The wrong value discipline. You might be providing a customer intimate style of service. However, customers who want quick delivery and low prices are unlikely to be satisfied with the level of service you can provide in this area. Customers are unlikely to have the same value discipline requirements for all the products and services they use. For instance, one customer might prefer a customer intimacy type of supplier to do their automobile servicing but would prefer an efficient and inexpensive supplier to service their stationery orders.
A change in circumstances. This is a very common cause of customer churn. Your customer might simply move out of your area. They may get a new job with a much bigger salary and want to trade up to a more exclusive supplier. Maybe they need to make economies and your product is one they can live without.
Bad experience. Usually, one bad experience won't make us go elsewhere, especially if the relationship is well established. Continued bad experiences will almost certainly lead to customer churn. Bad experiences can include unkept promises, phone calls not returned, poor quality, brusque treatment, etc. It is important to monitor complaints from customers to measure the trends in bad experiences, although the behavior of customers in this respect varies from one culture to another. For instance, in the United Kingdom, it is uncommon for people to complain. They just walk.
A better offer. This is where your competitors have you beat. These days it is easy for companies in some industries to leap-frog each other in the services they provide and, equally, it is easy for customers to move freely from one supplier to another. A good example of this is the prepay mobile phone business. When it first came out, it was attractive because there was no fixed contract, but it placed restrictions on the minimum number of calls you had to make in any one period, say, $50 per quarter. As more vendors entered this market the restriction was driven down and down until it got to the stage where you only have to make one call in six months!
So how can you figure out which of your customers are active, which are not, and which you are at the most risk of losing? What you need is customer insight!
The wrong value discipline. You might be providing a customer intimate style of service. However, customers who want quick delivery and low prices are unlikely to be satisfied with the level of service you can provide in this area. Customers are unlikely to have the same value discipline requirements for all the products and services they use. For instance, one customer might prefer a customer intimacy type of supplier to do their automobile servicing but would prefer an efficient and inexpensive supplier to service their stationery orders.
A change in circumstances. This is a very common cause of customer churn. Your customer might simply move out of your area. They may get a new job with a much bigger salary and want to trade up to a more exclusive supplier. Maybe they need to make economies and your product is one they can live without.
Bad experience. Usually, one bad experience won't make us go elsewhere, especially if the relationship is well established. Continued bad experiences will almost certainly lead to customer churn. Bad experiences can include unkept promises, phone calls not returned, poor quality, brusque treatment, etc. It is important to monitor complaints from customers to measure the trends in bad experiences, although the behavior of customers in this respect varies from one culture to another. For instance, in the United Kingdom, it is uncommon for people to complain. They just walk.
A better offer. This is where your competitors have you beat. These days it is easy for companies in some industries to leap-frog each other in the services they provide and, equally, it is easy for customers to move freely from one supplier to another. A good example of this is the prepay mobile phone business. When it first came out, it was attractive because there was no fixed contract, but it placed restrictions on the minimum number of calls you had to make in any one period, say, $50 per quarter. As more vendors entered this market the restriction was driven down and down until it got to the stage where you only have to make one call in six months!
So how can you figure out which of your customers are active, which are not, and which you are at the most risk of losing? What you need is customer insight!