Business leaders can be like magpies when it comes to acquisition. They are drawn to shiny new customers and will go to any lengths to attract them.
Acquisition has become the great test of a company’s worth. It’s the question frantically asked of new hires: 'How effective are you at getting customers?' It’s also the metric discussed at all-hands meetings and the achievement most celebrated at the end of the workweek.
But while leaders are spending all of this attention on acquisition, they’re underestimating the importance of retaining customers once they’ve arrived. Retention, though not quite so shiny and exciting, is the real indicator of a company’s overall health and viability.
Leaders might believe that if they make a good enough first impression, the rest will take care of itself. But attrition is a fact of life. A new product is as shiny and fleeting as a new customer, and the allure soon fades.
The true cost of an acquisition obsession
There’s no denying the financial outlay of an acquisition-heavy strategy. Sure, it costs a lot to invest in campaigns and promotions. However, there’s also a hidden cost to this strategy.
The truth is that customers who are lured by too-good-to-be-true offers are at high risk of trading in your product when another offer comes along. Their relationship with your brand begins on an opportunistic note rather than with genuine interest or commitment.
While it costs you a huge amount to deliver services and products to these people, the returns don’t begin until someone converts. And the pressure is heaped on that fated individual because he or she has to recoup your investment for all the other trial customers who left.
Plus, there’s no guarantee that any of these hard-won customers will stick around. In most environments, there is a highly predictable point at which fatigue and boredom set in, and a customer is likely to wander off to shinier things. Leaders must become aware of this drop-off point — or 'churn cliff' — in order to change it.
Solving the retention puzzle
Retention is the most powerful ingredient in your customer experience strategy because it focuses on long-term happiness for both you and your customer.
In fact, if a financial services company spends just 5% more on retention, it’ll see a 25% increase in profits. This occurs because customers who feel loyal towards a company will gradually spend more.
This might sound easy, but putting the right retention strategy in place for your customers is hard work. It takes more than the showmanship of acquisition; you have to learn to understand and predict your customers so you can keep delighting them even after the initial buzz of a new product has dissipated.
5 ways to steer customers away from the churn cliff
Don’t let new customers have all the fun. Take care of existing patrons by giving them a reason to come away from the edge or, better yet, showing them such a good time that they don’t even notice the cliff.
1. Draw a map of your churn cliff. It’s important to understand when and where customers are leaving on their journey. Are they grabbing their welcome offer and disappearing straight away? Or do they stick around and explore the product but jump ship once the rush of discovering new things has faded? Investigate customers’ patterns of churning.
Dig in, dissect, and chart your customer journey so you can get ahead of disconnect and boredom.
2. Identify what's leading customers to the cliff. More important than the 'when' and 'where' is the 'why' of customers’ churning patterns. What are the common denominators that connect churned customers’ experiences? Identify these push factors, and you could discover the most effective way to keep those customers around.
Check your communications for missing 'what's in it for me' elements. For example, does your welcome message start with 'We're so proud to bring you ...'? That's a sure giveaway that it's all about you, not the customer. Also, avoid the rush to sell customers more. Relax, and let them enjoy the promises you already made. Appearing to grab for their wallets again too soon can sour your new customers into feeling like nothing more than notches on your acquisition belt.
3. Ask customers how they’re doing. You won’t know why customers leave unless you ask them. Monitor their experience by strategically plotting surveys and check-ins throughout onboarding and beyond.
Just remember, don’t bombard them — that approach can push customers away even quicker than neglect. Instead, choose where to position surveys wisely. You could send a single question after a customer has explored one of your features, for example. That way, your product is fresh in his or her mind.
4. Unite your team around retention goals. It takes a village to retain customers. Leading customers away from the churn cliff isn’t just the responsibility of customer service reps. It means observing and caring for customers through every touchpoint, email, phone call, and action.
Train your service team to empathize. Legendary among customer service stories is MBNA, with its approach of having "Think of yourself as the customer" painted above every door in its office. MBNA also created a culture of catching customer-facing team members doing something right instead of something wrong. To emulate this, share stories of satisfied customers as a result of your team members' actions.
5. Don’t give up on fallen customers. Just because consumers stepped off the churn cliff doesn't mean they are gone for good. Showing you still care, even after they’ve left, might be what it takes to turn them into loyal customers.
Make sure you have a well-timed and effective win-back program in place to attract the churners who might give you another shot. For instance, offer to reinstate certain benefits — missed content, a special, or a limited offer that expired. And above all, tell them they were missed!
You don’t have to say goodbye to the excitement of acquisition. But be sure to remember that acquisition is just the beginning, not the end. Once you have all those shiny new customers crowding into your product, then comes the most exciting part — to engage, develop, and keep surprising them as they become loyal to your brand.
Gayle Teskey is the CEO and founder of Membership Corporation of America, a consultative and marketing services organization with a specialization in enthusiast membership organizations and affinity marketing. Since 1993, Teskey’s hands-on approach to leadership has driven MCA to refine the best practices in consumer marketing, membership acquisition and retention, marketing technology, and creative development to meet the needs of today's membership communities.