The idea that your customer is your greatest asset is not a novel concept, but in today’s post-pandemic era it’s an important one as businesses are undergoing bold customer experience (CX) transformations to put customers at the center of everything they do. Undoubtedly, the COVID pandemic has caused dramatic changes in consumer behavior. Alongside this shift, heightened “churn concern” ensued, causing companies to prioritize data-informed customer retention strategies.
The critical importance of the customer lifetime value on a company’s bottom line is also why many are embracing technologies such as artificial intelligence (AI) to optimize their CX strategies. AI-infused CRM is helping companies reach new levels of performance and predictability and improved customer lifetime value, enabling companies to focus on customer retention and experience.
The High Cost of Churn and Investing in Customer Success
In our 2021 CRM and Sales Impact Report, 57% of sales leaders surveyed said they were having trouble predicting when customers would churn, and 56% reported their customer churn has increased in the last 12 months. Upon reflection, 48% also reported not knowing why customers churned. This churn costs mid-market companies each an average of $5.5 million a year. The gap in data and lack of insight prevents teams, and business leadership, from acquiring the intelligence they need to make both strategic and tactical decisions.
The high cost of churn is compounding and exponential. In today’s current era of economic uncertainty, companies can’t afford this kind of loss, both from a finance and a marketing standpoint due to the long-term effects that churn has on brand perception and loyalty.
According to Gartner, “crises like an economic recession should logically drive organizations to focus on customer retention since churn risk increases. However, the 2020 Tech Marketing Benchmarks survey did not find this to be the case among respondents. In fact, only 43% had increased resources toward customer retention and expansion. Not making this shift is a missed opportunity for marketing, which can serve as a strategic business partner, to help protect and generate revenue growth by driving expansion within current accounts.”
With customers on the move, combating churn is a key tenet in the overarching strategy to deliver exceptional CX to ingratiate customers for life.
Modernizing Traditional CRM to Elevate Customer Experience Initiatives
For years, companies have relied on their CRM systems to provide insights on customers and prospects to enable organizations to hone their CX strategies. However, the reality is traditional CRM systems—which should be the lynchpin of any CX strategy—aren’t fit-for-purpose and are holding companies back.
Our own survey reveals the difficulties that arise when companies are unable to extract the full value from traditional CRM systems. One-third reported that incomplete data was a major source of frustration, and one-half reported being unable to access customer data, in a single view, across all functions or parts of the business. Without access to a single and complete source of truth, companies cannot optimize CX nor manage expectations required to minimize churn.
This is unquestionably devastating to sales efforts but also tormenting to marketers who rely on CRM systems to build winning customer loyalty and retention programs. Increased customer retention is a key benefit to CX transformation. Companies that improve the accuracy and completeness of their customer data stand to improve retention and increase revenue. A lack of customer clarity may be why 88% in our survey said they expect to increase their use of AI to augment more of their existing CRM processes within the next 24 months. To achieve these benefits, being equipped with CX capabilities backed by modern technologies will give companies a tremendous competitive advantage.
Every Downturn Leads to a Recovery
In times of economic uncertainty, customer acquisition is more challenging and places greater priority on customer retention. Recurring customers are essential for business success because they give you a steady source of income when they return to make later purchases. More important, they become brand ambassadors, spreading the word about your business and encouraging others to choose you as well.
We entered the pandemic as a marketing collective experiencing great churn concern—and for good reason. But we are persevering, having advanced the art and science of CX through next-level data-driven customer retention strategies.