You’ve heard the axiom that acquiring a new customer costs much more — between five and 25 times more, depending on which study you read — than keeping an existing relationship. And yet many organizations continue to devote massive resources to customer acquisition, while viewing retention as more of a “nice to have.”
Is customer churn that big of a problem? According to a recent study, the answer is “yes” … but much of it is avoidable.
In a survey of U.S. consumers by Callminer, 85 percent of respondents said they have switched suppliers in at least one industry over the last year, and customer churn is estimated to cost U.S. businesses $136 billion annually. One of the industries with the highest churn rates is banking, with 20 percent of respondents stating they have switched banks in the last 12 months.
The study goes on to look at some of the reasons customers choose to stay with their suppliers, and we see a clear connection between these best practices and customer master data management (MDM).
Why Customer Retention Matters
Improving customer relationships can benefit an organization’s bottom line in more ways than one. Forrester reports that increasing customer retention by just 5 percent can increase profits by up to 95 percent, and a brand’s loyal customers spend about 30 percent more than newly acquired ones. Loyal customers can also become powerful evangelists who can amplify your brand message and grow your brand awareness.
Customers Want Better Call Center Experiences
As part of the Callminer study, surveyors asked consumers how suppliers can deliver services to maintain their loyalty, and 62 percent responded with “Make sure call center staff are aware of your service history so you don’t have to explain multiple times.”
We’ve all experienced the frustration of calling a customer service center and, after verifying who you are, having to tell the service rep which products you have. Then maybe the rep has to refer you to a supervisor or someone in a different department … who then has to ask you again which products you have. If you’ve ever thought about switching to another provider based solely on the customer call center experience, you’re not alone.
When we work with clients to improve customer loyalty, one of the first things we look at is their customer data management — what data they have, how current and accurate it is, where it’s located, and how they make it accessible to customer-facing staff. By creating a single source of truth for the most current customer information and making it available to service reps, businesses can create those streamlined call center experiences that keep customers coming back.
Customers Want Robust Self-Service
In response to the same question, 43 percent of survey respondents said they were more likely to be loyal if a company “provide[s] a self-service facility that allows you to create your own service requests online so that you can avoid call centers or help desks.”
We live in the age of empowered consumers who want to report service issues themselves rather than telling their stories to a call center representative. Whether they choose to do that through webforms, chat, text, social media, or email, suppliers need to integrate those channels with customer MDM platforms so that they can offer a cohesive, seamless experience and facilitate efficient resolution.
These are just two examples of situations in which quality customer care — the kind that keeps customers coming back — relies on sound data practices. A third area is data privacy, which is concerning more consumers and influencing more buying decisions … and which also depends on mindful customer MDM. As consumers become more willing to use their dollars in rewarding or punishing providers, more organizations will realize that data management isn’t just about technology — it’s about your customers, and an investment in customer MDM is an investment in the future of your company.
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