Why Do We Lose Customers?

The Verde Group Customer Research

Every business knows the value of keeping their customers.

Yet despite companies’ best efforts customers still leave, and the reason often feels like a mystery. Why do they go?

They experience a problem
This is by far the biggest reason customers move on. 68% to 73% of customers stop doing business with companies because they experience a problem according to Forum, Bain, Verde customer research.

Many companies place a huge focus on fixing the problems they hear about from their customers. It’s a logical action, yet it misses the mark. In fact, more customers will leave for problems companies never hear about — the ‘silent killers’.

You have become irrelevant
This happens when you’ve stopped delivering a product or service that the customer feels is appropriate. Either another company has taken your place, or you’re no longer communicating with the customer in a way that’s meaningful to them.

This last point takes on more significance in the era of data-sharing and personalized social media. Customers assume that when companies take their data, they’ll use it to customize and improve the customer’s experience.

Companies continue to ignore this at their peril. For example, if a customer doesn’t have children but a company promotes online offers at them for diapers, soon the customer may begin to question that company’s relevance in their life.

They don’t need your product or service
Perhaps the customer no longer uses that type of product. More likely, however, they no longer view you as competitive — with your price, your customer service, or the freshness of your product offering.

Reading The Signs
There are clear signs that customers may be headed for the exit. Shopping frequency declines. Share of customer spend drops off. Surveys show a spike in customer problem experiences. Separately or together, these signs all point to a significant risk to the business.

What actions should companies take? They need to engage with their customers and relate to them in a meaningful way, invest in what the customer wants, and understand what those customers are buying from other companies.

Companies should understand that from a customer experience perspective, they’re not just competing with others in their segment. The last, best experience a customer has will become their new benchmark — their expectation for a buying and service experience they now demand from everyone. Fair? Maybe, maybe not. But is it the reality? Yes.

Companies cannot afford to simply react to systemic customer problems. Even if the company recovers, there’s still a permanent dent in customer loyalty.

Recovery systems aren’t enough. With today’s multi-channel businesses and mobile, online and in-store customer interactions, it’s almost impossible to build and maintain a consistent, flawless recovery system. Companies can’t rely on them alone — they must also identify and understand potential ‘iceberg issues’ and do their best to steer clear.

The Uber Effect
Many companies are looking at more radical approaches to transform the customer experience and maintain or increase relevance with their customers. They look to Uber as an example where a technological innovation (in this instance, one that dynamically matches consumer demand to driver supply) has transformed the customer experience, disrupted an industry and allowed Uber to take huge market share from traditional taxi companies.

Companies going down this path will want to look outside of their existing businesses to incubate and innovate. If a transformation is attempted in-house and within the trappings of their industry, the most likely result would be a cycle of continuous improvement, not innovation.

Paula Courtney is Chief Executive Officer at The Verde Group and Product Founder at WisePlum

 

The Four Biggest Mistakes Companies Make When Implementing a Customer Measurement Program

Transform your customer insights by avoiding these common errors 
Technology and analytics have provided companies the means to understand their customers in ways they couldn’t have imagined even a few years ago. Almost every large organization invests heavily in customer measurement programs, yet many don’t achieve the customer insight they’re looking for.

Why?

It turns out that a handful of common missteps are responsible for the unsatisfactory results:

#1. Unclear Measurement Goals
What are the reasons for undertaking the measurement program? Is it a desire to improve your customer’s experience? Are you trying to gauge the success of a recently launched product or service, or understand how you stack up against a competitor?

Companies need to establish clear objectives for measurement programs and ensure there is alignment across the entire organization. Extensive planning and engagement with key stakeholders are critical, as is a clear strategy for the use of the data captured. What decisions will be driven by that data, and who is accountable to take action?

 

#2. Not Enough Time Spent Establishing Ownership
Building alignment within the organization is fundamental to the success of any measurement program. But it’s not enough to just inform stakeholders, collecting their input into the objectives of the program, how it will be structured, and how findings can positively impact their specific business metrics — these are all are critical to the success of the program. And all require a lot of work upfront to get it right.

The most important step is to establish a link between the findings of the measurement program and business issues those findings promise to address. Stakeholders need to know how the program findings may help improve or transform their business.

 

#3. Measuring Customer Loyalty or Satisfaction in a Vacuum
Customer surveys only provide a single data set in any customer measurement program. A single data source provides an incomplete picture, and sometimes a very misleading one.

To truly gain customer insight, you need to establish multiple listening posts across the entire organization. This means gathering information from your sales team, the call center, your service teams, and your complaint management system.

All of this information should be reviewed and packaged holistically. The different data sources may corroborate some findings and create different perspectives for others. This provides a much broader understanding of your customer’s experience.

 

#4 Thinking You Know What Customers Want
Preconceptions can ruin a customer measurement program. Often programs are built in isolation and structured based on what is perceived as important to stakeholders.

Good programs need to be constructed outside-in. Speak to customers before building a survey. These upfront discussions provide customers with the opportunity to tell you their full stories, and many times it’s the qualitative insight you gather that proves most valuable.

This feedback also helps you understand and adopt the language your customers use to discuss your business, which may not align with your internal company vocabulary. For example, if your survey poses questions about the effectiveness of your claims department, but your customer refers to it as your customer service department, your findings will almost certainly be skewed or incomplete.

 

My Challenge to You
Customer measurement programs can provide you with critical customer insight that helps improve your business metrics and shape your company strategy. For these programs to be effective, however, you need to establish clear goals, cultivate alignment and ownership across your organization, and most critically, ask for your customers’ input as you’re building the program.

Paula Courtney is Chief Executive Officer of The Verde Group and a lecturer at The Wharton School