If getting new customers is an obvious win for your business, keeping the customers you already have is a no-brainer. Losing customers – customer churn or customer attrition – is a huge problem for many businesses. It can slash revenues in the blink of an eye and, even worse, damage a business’ reputation making it more difficult to acquire new customers in the long run.
So what makes consumers loyal to begin with and what can businesses do to prevent them from becoming disloyal down the road?
Consumers favor brands for a number of reasons. Things like product quality, price, convenience and customer service make the top of the list, but psychology tells us other, more subjective factors are also at play in the decision-making process. These factors include things like emotion and identity. Businesses need to associate their brand with positive feelings using slogans and imagery throughout the customer experience to reinforce the connection to the brand. Forging identity and belonging to groups of like-minded people are basic human instincts. Brands should indulge these needs and desires by first identifying their target audience and then creating unique experiences based on each of their personas.
Of all the objective and subjective motivations driving consumer loyalty, customer service is perhaps the most discussed because it can easily make consumers disloyal. Things like product and brand attract us to a brand. Failure to deliver on customer service drives us away. In fact, customers are four times more likely to leave a service interaction disloyal than loyal, according to this study. The main reason for this being businesses are more focused on delighting customers than removing obstacles they face when solving a problem.
To overcome this, many service departments are starting to focus less on customer satisfaction scores (CSATs) and more on customer effort scores (CESs). HubSpot defines a CES as a type of customer satisfaction survey that measures the ease of an experience with a company by asking the customer, on a scale of “very easy (1)” to “very difficult (5),” how much effort was required to use this service. Customers don’t like having to contact a company repeatedly to get a problem solved. Results from the CES indicate to the business should implement strategies to help solve customer problems more quickly and easily, which can be accomplished in a variety of ways depending on the type of business and its target audience.
Perhaps one of the easiest strategies businesses can use to improve customer effort is to revamp their culture. According to recognition expert Dr. Bob Nelson, 58% of workers report they seldom if ever receive a “thank you” from their boss for a job well done. Which begs the question – does your current culture ignite performance from front-line employees? Businesses that adopt all of the right surveys and shift their focus to solving customer problems quickly and easily but lack the right culture, will struggle to deliver on customer expectations every time.
Besides providing verbal feedback and praise, businesses can implement an employee incentive and recognition program to reward employees who have low CESs or come up with unique ideas to speed up the customer problem-solving process. Whatever the criteria, it’s important to offer recognition as close to the event as possible. For instance, after a customer service representative receives a 1 on a CES, they should immediately be recognized with a spot reward, not days after the event.
Research shows that employees who are recognized on the job are:
- 5 times more likely to feel valued
- 7 times more likely to stay with the company and
- 6 times more likely to invest in the company
Adopting a culture of recognition goes a long way in reducing customer churn. Businesses can make all the right changes but as long as employees aren’t committed and engaged in creating efficiencies for the customer, little will end up changing. By understanding the objective and subjective factors that create customer loyalty, accepting the role support plays in creating disloyal customers and implementing cultural changes that promote employee engagement and buy-in of new processes, businesses can lower their customer churn and employee turnover rates.