Once I was presenting at the IIR Conference on Customer Loyalty and Churn in the beautiful city of Vienna. As usual at these types of conferences you get an endless parade of companies presenting various approaches to data mining and predictive analytics in order to better segment customers and increase sales conversion through techniques such as ‘next best offer’ or value-churn analysis. Interesting stuff – but I wonder whether we’ve got so deep in data and technology to miss the fundamental human aspects of why customers actually do churn and whether customers can actually be loyal to companies?
If you unpick loyalty in human terms – i.e. loyalty to our spouse, friends, family – the following magic elements need to be in place:
- Mutual give and take
Now I would suggest that most companies would find it incredibly hard to include mutuality, enchantment and generosity into their business strategies – and yet they are fundamentals for loyal relationships.
We also are also progressively less trusting of large companies and rarely actively seek a lasting relationship with any but a small selection of brands that we personally identify with. Harley Davidson claims to be one of the few brands that has such a devoted following that their customers have their logo tattooed onto them!!
Maybe we are lost before we are started on the loyalty piece!
Churn, however, is a much more interesting question. There is evidence from many research studies that the reason that we leave a company (particularly those which require effort to switch – like banks, utilities and telecoms companies) is more to do with bad service experience and, in particular, indifference or ignorance from front line staff than about economics or incentives. It suggests to me that the focus of analytics tools should be less about opportunities for sales (although that is important) and more about where the process of customer experience delivery is lacking and, even more importantly, DOING SOMETHING ABOUT IT!!!
With that in mind you can understand why my talk took a slightly different tack to the well trodden path of analytics tools. The talk was called ‘The Best Things in Life are Free: How to Learn from Both Customers and Employees to Improve Customer Experience’. The emphasis here was in improving the input from the front line employees (the eyes and ears of the organisation) – learning WHY people are calling rather than just counting calls – and then addressing the root causes of customer problems – as well as focusing on what customers are saying and doing.
Research has suggested that when customers bother to complain they are essentially wanting to stay with you – otherwise they just walk away without a word. This is a valuable insight, which is why the BT work on complaint prediction was spot on in my opinion.
However, customer experience is inevitably part of a complex chain of interdependent parts that all have cause and effect on each other. Why was the person on the front line unable to help? – probably not because they got up in the morning and decided they would do a bad job today! It is often not the fault of the contact centre that 4000 bills were wrong – however, they suffer the consequences.
Cause and effect – find out why and, rather than blaming people and finger pointing, FIX IT. The economics of getting this right are persuasive – reduced repeat call handling, reduced cost of failure demand, increased customer satisfaction and increased staff satisfaction. The biggest question is, therefore, why at a conference on churn and loyalty did no one mention this as an approach?
The other missing part of the puzzle is the bit about listening, including, understanding and connecting – and these are all things that are enabled and accelerated by the social web. Companies such as Nike, Apple and Ben & Jerrys are starting to realise the value of customer co-creation and see Web 2.0 as a key tool to helping them blur the lines between customer and company. Other than myself, only one other speaker, the insightful Dr Graham Hill of CRMguru.com, actually mentioned this as an approach.
However, for every success story on Web 2.0 there are about 100 failures – and it is this fundamental question of why and how these new tools can successfully be used to create new types of relationship with customers that is going to be the focus on my new research…so watch this space as I post my various ramblings and thoughts on how we as companies can harness customer power whilst, simultaneously, relinquishing some of our own control.
Is loyalty just for dogs? With the exception of a lucky few – probably yes. But understanding churn and learning from it is certainly a lesson that many companies could afford to learn – because much the data is freely available to them, if they care to point their analytics tools in the right direction.
BIO: Dr Nicola Millard’s mission in life is to make customer experiences better for both customers and the employees delivering them. Since joining BT in 1990, Nicola has worked extensively with clients both within BT and in sectors such as telecoms, utilities, government and finance to ensure that they put the ‘relationship’ into ‘customer management’. She looks at how the human factor can become central to the development and success of a customer experience. She is responsible for leading innovation and thought leadership on Customer Experience in BT Global Services (marrying three ‘ologies’; psychology, technology and futurology). She has published extensively and is also a popular speaker on the international conference circuit. Nicola combines a pragmatic operational view of serving the customer with extensive research that challenges the way that organisations typically design and deliver customer experiences.