Study reveals the main reasons for customer churn

24th Aug 2018

Despite all the efforts to keep customers loyal, a new survey report - The CallMiner Index – a reveals a switching epidemic that has seen churn rates increase by three times over five years. This is costing British businesses at least £25 billion a year[1].  And most of the reasons are completely avoidable.

Almost nine out of 10 people (84%) switched 1.91 suppliers each last year, with electricity suppliers hit the hardest. If these numbers weren’t alarming enough, the report also shows that the rate of switching is getting even worse. The average rate of switching across all sectors is 3.4 times over five years or 0.68 times per annum on average. When you consider that the average rate for the last 12 months was 1.91 times, the rate of switching has accelerated by almost three times!

Besides price, treating customers unfairly is the biggest reason for churn

This kind of customer churn is simply unsustainable. So, it’s worth understanding the reasons why consumers say goodbye. Price is always a factor, but what stands out in the Index report is that the other top reasons all relate to not being treated fairly. In fact, after price, the next three reasons for customer switching are all related to being treated unfairly:

  1. There is no reward for contract renewal i.e. no reward for loyalty (45%)
  2. Discounts offered to new customers are not automatically applied to your account (39%)
  3. Feeling like you are not being treated fairly (31%).

This shows that the way suppliers handle interactions with customers simply does not satisfy what neuroscientists call the five deep-seated ways our brains work. These five needs are: Status, Certainty, Autonomy, Relatedness and Fairness (SCARF). They are based on the innate reward/threat response that is hardwired into our brain.

Amy Brann, a leading neuroscience expert at Synaptic Potential, explains: “Being unfairly treated triggers a response in similar networks of the brain that controls physical pain. The reaction can genuinely hurt! That’s why people will go to great lengths to right wrongs. In the case of suppliers this can include burning lots of time in having a complaint handled, defecting to another company, bad mouthing the supplier online and offline and in more extreme cases, pursuing legal avenues.”

The good news is that treating people unfairly is completely avoidable. Suppliers could slash their churn rates if they listened to what consumers are saying and put treating their customers fairly at the heart of their brand values.

Aimee Lucas, Vice President and Customer Experience Transformist, at Temkin Group, says: “It’s imperative that companies use the available tools to their advantage to identify reasons leading to negative customer experiences and churn and coach their call centre staff on the behaviours that create more positive interactions with customers.

In fact, the research shows that failing to listen to consumers may be central to this failure. The #1 emotion before contacting a call centre is to be listened to (46%) and yet only 23% of consumers believe they have been listened to after a call. With this in mind, it is possible to turn your call centre into the perfect defence against this churn epidemic and make sure your customers feel they are being listened to and treated fairly. When customers arrive with problems to be solved – the top two reasons why consumers contact a call centre - you can give your agents the information they need to take the heat out of the situation. By using Interaction Analytics to analyse 100% of calls and identify words, phrases and acoustic qualities that trigger a positive response from customers who arrive unhappy, you can convert someone who arrives annoyed into someone who leaves satisfied.

Armed with this insight, agents can adjust what they say and how they say it according to the behaviour of the customer. By providing agents access to post-call analysis it will be possible to identify best practice and reinforce positive behaviour. Real-time acoustic analysis can also identify when a call is deteriorating and prompt the agent to adjust their tone in time to rescue the call and deliver a better customer experience.

By analysing every customer interaction, you will be able to identify and eliminate most if not all the sources of churn. You can arm your agents with the insight, preparation and coaching they need to be able to listen effectively and ensure every call delivers a positive outcome. If you care about keeping customers loyal it makes sense to put active listening at the heart of your loyalty strategy.

You can download a copy of the CallMiner Index report here.


[1] According to the Office of National Statistics there are 52,078,525 adults in the UK. A conservative estimate of the cost of acquiring a new customer across all the main sectors in the survey is £300 per person. This is based on the level of incentives applied to attract new customers and a conservative estimate of associated sales and marketing costs. The CallMiner Index identified that in the last 12 months 84% of adults have switched 1.91 times. This represents 43.745 million people. The total cost of churn is therefore at least £25.05 billion.

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