Customer loyalty is harder to maintain than ever before. And that’s quite troubling because it costs far more to attract new customers than it does to keep your existing ones.
Not only are there now a myriad of options for doing everything from shopping to banking, but consumers are also holding the brands with which they do business to a far higher standard. More than a third of consumers switched brands during the COVID-19 pandemic. Younger shoppers are more quick to abandon a brand than other generations. Eighty percent of Gen-Z Americans are more likely to try new brands than they were before the pandemic, and 38% only give a brand a second chance before leaving it for a competing brand. Research on consumer behavior in our current macroeconomic climate also indicates that customers are ready to switch to another business if the price and value of an item or a service are better than the current brand they use.
There are things you can do to avoid this type of customer churn and generate more loyalty in the new era of the empowered consumer.
Ask for feedback
The best way to understand why customers do or might leave your business is to ask them.
If a customer decides to terminate business with you, email, text or call and ask them why. This helps you understand what led the customer to this point, if there is a way to bring them back and, if not, how to avoid losing customers for similar reasons in the future. You can also conduct a pre-churn analysis to identify high-retention risk customers.
But don’t just focus on the customers that are already in the churn cycle. Reduce churn before it’s even a consideration by using automation to ask for customer feedback—for instance, post-purchase or after a certain length of time as a customer. You can use marketing automation technology to organize your data, segment your audiences and deploy personalized communications soliciting feedback based on specific customer background and preferences. Lean on partners to help deliver retargeting ads, text messages and outbound calls so your brand stays top of mind.
Understanding your Net Promoter Score (NPS) will also be a useful tool in measuring your customers’ overall perception of your brand. If you’re not familiar with NPS, it’s a single survey question asking respondents to rate the likelihood that they would recommend a brand to a friend or colleague. Respondents are grouped into Promoters, with a score of 9 or 10, Passives, with a score of 7 or 8, and Detractors, with a score of 6 or below. Subtracting the percentage of Detractors from the percentage of Promoters yields the NPS. By incorporating NPS with other insights along the customer journey, you will have a comprehensive view of your customer experience performance, hopefully leading to happier customers!
Get your digital strategy right
Research by BAI, a nonprofit for the financial services industry, found that more than 50% of consumers have increased the use of digital channels even for more complex transactions such as loan applications since the start of the pandemic. Eighty-seven percent of this group planned to continue using these channels after the pandemic. However, the same study shows that about half of consumers are willing to switch their primary financial services provider for better digital capabilities. Unsurprisingly, millennials now approaching their peak earning years are the most likely to switch.
To give customers the digital tools they crave, you need the right technology and expertise. Often, this comes outside of your own business, especially if you don’t have in-depth in-house knowledge on the different presentment and payment channels or marketing touchpoints imperative to promoting digital services. Look for partners that help you centralize all your customer data from across sources and orchestrate digital services from a single, easy-to-implement system. Ensure you provide customers the ability to initiate a transaction in one channel and finish in another without having to start over. Keeping all digital services under one platform with a single view is how to guarantee a seamless, simple experience that reduces customer churn.
Also, consider that you’ll need different strategies for customers based on their level of comfort with digital tools. For those who might be skittish of digital adoption, you’ll need to take them on a journey with cross-channel (meaning both offline and online) marketing messaging and educational resources. It goes without saying that you’ll also want to make signing up for digital tools and services simple to do. Make sure the onboarding process for these customers has just the right level of detail and is easy to digest and apply.
Nail customer service
Fifty-six percent of global consumers say customer service is “very important” in brand choice and loyalty, and 61% have stopped doing business with a company if it’s poor in this area. Yet, many brands deliver disjointed, frustrating customer service experiences. Think getting switched from person to person, being put on hold multiple times and dealing with lengthy wait times to resolve an issue, for instance.
When asked about their priorities for creating a better digital experience in the BAI survey, banking consumers reported 24/7 customer service as their top request. They want to be able to use chat, email, text and even social media to have their issues resolved. Said another way, they want two-way, frictionless communications with the brands they use.
Your biggest resource for improving two-way customer communications and service is data. Integrated customer data captured, stored and analyzed in one system helps you build upon what you know about individual customers. Not only does this holistic set of information help you keep a record of your customer, the products and services they use and their behavior, it also helps customize their experiences. If you feel you don’t have enough data about your customers, there are partners that can help append the information you have to build more robust customer profiles. Check out a recent blog on this topic here.
You also might want to turn to a partner to help with the more tactical elements of customer service and overall communication to reduce customer churn. Outsourcing inbound and outbound customer service can help you cut handle times, create a more positive experience for your customers and transform service calls into sales opportunities.
Reward loyalty
It’s human nature to react when an individual has a problem and ignore when things are going smoothly. If you want to reduce customer churn, you need to flip that thinking by rewarding your satisfied customers in the here and now. The biggest way you can do this is by creating a highly personalized, relevant and meaningful experience in every moment of interaction with a customer. This can be as simple as showing you understand their needs and preferences—that you’re paying attention to get their attention.
There are other, more incentive-based ways to honor the customers that are sticking by your side. This could be a rewards program, customer recognition, discounts for paying bills or loans early and exclusive offers for those that consistently pay on time. You can even automate certain incentives and rewards, such as emailing coupons once certain milestones are reached.
It’s possible to retain customers even when they’re more likely to flee than ever. With communications and service based on unified data and executed and analyzed through one system, you’ll be able to deliver consistently personalized, positive experiences—keeping your customers happy and onboard.