How Talking to Past and Present Customers Reduces Future Churn

Reducing churn and retaining a solid base of loyal customers is a constant challenge for brands, which is why setting out to reduce that churn must likewise be a constant company goal. I outlined a variety of churn reduction strategies in my recent point of view document on the subject, but there’s a two-pronged approach that merits an especially close look: talking to past and present customers to reduce future churn.

Talking to Past Customers

You can’t always save customers who have already left your brand for what they believe are greener pastures, but talking to these individuals can yield valuable intel that might save some of your current customer base from doing the same. This methodology is often referred to as win/loss research or Attrition Customer Experience (CX), and its findings are invaluable. Talking to past customers can help brands understand what parts of their experience might be driving customers away, as well as better tell which churn might be controllable or uncontrollable.

Win/loss research also affords brands an opportunity to scout out the competition. Past customers usually aren’t shy about sharing which company they switched to and why they think that competitor suits their needs better. While that criticism might sting a bit, it’s a great way to learn about why customers and prospects choose other companies over you. Thus, talking to customers who’ve already gone out the door is rarely a waste of time.

Talking to Current Customers

Once you’ve discussed your brand experience with past customers, it’s important to incorporate those learnings into saving current, at-risk customers from leaving your organization. Arming yourself with context from past customers can go a long way toward reshaping your approach with current customers, listening to their concerns, and understanding why they may feel one way or another about their own journeys with your brand.

Having a powerful Experience Improvement (XI) platform is a priority to take here too. Tools like sentiment analysis can provide brands powerful intelligence that they can compare with feedback from past customers. Combining all of this information can help brands know not just which touchpoints need improvement, but also how best to meaningfully change those areas to retain current business.

Working Upstream

Combining feedback from past and present customers is one of the best ways that brands can prevent future churn. Organizations can rely on this intelligence to be more proactive about saving at-risk customers, identifying and solving broken touchpoints and other experience issues before they result in a loss. Though this process is work intensive and may not save all of your at-risk relationships, the brands that dedicate themselves to soliciting this feedback from all their customers will come away with less churn, and thus more success, than their peers.

Interested in learning more about reducing customer churn? Click here to read my full-length point of view on the subject and to learn additional strategies for reducing churn at your organization.

The No. 1 Enemy of Dealer Customer Retention!

I discovered a surprising truth after three years as Customer Retention Manager for a large volume dealer in Houston. There is a hidden enemy that must be addressed before any customer retention initiatives can be achieved. It is the no. 1 enemy of client retention, and yet most practitioners fail to recognize it, let alone address it.

It’s the reason why many dealers are left with small, gradual changes in their retention efforts that pale in contrast to the huge budgets and time spent acquiring new customers. But by keeping an existing customer, who is apt to buy again, dealers could be spending many times less to obtain the same amount new vehicle sales.  As proof of this, the 2018 Cox Automotive Service Study found that buyers who returned to the selling dealer for service in the past 12 months were 74% more likely to return to that selling dealer for their next vehicle purchase. Returning service customers were 74% more likely to buy their next vehicle from that same selling store! Those who didn’t return for service in the past 12 months were only 35% more likely to return for their next purchase.  That should gain the attention of most dealer GM’s, who generally come from the sales side of the business.

And speaking of sold customers returning for their next vehicle purchase, that same Cox study revealed a negative by-product of today’s obsession with “conquesting” sales from other dealers.  “Not a convenience location” (no. 5 reason in the 2015 survey) moved up to the second most given reason for new vehicle purchasers not returning to the dealer where they purchased.  So, there is a very good chance that many of today’s conquest vehicle sales will not return to that original dealer for service because they live out of the area where the selling dealer is located.

So, what is the number 1 enemy of retail auto customer retention?

No, the number 1 enemy isn’t a limited budget. Although a sufficient budget is necessary, it’s not the real enemy of a successful retention strategy.

Lack of buy-in from the dealer and management? It’s important, but the reason store leadership doesn’t get solidly behind a retention push is directly tied to the no. 1 enemy.

Silos are a real problem. You must address them, and it is not simple to do so, but they are not the real problem.

Competing initiatives are often cited as a reason for lack of meaningful progress in addressing customer retention. But these agendas usually directly support the number 1 enemy of retention. And that focus distracts management from seriously directing resources in the support of retention.

The lack of a robust technical infrastructure? Yes, retention can be aided with better technology, but it is not the true obstacle to retention.

Lack of training? It certainly helps to have trained employees, but if the average auto retailer really believed in retaining existing customers as a primary strategy, they would find the budget and time to train their workers. HINT: All the training, technology and “knowledge” in the world is not going to thoroughly address the number 1 enemy of retaining customers!

Lack of support from the OEM? No, automakers are offering more and more mega cash incentives for customer retention, as I covered in this post for the MaritzCX Cafe blog.

It’s transactionalism, an all-consuming focus by dealers on the “deal” or the “RO” is the number 1 enemy of a successful customer retention program. And that obsession consumes both the larger part of store budgets as well as the time spent by the staff.So, what is the number 1 enemy of a successful customer retention transformation?

Transactionalism describes the decades old, deeply ingrained tradition of placing the transaction front and center as the primary strategy for most auto retailers. And while the transaction has always been the primary focus of showroom sales, it’s just as prevalent these days in the service lane. Customer facing employees are paid to maximize and close “deals/ROs”, and because of that, retaining customers takes a back seat.

I’ve heard it said time and time again that there is little customer loyalty these days in retail auto. But how would we know? If the industry is so intoxicated with the transaction, and much less so with retaining the customer, it’s no wonder customer loyalty is perceived as dead. I spoke directly to this reality in a past MaritzCX Cafe post titled Retail Auto: Client Loyalty is not Dead, But Client Follow-Up is!

But there’s a glimmer of hope on the horizon.  Early last year, one of the largest automakers launched the first ever OEM customer rewards program and another major manufacturer followed soon thereafter.  And there is strong evidence that other OEMs are pivoting more and more towards implementing strategies that handsomely reward dealers and their associates for focusing on  retention.

That’s great, but the big question left is, how are the OEMs going to move the needle of retention forward, when most of the dealers are still consumed with “transaction?”  This is all about changing behavior at the dealership, which is the toughest challenge of all.

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