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Crash and Churn: survey reveals the customer service fails that cause attrition

Why customers churn

The days of long-term customer brand loyalty to brands are over. Today, consumer stickiness is far more dependent upon people’s specific experiences and the level of service they receive. Some turnover must always be expected – that’s the nature of competition, after all – but a high churn rate due to substandard customer service is unacceptable, and often entirely avoidable.

New research on consumer behavior related to churn has revealed that 39% of Americans who canceled a contract with a company in the past 24 months cited customer service as the primary reason for calling it day. It’s interesting to note that 62% of these customers canceled after an ongoing negative experience, while only 19% left after a one-time crisis. This indicates a clear opportunity for companies to recognize any shortcomings and take corrective action before the customer defects.

Customer churn is widespread

The industry that experiences the highest rates of churn is telecommunications, with 52% of those surveyed reporting that they canceled a phone, internet, TV or cable contract with a telecom company in the past 24 months due to the quality of customer service they received.

Other industries faced with high churn rates due to poor customer service include retail/ecommerce (12%), healthcare-related products or services (12%), insurance (11%) and banking/financial services (11%). This underscores the fact that churn plagues all verticals and customer retention strategies are critical to almost every industry.

Customer churn is triggered by high effort

The survey dug deep into the aspects of customer service that made subscribers call it quits. The key pain points identified included:

Multiple phone calls – 47 percent said having to call more than once to resolve an issue was a deal breaker.

Wait time – 27 percent said having to wait too long to reach a customer service rep was a deciding factor in whether or not to move on.

Poorly trained representatives – 32 percent stated that unknowledgeable agents were enough to send them packing.

Repetition or restating of issues – 39 percent reported that having to explain their problem more than once (or to more than one representative) made them cancel their contract.

This data reinforces the need for companies to meet customer demand for convenient and effortless customer service transactions. When these expectations are not met, customers will simply take their business elsewhere.

Need for improved customer retention strategies

While 43% of dissatisfied customers actively searched for an alternative provider, the majority of respondents (57%) churned passively, either because they were disengaged with the company’s services or because they heard about or were offered a better deal from a competitor.

Proactive strategies are required as the data shows that reactive strategies are ineffective. Despite 54% of companies trying to retain their customers after they canceled their contracts – usually by offering a discount – their efforts were largely unsuccessful. However, among those who churned following a negative service experience, 37% might have changed their mind if they had been offered a better service plan, and 34% would have stayed  if they had believed that the service would improve in the future.

Fallout from negative word of mouth

Dissatisfied customers present a real threat as they could negatively influence others. 76% of customers admitted sharing their disappointment about a company’s level of service with others. 70% discussed the company negatively with friends, family or colleagues, 18% shared it on their social media channels, 12% posted on the company’s official social media channel or website, 9% shared it in an online forum, and 4% even discussed it with the media.

With the average global value of a lost customer estimated to be $243, failing to focus efforts on retention causes businesses to lose $1.6 trillion per year when customers defect to rival companies. Implementing effective retention strategies has been proven to increase loyalty and reduce churn. In fact, 37% of the respondents said that they would be willing to consider using the company again in the future if it improved its level of customer service.

To download the full results of ‘Crash and Churn,” the 2019 survey report, click here.

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