In addition to knowing the number of lost customers, you need to know the reasons why customers left so you can drive change across the business. Without this information, you miss a massive opportunity to galvanize people into taking action.
Make the customer defection information come alive by hold a monthly “Customer Loss Review” meeting.
To prepare for this meeting, compile the data on customer defections so that you know which customers left.
Assign executives to make outbound calls to ten customers who have left during the month under review. They need to find out how and why the customer left. There’s nothing quite as compelling as a customer speaking to an executive who has accountability for making something happen. Customers are often so amazed by the effort that they consider trying the company again.
Shortly after the calls have been completed, convene a Customer Loss Review meeting.
- Discuss what’s happening with your customers and what is driving them away.
- Get alignment on how to prioritize the issues and assign accountability.
Perform a “Customer Loss Review” each month. Use subsequent meetings to track progress on resolving issues, continuing the process with executives calling customers who defected.
Hour for hour, the return on investment for this loss review process is one of the best in terms of driving action.
The process of establishing a reliable discussion for identifying customer defection issues and having executives constantly involved in speaking to defecting customers gets people moving more rapidly than any twenty presentations I’ve seen on customer satisfaction statistics. It’s real-time information, it’s operational, it’s relevant, and it puts people’s skin in the game.
Summary – Customer Loss Review Steps:
1. Compile the data on customer defections so that you know which customers left.
2. Assign executives to make outbound calls to ten customers who have left during the month under review.
3. Convene a Customer Loss Review meeting.
- Discuss what’s happening with your customers and what is driving them away.
- Get alignment on how to prioritize the issues and assign accountability.
4. Hold a “Customer Loss Review” each month and track progress on resolving the issues.
Jeanne – this is a valuable recommendation and a useful set of steps. If your readers are considering this effort, here are a set of questions for categorizing the results. Someone once told me these are called ‘Janusian questions’:
Based on this analysis,
1. what must we start doing?
2. what must we stop doing?
3. what must we continue to do?
4. what must we continue to do, but do differently?
I also recommend a 4th step, preceding your first one: prepare the executive team for openness and candor. Many clients I work with express an interest in similar programs, but the executives begin the project seeking a particular finding (e.g. “we really want to learn how we can gain efficiencies in Marketing,” or “for now, we’d like to keep HR out of this analysis.” Sometimes, there’s dismissiveness before uncovering the facts: “customers will always complain about product problems,” or “price is a common reason given for customer defection, but it’s rarely the real reason.” Possibly true, but prior to asking customers directly, it’s speculation.
Executives must go into the analysis prepared to learn insights that might not be what they want to hear, or what they expect to hear, but insistence on full candor is the only way that the effort will be of any value. Having preconceived notions, playing politics, or making certain departments sacrosanct will obstruct valuable discovery.
Hi Andrew!
Great feedback. I couldn’t agree more with your ideas to elevate this work. The informed ‘stop doing’ list to create capacity is a critical necessary action to enable the work forward.
what we also do is stage by stage a decision tree to answer what you suggest above- “What must we always do?” “What must we never do?”
Thanks so much!
Hi Jeanne
Not all customers lost are bad for the business. Some customers destroy value for the business and are quite simply better lost to competitors.
Shouldn’t that be a part of a Customer Loss Review as well?
Graham Hill
@grahamhill
Graham you are exactly right. Thanks for bringing this up!! Is there a practice that you employ that works well?
J
This is excellent!!! An incredibly important subject, and essential to revenue protection, that receives all too little coverage. And, as you know, Jill Griffin and I saw the need for bringing the risk, loss, and recovery stages of the customer life cycle more attention that we devoted an entire book, Customer WinBack, to it. Even so, making loss review and action an executive-level responsibility refreshingly amps up the focus, and in a very positive way. Done well, this can breed powerful new customer value and risk minimization programs.
Hi Jeanne
Whilst customer loss analysis is insightful, it is much more useful as part of an end-to-end customer lifecycle analysis. This looks at where customers come from, what they do whilst they are with us and where they go afterwards. For example, if an unprofitable customer defects to a particular competitor because our prices are higher than theirs, that doesn’t mean we should reduce our prices to compete. It might be better to reduce the billing errors that triggered the customers to call, running up internal costs and causing them to become unprofitable. The more we understand how value is created and destroyed during interactions with us, the better we can decide how to optimise value for us, and of course, for customers. And to decide where we should say “Goodbye” to unprofitable customers.
Graham Hill
@grahamhill