Whether your customer decides to call it quits overtly, or silently goes away, this study will tell you what to do to stop others ditching you in the same way.
By MediaStreet Staff Writers
Companies invest billions each year in expensive customer service programs, sales forces, and sophisticated discounting programs such as Groupon. This is all to lure and retain customers, but they are shocked to realise that “churn” remains one of their biggest and most expensive challenges. (Your churn rate is how many people are leaving you over a specific period.)
According to a new study, customers have a tendency to send clear signals before they “break up” with a company. But to catch it before it happens, you have to know what to be monitoring, and the key to any relationship remains effective communication.
The study was co-authored by Eva Ascarza and Oded Netzer of Columbia Business School, and Bruce G.S. Hardie of London Business School. It is unique in that it is one of the first to analyse “hybrid” settings, where customer could leave the service either by cancelling their account/unsubscribing or by stopping to interact with the service. As a result, firms operating in these settings, face two different types of churners: “overt churners,” who inform the firm about their disengagement with a company; and “silent churners” who tend to fade away more quietly simply by not making repeat purchases.
The authors analysed customer behaviour in two different (hybrid) contexts: a daily deal website and a performing arts organisation. They separated overt churners from silent churners to understand and predict both types of churn and then explore possible levers to better manage the customer base.
“We have consistently found that overt churners tend to interact more, rather than less with a firm prior to disengaging with that firm,” said the authors. “This means that they will open emails they receive and read communications from a company, but it can be a mistake to assume that simply because a customer is engaged, he or she is satisfied and will not leave.” In turn, the research found that while overt churners may engage with the firm by opening emails and reading them, they rarely click on links in the emails, which suggests that the content is not perceived as valuable to them.
“We have found that once a customer transitions into the “silently gone” state, the firm is highly unlikely to reengage the customer using previously used communication methods,” said the authors. “However, a more proactive and customised communication reduces the possibility that certain customers will leave silently”.
So there you have it. The trick is to intervene before they leave you to nurse your broken heart.
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