What is Customer Churn Costing You?
Every business manager understands that a high rate of customer churn is costly. No company, regardless of its resources or history of success, can afford to lose large numbers of clients to competitors and stay viable for any length of time.
But while most executives look at customer retention management and churn reduction as a major part of their overall business plan, they may actually be underestimating its importance. For instance, Research from Inc. Magazine shows that acquiring a new customer costs at least five times more than making a sale to an already existing customer. Furthermore, a two percent decrease in customer retention has the same fiscal effect as decreasing costs by 10 percent. By contrast, a five percent increase can increase profits by up to 125 percent, according to a recent report from Bain & Company.
With these figures, can you afford not to pay attention to your customer churn?
One of the primary reasons consumers abandon a company is due to poor contact center customer service. Long wait times, overly complex functionality or a single encounter with an unhelpful call center agent may be enough to send a customer into the arms of a competitor. Not only does that loss impact a company’s bottom line, but it can also hurt employee morale by raising concerns about a business’ long-term prospects.
In looking for ways to retain their hard-earned customers, businesses are increasingly focused on analyzing large quantities of newly accessible data and communicating on a more meaningful level with customers through social media and other tools. Many of these companies are discovering that the best way to exceed service expectations is by implementing a customer service management (CRM) solution. Best-in-class CRM technology offers businesses unparalleled insight and full transparency into customer needs; the kind that businesses need to remain ready for action, providing the capabilities to meet those competitive requirements. Not only is CRM vital for businesses’ customer loyalty strategies to increase customer satisfaction and retention, but the technology also:
- Streamlines critical business processes to get business done faster and more efficiently
- Enables your company to be forward-thinking by planning tasks and activities in advance using better customer insights
- Mitigates risk, by enabling you to set thresholds to detect, manage and resolve issues early on
- Lowers compliance costs as well as costs associated with paper storage and handling.
Knowing how crucial retention is, it is not surprising that 62 percent of organizations view customer service provided through contact centers as a competitive differentiator, according to a study commissioned by Deloitte.
So the only real question is: how much is customer churn costing your organization and how much longer can you ignore this new reality?