Trying to Reduce Churn? - Marketing Cannot Replace Real Customer Experience Management

Too often, customer management discourse is consumed with emphasis on the front-line.

Vendors sell products that enable better communication between the organization’s agents and its customers. Companies employ social and digital marketing strategies to influence dialogue about their brands.

They see the customer experience as a mere "benchmark," as something that can be quickly bettered or worsened with changes at the surface level.

In reality, customer experience is a mindset, not a measure. Customers might welcome increases in Twitter activity, improvements in average handle time and more-user-friendly IVR systems with open arms, but if the company is not positioned to improve the actual communications and engagements that are facilitated by these enhancements, the customer experience has not truly benefited.

And in a competitive market environment with the threat of customer churn lingering as a key challenge, organizations can no longer afford to ignore the substance of customer experience management.

"One of the most common faults is to concentrate only on first-line activities and to believe that good marketing communication can replace or supplement real customer experience,"explains Marek Grabowski, sales and customer strategy director at Orange-TP Group and a featured speaker at the 2011 IQPC Customer Segmentation & Churn Management event. "[When increasing customer retention], the most important [strategy] is to engage all company functions: marketing, sales, customer care, finance and network."

In combating churn, Grabowski adds, "goals to minimize churn should be reflected in top management MBOs and fairly distributed between all the functions."

Strategies for retaining customers and minimizing churn need to take place at every step of the customer life cycle. As economic concerns drive customers to remain very focused on the value and quality of their purchases, higher hurdles exist to solidifying customer loyalty.

New customers who engage with brand, more than ever, have reason to be utilitarian in their pursuits. They buy the products and subscribe to the services that make sense, but they are not married to the brands, and if the value and/or quality declines, they have no problem leaving.

Case-in-point: the recent trend of customers switching to credit unions and online banks due to frustration with major financial institutions, a particularly-noteworthy trend given the history of customer inertia in the banking space.

As a result of this pressure, it is no longer sufficient to just focus on the retention aspect of customer engagement. Organizations must understand and strengthen their relationships the second they begin.

"It is important to embed churn considerations even at the early stage of customer lifecycle, in order to increase quality of acquisition of new customers," explains Grabowski.

A necessary element of churn management, which is in turn a necessary business function Grabowski calls one of the most meaningful ways to increase the customer base and generate satisfactory revenue, this emphasis on managing every aspect of the customer experience requires a system-wide subscription to customer experience as a philosophy.

Gaps in the experience simply cannot exist. If marketing says something that is not backed up by the product quality or customer service team, the relationship suffers. If customers continually issue feedback that is never realized in future iterations of the product, relationships suffer. Front-line customer management improvements better organizations’ ability to interact with customers, promote the brand and capture information, but only a system-wide experience focus can put all the pieces together and truly transform the customer experience.

If this is done in a way that is effective and evident to the customer, the truest version of loyalty will emerge.

"The only way to engender loyalty is to improve customer experience through delivering an unique quality recognized in every stage of customer lifecycle. This cannot happen only through redefining procedures and launching several performance-oriented projects inside the organization," notes Grabowski.

What should those projects entail? In his interview with IQPC, Grabowski highlights two fundamental elements of a holistic customer experience management strategy:

Segmentation: "Proper customer segmentation must take into consideration both churn probability and monthly expenses per customer (Value-at-Risk matrix) and then, each customer segment should be targeted with dedicated, tailored product offer. Such a varied approach cannot exist without thought-out sales channels strategy, that assigns specific channels to customers from each segment. Consequently, customers with highest VaR are served by best agents.

Organization/Employee Engagement: The key is to concentrate on your employees, both first line and back-office workers. As your employees have the best knowledge about your company weaknesses in everyday contacts with customers or irritating gaps in internal procedures, you have to take the advantage of their engagement, experience and innovative solutions.

Notice that cutting-edge call center technology, new social media platforms and "much ado about nothing" call center benchmarks are not driving forces in true customer experience transformation. Like marketing, these elements can improve or assist in the communicative nature of the brand-customer relationship, but they cannot, in and of themselves, actually drive meaningful change in the customer experience.

Customer Segmentation & Churn Management Event: Join Marek Grabowski and many other elite-level speakers at the 2011 Customer Segmentation & Churn event. Your time to register is running out—do not miss this opportunity. Agenda, speakers and pricing here!