. After a long back and forth call with Customer Service, they required that I (a petite female) carry the (extremely heavy) box to the nearest UPS (many walking blocks away) to return the item for a full refund. It was frustrating that I had to go through all this extra effort to rectify a mistake they made. I still wanted the dresser but turns out Amazon was selling it too. Guess who I went with?
Why are they leaving?
As mentioned in my previous post, studies show that acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. There are many reasons why a customer may decide to stop doing business with you - unhappy with prices, product doesn’t meet expectations, or a personal lifestyle change. But a consistent leading cause is a bad customer experience. Aspect Software’s Consumer Experience Index Survey found that a significant and growing proportion of consumers over the prior year stopped doing business with a company due to poor customer service — 54% of consumers (Millennials even higher at 61%) stopped doing business with a company due to bad service in 2017, versus 49% of consumers in 2016. Specific drivers include:
Make it difficult to get help
Not “listening” to your customers
Not treating your customers with respect
Not providing fair treatment
What should be your goals?
There are two primary goals your company should be focused on for this type of customer:
Prevent churn by engaging and retaining
Predict when customers might be on the edge of leaving - Leverage customer data to identify leading indicators of churn (perhaps your company is sophisticated enough to have a churn propensity score). Track trends in attributes, events, or behaviors that churned customers exhibit - ex. experienced x# of late/missing deliveries, low digital engagement, provided CSAT score below xx%, etc. While studies have shown NPS scores are not directly correlated with churn, survey responses can be a great source of information to surface drivers of customer dissatisfaction. More importantly, these insights must be disseminated across the organization, including your Customer Support team, to enlighten and empower teams to act, which leads me to my next point.
Do everything in your power to save them, but be smart about it - Once your at-risk customers have been identified, you should develop proactive, personalized engagement strategies. When you reactively engage with a customer that’s likely going to churn, it’s not only especially critical to embody the key tenets of good customer experience (e.g., empathy, personalization, transparency) but also take this as an opportunity to provide above and beyond service. However, it’s important to segment these customers in order to be strategic in how, who, and when to apply these tactics, otherwise they might become too costly.
Understand why they churned - Implement ways to capture feedback and drivers of customer cancellation. Survey are inexpensive, easy and incredibly valuable because they can reach a large quantity of people and the responses can be tied back to specific users for future reactivation strategies. I would recommend incorporating this survey in the cancellation flow to maximize response rate. Other customer research methods like focus groups and personal interviews allow you obtain in-depth information and can help paint a different lens against quantitative data but are less scalable, more costly, and prone to bias.
These are not one-time goals. Ensure this becomes a cyclical process to iterate and drive continuous improvement and you’ll be on your way to success!
TLDR; Customers often leave and may never come back because they had a poor customer experience. It’s important to understand what is driving them away, proactively engage your at-risk customers to prevent churn, and always be on your CX A game.