All companies care about their customers for obvious reasons. No customers – no business. This is also why you need to prevent customer churn as much as possible and you have to encourage your promoters to actively recommend your products or services to others. But how exactly do you reduce customer churn?
This blog covers:
In this simple, three-step guide we will focus on our experience in reducing customer churn in a B2B industry where there is a one-to-one relationship between the customer and the company, e.g., through a Key Account Manager (KAM) structure.
"IF YOU ARE ABLE TO SET A CHECK MARK NEXT TO ALL THREE STEPS SHOWN BELOW, IT MEANS THAT YOU ARE WELL UNDERWAY TO SIGNIFICANTLY REDUCING CUSTOMER CHURN."
Let us take a look at each of the three steps in a little more detail.
STEP 1: GET A FACT-BASED AND SYSTEMATIC OVERVIEW OF YOUR CUSTOMERS WHO ARE AT RISK OF CEASING TO USE YOUR PRODUCT OR SERVICE
- Identify your customers who are at risk of this through an external customer study or through other available sources of intelligence.
- Reach out to customers who are at risk and engage in a 1:1 dialogue with them, and discuss their feedback and context.
- Craft an individual recovery/development plan based on the customer meeting and secure regular status check-ins, if needed.
To foster and continuously train a customer-centric culture and mindset among your people, you need to commit to a systematic setup (minimum yearly) if you want to reap any benefits over time. Customers expect to be able to give feedback on the collaboration with you and that you follow up on their feedback – especially if it is critical.
STEP 2: UNDERSTAND THE ROOT CAUSES OF DISSATISFACTION AND DIVIDE THEM INTO LOCAL AND STRUCTURAL CHALLENGES
- The local (customer specific) challenges must be addressed and solved in the 1:1 dialogue with the specific customer in the short term. This is the responsibility of the KAM. For example, a customer-specific local challenge could be a situation where the customer feels that their ongoing status meetings with their KAM lack clear structure and action-oriented tasks with responsibilities for follow up.
- Any structural challenges (e.g. lack of product quality) that emerge from the customer feedback are outside the KAM’s area of responsibility and require managerial focus and organizational response (typically this is more of a long term initiative).
Translating customer experiences into relevant insights and conclusions requires well-established processes to accumulate organizational learning. Inspiration can be found in Bain's inner and outer loop framework as well as other organizational learning models.
STEP 3: MAKE CUSTOMER FOLLOW UP A CORPORATE PRIORITY BY MAKING FOLLOW UP AND COMMUNICATION A CLEAR RESPONSIBILITY IN THE EXECUTIVE TEAM
- Appoint a sponsor in the executive team who follows up on the progress of the customer feedback process and ensures that it is prioritized.
- Use your window of opportunity and set a realistic yet ambitious time plan for the local follow up, e.g., that all prioritized customer dialogues have been completed after four weeks.
- Align any prioritized corporate development initiatives with other strategic priorities, so that the customer feedback does not become a separate track or project on its own.
Our experiences clearly show that the companies that are the most successful in their follow up on customer feedback have appointed a person from the executive team to oversee that all actions and initiatives linked to a professional follow up process are in fact carried out. The follow up competes with many other important agendas and unless progress is tracked there is a huge risk that focus quickly fades. Once that happens, your window to avoid customer churn is closed.
If you are able to follow some or all of the above recommendations, then you will have succeeded in taking major steps towards significantly reducing your customer churn in the future.
"START SIMPLE AND FOCUS ON THE SMALL WINS AND SUCCESSES."
You will be able to gain even better results going forward as your organizational maturity, experience and capacity grows.