I have had the same mobile (cell phone) company in the U.K. for around 25 years. However, I am about to leave them--and they don't know it. With my imminent departure on the horizon, I wondered how do organizations avoid customer defection? It turns out that customers usually indicate they are going to leave, and you can see it in their habits.
I see it happen all too often as a global customer experience consultant. Customers leave, and companies have no idea how it happened. We discussed this problem on our recent podcast, and how this comes down to not understanding your customers' motivations and not executing a proper segmentation based on these motivations.
Your customers chose you for a reason that can range from product quality to monthly cost to ease-of-use, and any other host of reasons. People are different and want different things. If you don't understand what people want, then you cannot serve them well. Likewise, their reasons for leaving are different, too.
You should know what your customers want or why they are leaving so you can be proactive in an appropriate way when you sense they will defect. For example, I am leaving my mobile company in the U.K. because the service is not as excellent as my service in the U.S. In other words, my motivation for moving service is an inferior network. So, offering me a discount is not a way to keep me. To keep me from defecting, the company should explain the company's plans to upgrade the network and then offer me a discount!
Read the Writing on the Wall
Defections don't happen suddenly. Specific behaviors occur before customers leave, meaning an organization has an earlier opportunity to address the customer defection. You have to look at the broader set of actions, to read the writing on the wall as it were, before getting dumped, to understand the motivation behind the customer defection.
Now, if a client came to me worried about customer defection, I would ask what data exists about customer habits? Charles Duhigg's book The Power of Habit teaches us that people engage in specific behaviors when they experience a habit's trigger. Habits result in patterns of behavior that you can see in the data. When the pattern changes, it indicates the behavior is also changing. An excellent example of this principle in action is how Target stores discovered that women's habits change when they first learn they are pregnant. Specifically, the women buy vitamins among other things. Target's data was very accurate, so much so that Duhigg shares a famous story where Target's marketing team discovered a 16-year-old girl was pregnant before her father did.
Most organizations don't follow customers' habits, however, and that's why customer defection takes them by surprise.
Losing My Virgin Status
I split time between two countries, the U.K. and the U.S. In the early days, I didn't have an office in the States, which meant I was flying home a lot. Hopping to and fro across the pond, I achieved Gold status on Virgin Atlantic. Over time, we opened an office in Florida and switched to a more convenient airline, Delta. Virgin never contacted me to find out why I wasn't flying as much. I had gone, and nobody cared.
Now, this complaint isn't about my feelings (much). We all know that business travelers with such a high status are the most profitable for airlines. Losing me was losing a valuable customer, but, as far as I know, no one noticed and I found that surprising at the time.
However, I have since learned that people don't always look at the data. If Virgin Atlantic had looked at the data, they would have seen my flights drop off and could have reached out to see if there was anything they could do. Moreover, automate it, like an email they send when they notice a decrease in flight frequency for one of their profitable passengers. While the email isn't as effective as more personal contact, it would have been something at least.
My Virgin Atlantic example is indicative of behavior I see from many organizations. They are far more concerned about filling the sales funnel with new customers rather than taking care of the customers they already have. This strategy is poor. You might be filling the sales funnel with new customers, but the old customers are spilling out the door.
Counteracting Customer Defection
So, what can you do to stop your customers from dumping you? My advice is to examine the patterns of their behavior that can be indicators of defection. Once you determine the signs, you can design an appropriate intervention that will persuade them to stay.
The defection patterns vary depending on your industry. To determine what indicators you have before customer defections, you could analyze aggregate data to determine what happened in the past. Another way to understand signs is to look at data on similar types of customers, meaning ones with a similar behavioral profile. In other words, have other customers like this one exhibited a similar pattern of behavior before they left?
Some examples of indicators:
- Have their sales decreased? It could mean they have been trying the competition.
- Have they been contacting the help center more than usual? It could be a sign they are having problems with the product or service.
- Is the customer complaining more than in the past? It could be a sign they are going to start looking for a better option.
The best advice I can give any organization concerned about customer defection is that you have to be proactive, not reactive. You should not wait until your customers are leaving you to do something about it. Your efforts should be to promote loyalty, not prevent defections. It's far better for your bottom line to provide positive customer experiences that make people want to stay than to scramble around trying to save a relationship before they leave.
Have you been able to foresee and then prevent your customers leaving? Please let us know what you did in the comments below.