Keeping existing customers is almost always cheaper than finding new ones. The traditional approach to customer defection research is to ask former customers: “Why did you leave?” But acting on the results of this type of research won’t actually reduce defections, and can divert your attention from the real issues.
Repeat or on-going customers leave a supplier for a combination of three main reasons:
- Drawn: They are drawn away to a supplier that offers them substantially more of what they value (e.g. service, benefits, savings, etc.).
- Drift: They drift away to a similar supplier who offers them marginally more. Most often this occurs at points of change in their own life (e.g. moving job/house/site, having children, etc.).
- Driven: In the absence of a strong engagement, they become disenchanted over time and then a particular incident (trigger) pushes them to change suppliers.
Most customer retention research asks customers: Unfortunately, when asked, “Why did you leave?” most respondents feel compelled to provide a socially valid ‘reason’, and tend to exaggerate the ‘driven’ reasons, and understate the impact of the ‘drift’ and ‘drawn’ factors.
Thus, ‘Why did you leave?’ research reports usually contain a list of “things to fix”, but these are just the triggers to change. While fixing the ‘triggers’ is fine, it only reduces points of annoyance and it won’t actually help you to add real value to your offer. And until you add real value to your offer, your customers will still be drawn, or will drift, away to your competitors.
So instead of asking them why they left you, try the following strategies to reduce customer defections:
1. Conduct value research
- Use analysis of relevant online discussion forums, traditional focus groups and other tools to identify what customers actually value from their relationship with you. Then use these insights to drive value into your customer relationships.
2. Leverage your customer data
- Use customer complaints data to prioritise and address those things that annoy customers (and start collecting it immediately if you don’t already!)
- Statistically analyse customer transactional behaviour to identify other change triggers (positive and negative).
Mark Fletcher is Principal Consultant at Shopworks Science where he works with major retailers to help them find and keep customers and to sell more to them.