Editor’s note: Howard Lax is principal director of customer experience consulting at CX and marketing research firm Confirmit.
Customer loss is somewhat inevitable. Customers no longer need certain goods or services, they move out of your market footprint, etc. However, most customer “leakage” is defection, meaning your now former customers are buying what they need from someone else.
Some businesses may feel the need to choose whether to focus on customer acquisition or customer retention, but the reality is, every business must pursue both paths for viability and growth. But where to begin? For one, start by playing defense – find out what is disappointing your customers, causing poor customer experiences and weakened relationships. It’s critical to recognize that customers are being lost because of these weaknesses, and then make it your top priority to fix them. I recommend a three-part plan to fix your leaky bucket:
- Satisfice: Finding the minimally acceptable performance threshold is a necessary first step to stop the leakage. Identify the drivers of disappointment, your vulnerabilities and determine the minimum performance standards required by customers. Delivering against a minimalist standard may not be a noble, lofty goal that earns customer raves, but it accomplishes the critical purpose of reducing customer disappointment.
- Remediate: Don’t just respond to customers who send a scathing complaint or ask to be contacted – use the closed-loop feedback process in your Voice of Customer (VOC) program to address customer problems. If/when a customer expresses a problem or their assessment of your performance falls below even the satisficing level, it’s time to intervene. Don’t let the issue fester; take steps to mitigate your risks – contact the customer; hear their concerns; express your concern and empathy; take responsibility and palliative action (as appropriate) to defuse the situation.
- Improve: Now it’s time to raise the bar and deliver a stronger performance. Change your goals from an “average of X” to the “share of customers who fall below (or meet) X.” Averages may look good, but customers don’t experience the average; they experience the variance. One way to skinny-down the performance failures is to augment your VOC process with employee feedback specifically designed to solve issues before they happen instead of fixing wounds after the fact.
Use VOC/E to institutionalize a process of soliciting employee feedback to solve issues and avoid future problems. Yes, continue to close the loop and heal customer wounds. But once multiple customers incur the same wound, activate VOC/E to collect direct feedback from frontline employees involved in the problem area regarding how to put in place a permanent change to avoid the same problem occurring again and again.
Every bucket will spring leaks – meaning, there will always be performance failures. Rising customer expectations and competitive pressures will breed disappointment. So be prepared with your patching strategy – satisfice, remediate and improve – to reduce churn.