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.
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View Comments
Annette
March 10th, 2010 at 4:31 pm
There’s a good trigger checklist / article (for when you have your marketing hat on) from Portrait Software that’s free to download (there’s a registration page though) and might give you ideas about what kinds of triggers to look for. It’s written for larger organisations as a way to identify triggers for retention and sales but it might be a good way to get ideas flowing.
http://www.portraitsoftware.com/triggerchecklist
BTW – admission of bias; I work with the guys and gals at Portrait in Australia.
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March 10th, 2010 at 11:44 pm
[...] Don’t ask customers why they left you! | Anthill Magazine [...]
Rod Brown, CEO Cockatoo Network
March 11th, 2010 at 2:47 pm
Anthill colleagues – you are 100% spot on – if it’s not a rigorous process, people will give you the sugar-coated version. This in turn restricts your ability to turn your business around.
[Reply]
Gene Detroyer
March 18th, 2010 at 7:00 am
I often find that companies know why they are losing customers well before they do any research. But, short of that, companies need to be doing ongoing researech as to customers attitudes. Only when you the dissatisfication line moving in the wrong direction can you have any effect. Once the company feels the loss it is too late and no research will help.
Gene
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