Thinking About Customer Defection Is Mis-direction

The recent newsletter from customer management magazine indicates that the of rate customer churn is up in a number of industries.

This particular study cite the following three key reasons for customer defection that are consistent across industries :

• Not being recognized as a valuable customer.
  
• Unhelpful staff.
  
• Ineffective call centers

One of the main conclusions is that companies retention strategies need to improve to deal with the phenomenon.

I've got another suggestion—give customers a reason to return. If you want to be customer-centric, start thinking about problems from the customers' perspective. We are all customers and I doubt that one of us wants to be retained.

Certainly the key reasons mentioned above are important to customers but there are some other considerations at work. A big one is the way companies fight over market share. In many industries it is tantamount to bidding for customers business.

As customers we see a world of abundance and overwhelming choice. Under these circumstances when a business routinely drops its price or offers incentives, it signals that their offering is functionally indistinguishable from the competition. This encourages customers to shop and shop around for the best trade-off between price and convenience—and, to do so every time. If it weren't for convenience, the hold a business has on a customer would be even more tenuous.

I suggest a realignment in thinking about customer defections or churn and trying to patch together a strategy to retain customers. The above scenario describes a self-inflicted wound.

Don't think about acquiring customers. Think about attracting them to your offering. What attracts customers? The hope of a better customer experience. Don't focus on retention. Work at shifting the focus of the buyer-seller relationship from things to the inherent value of the relationship. Think, how you can get customers to see value in coming back time and time again. Think about building customer equity so they put up with snafus, so they are less focused on price and value the relationship.

Companies who put their energies into this approach dramatically increase the number of repeat customers. They also create advocates. It's about shifting the focus from things the company wants (acquire and retain customers) to what the customer wants (a valued experience and a valuable relationship).