All companies in today’s world, whether in saturated or unsaturated markets or developed vs. developing economies, are striving to protect their customer base. In the context of consumers whose decision making is swift, the issue most companies face is that of customers leaving. A close look tells us that this can happen due to everything from a small technical issue causing transaction failure to having the wrong product delivered; the reasons can be many.

Amidst this situation, the conundrum that companies face is to differentiate between good and bad churn by using a cost vs. benefit payout to decide which customers to retain and which to let go. And once these questions are answered, a new set of questions arises regarding where to start and which would be the right initiatives to drive results. To give more context, here are the user scenarios of John, Cheng and Tina.

Scenario #1: It’s a story of one beautiful day when John took a day off to prepare a surprise dinner for his girlfriend. With all the recipes in mind, he powered his laptop and started ordering the ingredients and a bottle of wine from the local retail store. After three failed payment attempts, he finally had to walk down the street to get the groceries he wanted. And as expected, the dinner did not go as planned.

This is a classic example of involuntary churn, where a technical issue of payment failure made John shift away from using this merchant to place his online orders.

Did you know? Approximately 10% – 20% of involuntary customer churn is due to reasons like chargebacks, payment failures and poor communication.

Scenario #2: In another part of the world, Cheng got a job at the Shanghai stock exchange and relocated last week to the new city. With relocation, he changed both his mobile number and his mobile provider, as his previous provider did not provide service in Shanghai. The churn occurring from such incidents is called Incidental churn.

Did you know? Incidental churn usually only explains a small percentage of a company’s voluntary churn. The larger chunk is deliberate churn, which is harder to predict and thus more puzzling to companies.

Scenario #3: Then there was Tina, who experienced a four-hour flight delay, due to an in-flight technical glitch that was managed very poorly by the airline staff. She was very annoyed with their lack of care and empathy toward passengers, and she decided never to fly with them again. This is categorized as deliberate churn, and it is the most damaging churn for any company.

Did you know? A sizable number of customers (approximately 60%) are turned off every year, eroding product differentiation and customer loyalty. In a hyper competitive market, companies only get a partial share of customer lifetime value, which is split across many products and services.

CustomersFirst Now (CFN) has been refining our CX solutions for more than 40 years – working with and for many Fortune 100 companies. We provide the only proven, predictive process that links Customer Delight to financial performance by incorporating and measuring CX Best Practices across all key business disciplines. For more information, contact Amit Garg, Data Science Leader, at agarg@customersfirstnow.com

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