A survey conducted by customer loyalty and win-back experts at CustomerSat has identified several new insights into companies' recognition of customer defection rates.
According to Jill Griffin, a research partner with CustomerSat, the survey of 500 sales, marketing and corporate buying executives also observed a worrying lack of processes for identifying lost customers and winning them back.
Defection management lacking
Griffin described the management of customer defections in corporations today as "bad, and getting worse". Comparing this latest data against her original win-back study in 1999, there is a marked deterioration in policies, programmes and monitoring systems for customers who have defected.
With a very few exceptions, the majority of the firms surveyed reported critical deficiencies around customer risk, loss and win-back. For example:
- 71% of marketing and sales executives have no process for identifying customers who have defected;
- 46% do not know how many customers they lose each year;
- 68% of companies surveyed have no process for identifying customers at high risk of defection;
- 62% of companies have no process for determining which competitor gained customer that they lost;
- 60% of companies do not conduct interviews with lost customers;
- 77% of marketing and sales executives do not know how many lost customers they successfully win back each year.
Drivers of failure
Griffin said there are three main factors that have contributed to unattended customer databases in the past few years: a wave of mergers and acquisitions, an increase in customer resellers, and a proliferation of purchase channels.
"But that's not all. Disconnected customer information silos and an emphasis on acquisition over retention have haunted corporations for years. So, it's no surprise that firms are less well equipped today than ever before to manage customer loss," said Griffin.
There is a hopeful sign, however, according to Monica David, vice president of professional services at CustomerSat: "CustomerSat has been conducting web-based customer satisfaction and loyalty programmes since 1997 and has recently seen an increase in the number of businesses that are focusing on loyalty and, in effect, the retention of customers. What we are seeing is more attention to customer life cycle, interest in customer segments, and targeted action programmes for those customers."
According to David, a lifecycle emphasis provides more opportunity to identify potential defectors, understand the source of their dissatisfaction, and then take appropriate action. In addition, with online surveys the results are available in real-time and can be more easily accessed by those who need to know. As a result, customer feedback is slowly but surely being heard more quickly and clearly across the whole enterprise, and many executives are starting to take more action to ensure customer retention.