“What people do isn’t always a function of what makes them happy”
Dr Jan Hofmeyr (creator of the conversion model)
Most companies can tell you the final straw that broke the camel’s back - but they rarely know what was weighing it down in the first place. Customer retention is the same. If you don’t recognise the issues, you’ll never pinpoint fixes.
The causes of disaffection are often long-standing. They can include the way you acquired the customer, the quality of the customer and - most revealingly - whether they were attracted to your proposition or simply “bribed” into coming on board.
Simple post-churn research typically flags price as the major driver. However, deeper research tells more. It will show that elements of the fundamental value proposition (either misunderstood or not valued) are actually the root causes.
When companies try to understand how likely they are to lose customers they often look to satisfaction indicators. But satisfaction is a particularly poor indicator of purchase behaviour:
• Correlation between satisfaction and purchase intent = 0.3
• Correlation between purchase intent and purchase behaviour = 0.1
• Correlation between commitment and purchase behaviour = 0.85
Commitment indicates how entrenched a customer is with a brand or how likely they are to leave. It centres on three things:
i) The perceived advantage relative to others.
ii) The level of involvement in the category (how important it is to the
customer)
iii) The level of satisfaction with various elements.
OrangeKeeping the future bright. Orange in the UK has the lowest churn rates in the industry. It is the only mobile phone provider here that has a net positive word-of-mouth rating. Orange has consistently innovated around its service. It was first to introduce ‘per second’ billing. More recently, the brand has focussed on usability - helping customers get the most out of their phone with a “learn” campaign. Orange sends ‘thank you’s to existing customers and rewards those most valuable with discounted and free premium services. Orange was also one of the first providers to make it easy for customers to leave. Instead of asking customers to “put it in writing”, they are transferred to a well-trained customer consultant who is empowered to mitigate the reasons for leaving. |
Want tactics and strategies to retain more customers? Fast-track, cost-effective programmes from H2X can help….
• Retention – Are you throwing good customers away? H2X helps companies find the root causes of churn. We implement tactical and strategic solutions that can improve retention rates quickly.
For an initial, confidential discussion to find out more, contact David Williams, H2X CEO, on +44 (0)1628 777945 or email davidw@h2x.biz
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