Churn continues to be a hot topic for all mobile service providers, regardless of their size or location. It’s easy to understand why, because customer churn could result in millions of lost revenues. As a result, new approaches to solving the churn problem tend to be at the forefront of most smart service provider investment strategies. These providers know that keeping even a small percentage of those customers normally lost to churn can have a noticeable impact on their businesses.
So, why do customers leave? Studies show that customer churn is a consequence of several contributing factors, each played out over a specific timeframe. However, all churn can be related, in some way, to a poor customer experience. More interesting is that it is not necessarily related to the actual delivered service, but rather, to the customer’s experience when engaging with the service provider directly.
One of the simplest models that I often talk through with service providers in order to explain the customer thought process comes from Bain & Company.
The article discusses the 4 key steps associated with a customer’s decision to leave their current service provider and, in so doing, create churn:
- Pre-churn – This is the initial interaction that opens up what is known as the “churn funnel.” Usually, it all starts with poorly set expectations during the sales process. For example, a service provider guarantees 4G coverage in the customer’s home location. The customer then discovers that their device appears to spend more time on 3G; the provider isn’t delivering the expected high-speed browsing experience.
- Root Cause – At this stage, interactions between the customer and service provider build frustration. Usually, this is a combination of poor service performance and, more significantly, poor customer care. If we take the example described in the Pre-churn phase—where a customer is not getting the experience that they were promised and, indeed, are paying for— eventually, the customer will call their service provider’s customer care line. This is really when the problems begin: In the majority of cases, customer care departments do not have the information and tools required to acknowledge an individual customer’s poor service experience, never mind the ability to take the proactive steps to resolve it.
- Tipping Point – This is one or more events that predispose a customer to churn. Again, it’s related to continued poor service performance or customer care. Most service providers offer no guaranteed resolution time for individual issues, especially when the core services being offered are deemed accessible. As a result, a customer will perceive that they are unimportant to their service provider and, with that, will begin to feel that their business is not valued.
- Final Trigger – This is a specific event that triggers the customer to actually leave. As a result of the previous steps, the customer’s decision to change service providers has already been made. The “tipping point” in each case is simply something like a more enticing offer from a competitor or even a friend’s recommendation to look for better service elsewhere.
Make sense? It’s easy to begin to understand the psychological process a customer goes through when they decide to churn. The Empirix approach to reducing service provider churn looks to attack steps 2 and 3, with particular focus on Root Cause outlined in step 2.
Offering a market-leading customer experience solution, Empirix can provide detailed analysis on every customer in a service provider’s customers base, summarized to a level that can be easily interpreted by customer care technical staff. Not only does this result in a reduction in the trouble tickets requiring resolution, but, more significantly, it improves the service provider’s ability to respond to individual customer issues— which in turn improves the customer experience, reducing the chance of churn.