Low Customer Churn Doesn't Mean Customers Are Happy

Providing great customer support is expensive and time-consuming. Many organizations are tempted to cut corners, particularly when their customer churn metrics are within the average for their industry. If customers aren’t defecting, the thinking among call center management goes, they must be happy. Right?

Not necessarily. Customers don’t always defect when they’re not content with a company. It’s not easy to switch banks, insurance companies, cell phone providers and cable companies, healthcare professionals and other vertical industries that have customers “entrenched.” This doesn’t mean you’re safe. Your unhappy customers may be badmouthing your organization in person and on social media, warning potential new customers away. They may be avoiding signing contracts for new services with you. They may be planning to switch to your competition as soon as they get a week off from work during which they can make phone calls and prepare paperwork.

“Entrenched” Customers are Increasingly Common

The banking is a good example of “entrenched” customers. Aware (News - Alert) of customer dissatisfaction, banks began expensive, complex programs to improve customer loyalty and satisfaction at the end of the last decade. Their efforts yielded some weird, seemingly conflicting results:

•         Customer satisfaction barely budged above what it was before the initiatives started; yet
•         Defections are at their lowest rates ever.

It seems more people are accepting being “stuck” with financial institutions they’d prefer not to do business with, according to Jim Marous, publisher of the Digital Banking Report.

“The research from J.D. Power shows that there have been only very minor incremental improvements in customer satisfaction over the past year, while also showing that ‘switching’ between financial services providers is at the lowest level on record,” he wrote. “Is this good news for the industry, or a source of ill-advised comfort given the industry forces at play?”

Are You Holding Customers Captive?

“Ill-advised comfort” is a good way to describe the situation. You’re essentially holding your customers captive to bad service because they don’t have the time or the energy to flee to a competitor. Chances are that many of these loyal/disloyal customers will vow to switch if they have one more bad customer experience, and call center management should be aware of this.

The moral of the story is not to use customer churn in the contact center as your only metric for whether customers are happy or not. Happy customers use more services, spend more money, make referrals and praise your business. Use more direct measures of customer satisfaction, such as the American Customer Satisfaction Index, or Net Promoter Scores.

After all, grudging customers may be better than no customers, but they’re not part of a recipe for long-term growth. 

Edited by Maurice Nagle