4 Technology Based Solutions to Successful Customer Retention Strategies
Customer churn in the age of information is a fact of life for every business in every industry. Customers have unprecedented access to data, enabling easy comparisons of alternatives, as well as hassle-free provider changes with a simple click of a button. With Accenture reporting that 77% of consumers are no longer loyal to any particular brand, companies must work harder than ever on their customer retention strategies in order to retain their customer base.
It is well known that the acquisition costs of converting new customers far outweigh the costs of maintaining current customers, further motivating companies to find and implement innovative customer retention strategies. Technology-based customer retention solutions provide powerful platforms and fresh approaches, and most importantly, practical frameworks and processes to successfully engage with customers at scale. They have been proven to consistently decrease churn and improve a business’s bottom line.
The customer churn formula
Churn refers to the percentage of customer attrition over a specific period of time. The churn rate is calculated by dividing the number of customers lost by the total number of customers. For example, if a company began 2017 with 50,000 customers and lost 2500 over the course of the year, the churn rate would be 5%. While some customers are lost due to involuntary churn – billing issues or death, for example – it is the ones lost due to voluntary churn that companies are most concerned with.
In addition, partial churn refers to a customer’s decision to downgrade their level of service or purchase a decreased number of products, or otherwise become less profitable to the company.
The price of a high customer churn rate
While some churn must be expected, a high churn rate can cripple the growth of an organization. Finding ways to reduce customer churn is essential, with even slight fluctuations impacting profit margins significantly. A McKinsey report highlights that companies with top-quartile growth have lower customer churn than mean performers—from about 10 to 30 percent lower depending on the customer type.
Happy customers = low churn
With these numbers in mind, it’s no surprise that a Forbes report highlights customer retention and reducing churn as the highest priority for executives in both the United States and Europe. Considering churn is closely linked to customer satisfaction, companies are attempting to transform their customer experience to meet consumers’ high expectations. In fact, data from Walker predicted in 2017 that customer experience would overtake price and product as the key brand differentiator for B2B by 2020.
Technology – key to successful customer retention strategies
As a general rule, the best way to reduce churn is to successfully address the needs of a particular customer at the right time with minimal effort and disruption to the customer. For years, solutions have focused on training customer service personnel, and adjusting company policies and guidelines, as proactive efforts to retain customers who are considering making a transition.
While people and processes continue to play an essential role in reducing customer churn, the technological advancement associated with AI, Big Data analytics, visualization, voice analytics, and other advanced technologies that improve the customer experience offer a critical boost to the human factor. These technologies power better personalization, prediction of potential churn and higher levels of engagement, all of which enable companies to lower their churn rate and increase their customer retention efficiently at scale without increasing their resources.
McKinsey reports that a comprehensive, analytics-driven approach can help telecom companies reduce churn by as much as 15%. Let’s look at each pillar of customer retention and the technologies that support these efforts:
Four pillars of customer retention
- Customer success – ensuring that the customer achieves the result he was hoping for with your product/service
- Customer care and support – ensuring that any issue with your service product is addressed quickly and effectively and leaves the customer satisfied with your response.
- Personalization – understanding your individual customer’s needs and engaging with them according to their preferences and personality.
- Post-funnel marketing – ongoing engagement with existing customers, by giving them the attention they crave, listening to their voice and predicting their needs and wants.
Customer success – Gainsight
Ensuring the customers achieve the goals they are aspiring for when engaging with your product or service is a surefire way to keep them happy. Listening to the customer and analyzing their needs is critical to providing spot-on solutions that will ensure success. Gainsight offers a comprehensive suite of solutions dedicated to customer success and therefore – retention. Solutions include voice of the customer (VoC) closed-loop surveys that enable companies to take quick action based on customer feedback, as well as best practices for renewal management.
Customer retention strategies can be triggered as a result of behavior or lack of behavior. For example, retention-driving emails can be sent to encourage better engagement, or notify of unused features. Harvard Business Review reports that providing customers with short tutorials on product features before disengaging can reduce churn by 6%.
Customer care and support – TechSee
The relationship with your customers only begins with the sale. Quickly and efficiently handling any issues your customer may have with your product or service is key to ensuring long-term loyalty. In fact, according to Zendesk’s Trends Report, 50% of customers would switch to a competitor after just one bad experience, with that number snowballing to 80% in the case of multiple bad experiences.
Visual Engagement is quickly proving to be a game changer in the enterprise-consumer relationship, improving relationships and success with customers from sales through service. The technology has proven especially effective in specific use cases, such as billing proofs and technical support.
TechSee’s visual support platform uses screen-based technology that allows agents to see the customers’ physical environment via their smart device in real time, and to visually guide them using Augmented Reality. This enables fast, effective problem diagnosis and resolution between tech support agents and customers – resulting in significantly higher levels of customer satisfaction and therefore, retention.
Personalization – Interaction Studio
Consumers are more likely to be loyal to brands that interact with them according to their preferences. Interaction Studio by Salesforce’s real-time personalization platform combines in-depth behavioral analytics and customer data with advanced machine learning to enable one-on-one interaction with customers – maximizing relevance, individualizing each experience, and driving loyalty.
Gaining insight into customers and personalizing responses allows companies to provide a better experience to the specific customer based on the history of his preferences and other data. It also enables the company to prioritize the customers in danger of churn and allocate resources towards high value customers.
Harvard Business School’s Managing Churn to Maximize Profit, recommends that rather than redirecting time and resources to retaining any customers on the brink of churning, businesses should focus their attention specifically on the most profitable customers on the brink of churning.
Post-funnel marketing – Optimove
Maintaining a conversation with your customers post-sale and deepening the relationship is a proven customer retention strategy. Advanced churn modeling using predictive analytics is a powerful tool for maximizing business intelligence – understanding why customers leave, identifying customers who are on the verge of leaving, and proactively respond with retention tactics to reduce churn.
Optimove combines predictive customer analytics, AI optimization technologies and a multi-channel campaign execution engine, to help businesses understand post-purchase customer needs and interests from a marketing perspective. This data enables companies to engage and interact with them effectively using emotional intelligence to maintain the relationship, reduce churn and ultimately optimize the monetization possibilities and lifetime value of each and every customer.
Proven ways to help you increase customer retention rate
High customer churn is a current epidemic across many industries, and managing churn has become critically important for the profitability of companies. To lower your churn rate, you must adopt proven customer retention strategies. Focus on the four above-mentioned pillars of customer retention in your business, take the time to analyze churn data, engage with post-funnel customers, solicit feedback, and take action to improve.
Implementing innovative customer retention technologies – in the areas of customer success, customer support, personalization and post-funnel marketing – will help you perform those tasks at scale and have been proven as effective solutions to enhance the customer experience, thereby increasing NPS scores and decreasing the dreaded churn.