Actionable Customer Feedback Can Reduce Defections

Do you wonder why customers leave you for a competitor—and what you can do about it?

Customer retention is one of the primary reasons why Forbes Global 2000 companies embrace a customer feedback solution. After all, unless you know what customers are thinking and feeling, you can't pinpoint problems—or take action to fix them. Note the emphasis on action. Customer intelligence should not only tell you what's wrong but also guide you toward a cure. It must be actionable.

Here's a good example. In 2005, a large West Coast auto insurer was struggling with an unacceptably high customer turnover rate. The churn was aggravated by several internal changes, including the introduction of a new CRM system. The company's support reps' unfamiliarity with the new system caused temporary delays and busy signals, which increased defections and took a toll on renewals and new-customer acquisition.

As part of a newly launched quality initiative championed by its then-CEO, the insurer was determined to integrate the Voice of the Customer into all key customer touch-points. The company contacted us at CustomerSat, and a cross-functional team was formed, representing the insurer's sales, claims, service, product management and even actuarial departments. The team members mapped out the customer lifecycle and customer lifetime value, established performance objectives and then identified key touch-points and the overriding issue(s) associated with each. Among their findings:

• Prospective buyers' main concern was finding the right policy at the right price.
• New customers wanted to feel great about their buying decision.
• Support callers wanted their questions answered and issues resolved quickly, preferably on first contact.
• Policyholders wanted claims handled quickly.
• Defectors (former customers) wanted the company to notice that they left.

Working closely with our professional services consultants, we formulated a series of questions to ask at each touch-point. For example, defectors would be asked approximately 10 questions, including,

• Where did you take your insurance business? Why?
• What could we have done to keep you?
• Would you consider doing business with us again someday?
• May we contact you again in the future with a competitive quote?

In January 2006, CustomerSat launched a series of surveys for this client to measure customers' overall satisfaction, loyalty and attributes of the customer experience that affect loyalty. Offered in both English and Spanish, all surveys also probed whether the customer intended to renew and whether customers would recommend the insurer to friends.

Wealth of data
Our analysis of survey responses has revealed a wealth of actionable data. For example, we discovered that customers submitting claims found it difficult to learn the status of their claims. Others were displeased by how long it took telephone reps to handle routine (non-claim) service, like adding a new driver or vehicle. These issues went on the insurer's list of planned improvements, and customers were informed of changes as they were made.

Action alerts and cases are automatically triggered by survey responses, both positive and negative. For example, complaints and non-renewals trigger cases. So do requests for rate quotes. Separate response teams and strategies have been created around three distinct customer loyalty segments: enthusiastic fans, the passively satisfied and those at risk of defecting to a competitor.

This focus on the customer, plus the insurer's quality initiatives, are driving an ongoing series of process improvements. For example, the company now reaches out proactively to both happy and unhappy policyholders. Customers who renew receive an email thanking them and assuring them they are valued. The company immediately contacts unhappy customers—those who gave the company a score of 6 or less (on a scale of one to 10)—with the message, "We're sorry you're not happy. You're important to us. We're working on this problem and will let you know when it's fixed." Certified agents reach out through phone calls, email and a letter over a 10-day period. They have found that different folks prefer different channels and that the postal mail has been especially effective in reversing and "re-charging" the relationship with the discontented.

In just six months, the company's retention team proactively contacted more than 30,000 at-risk customers. While the exact number of "saves" is confidential, this single action retained millions of dollars in revenue over that brief period. As a bonus, it reduced the number of new customers needed just to replace defectors. In the hyper-competitive insurance field, that's a substantial chunk of revenue.

Customer care is crucial. A significant share of this company's revenue enters through its support organization through such activities as up-sells, renewals, additional policies and new services. The new responsiveness and proactive behavior have helped spur impressive gains in loyalty, satisfaction and revenue. A few specific examples:

• Defections among detractors—those on the brink of leaving—declined 15 percent in six months.
• Eighty percent of support contacts are now resolved on first contact.
• Seventeen percent of customers said yes when offered a review of their current coverage and any overlooked discounts—a best practice.
• Twenty-one percent of customers opted in when asked if they'd like a quote for other types of insurance. Conversion rate: more than 30 percent.
• Thirty-seven percent requested more information when informed about automatic payment options. This is noteworthy because, for a variety of reasons, policyholders who use automatic payment are three times more loyal.

By gathering actionable customer feedback at all key touch-points, this insurer has been able to identify and implement process improvements that continue to make measurable improvements in retention, renewals, referrals and new-customer conversion. The biggest surprise, an executive shared with me, is "the substantial lift you get when you proactively reach out to a customer who's unhappy, fix their problem and leave them with a positive experience." Research suggests these customers become even more loyal than customers who never had a problem in the first place. "Our experience definitely confirms that," the executive agreed. "Even bottom-tier detractors, the ones on the brink of walking away, show dramatic increases in loyalty."

Joan Gurasich is vice president, Marketing, at CustomerSat. She has been in marketing and product management since 1980, having held senior marketing positions at Vitria, eGain, Vantive and Decisive Technologies. Gurasich led product management, alliance, education, support and IT teams at Siemens, IBM and ROLM.