Customer churn is bad. You don’t want it, obviously. In a perfect utopia, all your customers would stay in the fold, retain, and refer you to other new customers. That’s the apex of a customer-driven growth engine, and it’s essentially the polar opposite of customer churn.
But we all know the quote, often attributed to Warren Buffett. It takes about 20 years to build a reputation — and about five minutes to end it. That happens to brands too, and oftentimes it happens to brands around how they deal with their customers. In the simplest possible terms, dealing with customers poorly tends to create customer churn.
How do you prevent customer churn, though?
First you need to understand one of the roles of a Chief Customer Officer: driving executive and organizational appetite for wanting to know about interruptions in customers’ lives and opportunities for differentiation. Once you understand that role (we’ve been discussing it often on my podcast), you will better understand the next steps around preventing customer churn.
Prevent customer churn: Build a defector pipeline
I wrote a little bit about this back in 2012, and it’s also mentioned in CCO 2.0. (Pages 151-152 or so if you have the hardcover version.) Here’s one way to visualize it:
The defector pipeline IDs make-or-break moments when proactive management and intervention are required to earn customer growth. Sometimes, companies will re-contextualize “a defector pipeline” as “moments of truth.” Often, though, I encourage clients to use the term “defector pipeline” when addressing customer churn. Why? Because you’re then invoking an explicit commitment to specific customer intersection points that should be invested in. The term “moments of truth,” while very real, can sound “soft” to some executives. The problem: executives tend to not buy into concepts they deem “soft.”
Here’s one of the simplest examples of how this works. If you are missing customer cycle times, and that’s part of your promise, that’s contributing to customer churn. Your executives need to know and care that this is happening. A defector pipeline outlines it for them.
Prevent customer churn: How does one build a defector pipeline?
This is one of the best ways I know to turn what seems like a huge concept into a plan of action for the sales organization. It engages them immediately, connects them to specific actions to take, and expands the role beyond sales to relationship.
1. Plot the stages of the customer experience visually so the organization can see and identify the stages.
2. Identify the places where your research indicates that you are vulnerable to losing customers to defection.
Above all, remember this: the entire competency around experience reliability and innovation is a revenue erosion early warning system. That’s the easiest way to think of it. Customer churn will lead to revenue erosion, and you need a way to manage that process so that everyone is invested in stopping it from happening.
Next week we’ll be back with a new podcast and a new blog, but for now … any other thoughts/approaches on customer churn?
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