- Strategies for Reducing Customer Defections
- Understand the Reasons for Customer Defections and Monitor Declining Accounts
- Address Key Churn Drivers
- Implement Effective Complaint-Handling and Service Recovery Procedures
During one of the weekends, we went to one of our signature corporate dinners in a particularly upscale neighborhood. We have all heard glowing reviews about the restaurant’s signature dish: meat. Doesn’t matter on whether you pick chicken, beef, or lamb, they really know how to make a culinary party in your mouth! As awesome as the food was, a quick survey of #TeamAxilweb lead to a unanimous conclusion: we’ll never eat there again.
The chances are always high that your customers might not always be satisfied with at least some of the services that you give. How do you respond to dissatisfied customers who are so unhappy with your services that they have started to abandon your business and opt to spend their hard earned money for your competitors? I guess you can decide to become really generous and let them get away with your money.
If you don’t want to turn the other cheek and do want to put up a fight, then you’ve come to the right place.
Strategies for Reducing Customer Defections
The first thing that we have to understand is that your customers are turning away from you for a particular reason. It’s not like they decide to wake up one fine morning and think out loud, “No! I’ll never go there again!”
The good thing is that there are actually ways to understand why consumers do the things they do. And once you do, you can just as well figure out stop them from leaving your business. There’s no golden rule towards solving the problem, but a complementary approach is recommended to help your business return back to the glory days.
Understand the Reasons for Customer Defections and Monitor Declining Accounts: As stated before, you MUST figure out why your customers are turning away from you. An academician named Susan Keaveney did the hard work for us and conducted a large scale study across a range of services and found several factors as to why consumers would deflect. The study shows that core service failures (the primary service that you’re selling) affected nearly 44 % of the consumers to leave the service.
She also suggested that businesses should also pay special attention and monitor declining accounts. In the telecommunications industry, for instance, marketers constantly try to figure out churn rates, i.e., the annual rate at which customers would stop subscribing to their service.
Reflecting back to the corporate dinner, we mentioned that we loved the food, which meant that their core service remained miraculously intact. But I also mentioned that we would not go back there again. Surely we aren’t the only ones who think like that. It’s a high probability that there were other people who faced similar experiences on a repeated basis.
You might not have an army of MBA graduates working for you, but you can surely figure out how many customers avail your service on a weekly basis and monitor the changes on a weekly or monthly reports.
Address Key Churn Drivers: Keaveney’s findings also addressed other important factors as well. You have to analyze key churn drivers, i.e., the primary reasons why your customers are turning away from your business. Some generic issues as to why customers might abandon your business might be because of service encounters (the personnel who are in charge to actually deliver the service to your customers).
For us, we found out that that was one of the contributing factors to our decision of never returning there. Going back to the restaurant scene, the food that was delivered to us was given to us out of order. They served the main course, one dish at a time, with at least 10 minutes in between dishes. The bread came us when we were almost done with our dining, accompanied by some appetizers. I mean who in the right mind would start off with the main dish and then deliver the appetizers later? It’s called appetizers for a reason, guys!
But be mindful of External Factors!
Each industry has its own challenges with which to deal, and the challenges vary greatly from industry to industry. In the case of the restaurant industry, consumers are less brand loyal because the barrier to switch to another restaurant is really low. All they have to do is walk over to the next restaurant to fill their stomach.
However, businesses can increase the perceived exit barriers such as increasing your value proposition, play around with pricing, a change of location along with moving to a low-competition area to attract (and to keep) customers.
Implement Effective Complaint-Handling and Service Recovery Procedures:
Effective complaint handling ability along with service recovery (the thing that you do to make up for your poor service) are crucial factors that can contribute significantly to reduce your customer deflections.
Take our encounter with the restaurant. When we saw that the servers were horribly inept at being waiters, constantly missing orders, messing up food serving process, or downright spilling drinks on yours truly, we were quite upset about it.
Naturally, when we are upset, we want to get up and do something about it. And that we did, we issued a complaint to them. But hold on, that’s not even the full picture! There was no manager stationed at the eatery who would listen to our complaints.
They were running on a skeleton crew comprised of a handful of inexperienced waiters and a cashier. It’s not like that their business was bad; in fact, we saw many people over there when we were leaving late at night.
The complaints that we made fell unto deaf ears. Only the cashier was there to listen to our woes and sufferings. Now ask yourself a question: Would a cashier whose sole responsibility is to be a cashier be able to understand and convey the message to the owner of the business as we could? The cashier did not face the problems, we did!
It was pretty much fresh in our minds when we received the abysmal service. But we couldn’t issue a complaint to any person. There was not even a sign of a complaint box!
The only thing the cashier could do was to give us a free pitcher of Coca-cola. Yikes! Talk about poor service recovery procedures.
Do you do what it takes for your customers to make sure that it is easy for your customers to voice their concerns to you? Do you have proper service recovery procedures to follow in case you fail to deliver service in a way that can make your customer happy? Often times you’ll find that there are common recurring service delivery problems that your customers encounter and you can plan accordingly to solve the problems.