In telecommunications (telecoms) we talk a lot about customer churn...those customers who once patronized a product/service solution we offered, then left, then came back again.
SAS (the leader in business analysis and predictive software) estimates that churn may cost telecommunications companies (telcos), globally, at least USD $10 billion/year.
Churn occurs in about 25-30% of our customer base, and is seen as the norm for telcos, or so we may be tempted to think.
We often take for granted that a certain percentage of our customer base will drop out, then come back again, when we offer new, or better-positioned product/service solutions (product/service offerings that solve a problem that the customer is having or meets a particular customer need.)
But what if these customers don't come back?...but not only that, what if these customers took others with them?
Hmmh!
Most telcos (pure-play Telecommunications Service Providers, Internet Service Providers(ISPs), Wireless Internet Service Providers (WISPs), Cellular Service Providers, etc.) are quite willing to loose "bad" customers.
[These customers bring little revenue into your company, but the expense (both monetary, and time) that you have to expend in servicing them, far exceeds the revenue they give you.]
But when we start losing "good" customers (the revenue they bring into your company is about 20% to 400% higher than the money spent to service them) we start to panic, moreover, if they take other "good" customers with them.
Unfortunately, bad news about our product/service offerings and customer service levels, travels ten (10) times as fast as good news, does.
And it doesn't matter if the customer who is complaining is spending $50/month with us, or $5 million/month with us.
There are many customers who are smart enough to deduce that if we can't properly service our smaller customers, then we won't be able to properly service the larger ones, either.
So where does this leave us?
For many telcos, it leaves us in a quandary (plight).
For the smarter ones, we realize that customer churn must be properly investigated and reduced!
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When customers leave, we need to find out why...especially when these customers are our "good" customers.
We need to hunt them down, ask them to be very frank about the reasons why they left and assess their willingness to return.
(We should be storing our customer information, in customer databases/data warehouses, and be using data mining software to unearth customer behavioral patterns.)
When we get their feedback, we should:
1. Ensure that we record it properly, read it through thoroughly, and have the relevant people, act on it, even though the feedback may be unpleasant to digest.
2. Ensure that our other customers, who are experiencing the same problems, are dealt with promptly. Then promise them to not allow the slip-up to take place again and keep our promise.
3. Properly trace the customer's previous contacts with our company concerning the problem and find, where the breakdown occurred internally, in communicating this problem to the people who could solve it.
4. Ensure that we store the customer feedback along with other customer information in our customer databases, so that, should we convince the customer to return, our employees are aware of the customer's history and previous problems encountered, so as to ensure that we don't further aggravate this customer.
[We may just be uncovering a gem of a customer in the rough, that if rubbed down and properly
polished (treated properly, thus leading to them telling their family members,friends, business associates about us and our great treatment of them and them giving us more business, as a result ) will lead to a sparkle in our profits!
Systematically doing the above, will not only reduce customer churn, but will make it easier for us to know what our customers are thinking, thus making us more proactive in solving their problems while they're with us, rather than waiting until they leave, to do so.
Gillian
Sources Include:
1) Statistics from SAS White Paper, "Predicting Churn, Analytical Strategies for Retaining Profitable Customers in the Telecommunications Industry".
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