5 common reasons for customer churn (And what to do about them)
January 8, 2021
Customer churn, often referred to as customer disloyalty, refers to the customers who stop doing business with you, cancel your company’s product or service, or otherwise “leave the table.” Gone. Adios. Au revoir.
It can sometimes be more difficult to keep someone happy throughout their customer lifetime than to acquire new customers. It’s always a sad day when you lose a customer, and we all do our best to prevent it.
Identifying the reasons for customer attrition can be helpful for retaining current customers, even if you can’t retrieve those customers you already lost. That’s why, as part of the research in The Effortless Experience, our experts worked to boil down the reasons for customer churn to just five drivers of customer disloyalty.
These churn reasons are nearly universal, occurring across industries and a wide range of service channels, and you can use them to address customer disloyalty before it occurs.
Here are the most common customer cancellation reasons:
1. Repeat Contacts
Repeat contacts are one of the biggest reasons for customer churn. These contacts cause high damage tRepeat contacts, which occurs when your customers must reach out to customer support several times to resolve one issue, is one of the biggest incidents predicting churn. These contacts cause high damage to customer loyalty, since more of the customer’s time is lost dealing with it. Without first call resolution (FCR), the odds that the customer will churn increase significantly. The better you can do at FCR, the more customers you’ll keep.
The concern keeping most service executives up at night is “Why aren’t we resolving issues the first time customers contact us?” But the question that should be keeping them up at night is “What causes our customers to have to call us back?” The Effortless Experience, pg. 73
To solve this, think beyond the customer’s current problem, and consider any tangential issues as well. When you can solve today’s problem and tomorrow’s in a single phone call, you’ll be able to significantly reduce the number of repeat contacts and increase customer satisfaction.
2. Generic service
When was the last time you got on the phone with a service provider, only to be greeted with a rep who sounded like they were reading your last will & testament–or worse, a robot? Such interactions have happened to all of us, and they’re always irritating.
So irritating, in fact, that “generic service” was actually the second-biggest reason for customer churn in our research. Customers feel like a number, and so they leave. How do we fix it? This is where coaching your customers success teams comes in handy, especially with an arsenal of tools like Tethr’s at your back.
3. Repeating Information
Forcing your customers to repeat information is the next culprit on our list of customer churn drivers.
Repeating information, like your account number or reason for calling, is a lot of effort for the customer and it makes them feel like they aren’t being listened to–two things we already know won’t go over well.
It comes as no surprise, then, that repeating information is a big reason customers leave. Pivoting to a low-effort customer experience approach can help mitigate this phenomenon and transform how your customers interact with you.
4. Effort perception
How much effort do your customers perceive when they call you? This is a tricky one, but it comes down to how your agents handle their calls. If they’re using positive language, employing advocacy, and utilizing anchoring techniques, your customers are more likely to perceive the interaction as easy, or low-effort. If the opposite is true, and lots of negative language is used, that’s one of the big reasons your customer base leaves.
There are many ways to say the exact same thing to a customer, but some fuel disloyalty and others mitigate it. The Effortless Experience, pg. 26
Fifth on the list is that old classic, transfers–but with a modern twist. Transfers, in this day and age, include channel-switching. A transfer is not only being handed around to five different service representatives, but also when you tried to fix the problem on the website via chat, and they asked you to call them instead. Then, with the new rep, you have to start all over again. What a hassle, and a huge effort driver.
We believe that there is a lot of potential for growth in this area across the board, as technology makes it possible to provide a more synchronous experience for the customer throughout multiple channels. (Learn more about our thoughts on channel switching.)
And there you have it. Repeat contacts, generic service, repeating information, effort perception, and transfers are the five biggest reasons for customer churn (and therefore, revenue churn.) No matter where you are, what you sell, or what service channel you utilize, just a few careful course corrections in each of these five areas can help you gain long term customer loyalty and reduce churn.
Ready to take the next step in customer listening? We’ve got your back. Tethr’s platform delivers actionable insights, structured reporting, and highly transparent data like no one else on the market today.
We help you with predicting customer churn rates, plus use customer feedback on emerging trends to improve your service. Request a demo to get one step closer to understanding the true voice of your customers.