Cut Churn With Low-Cost Customer Retention Automation

No More Churn! Create Your Own Low-Cost Customer Retention Automation

Post summary:

  • A 2% increase in retention has the same impact as a 10% cut in costs
  • A surprising proportion of churning customers can be retained with a single positive message
  • Simple automation is fertile ground for competing for fickle customers!

The rationale for customer retention comes down to one simple equation: customers = income.

If you’re on board with that, let’s get started. 

There are plenty of ways to drive customer loyalty. These range from improving customer service across the board to refining your product or updating your brand. 

But that’s not what we’re here for today. 

We’re going to look at some simple, low-cost and (most importantly) automated strategies that the contact center can lead on. 

First some definitions. (Skip ahead if you’re already an expert!)

What is customer retention?

Customer retention is a business’s ability to keep customers coming back. For a subscription business that means renewals. For a retail business it usually means being the consistent 1st choice for customers. 

You can calculate customer retention like this:

Customer retention automation equation

For a subscription business, that’s pretty simple; you either have a customer or your don’t. 

For a business that doesn’t lock customers into a contract, the calculation is more nuanced. These kinds of businesses usually need to take a longer view of their customer relationships. 

For example, a ‘retained’ customer might be someone who makes a new purchase every two months. 

What is customer retention automation?

Customer retention automation is exactly what it sounds like; you identify core retention activities and remove the manual parts. 

There’s no doubt that increased retention is a good thing. But it can also be costly and time-consuming to manage. That prevents businesses from committing to it as whole-heartedly as they’d like. 

Which is where automation enters the picture.

One example we’ll look at in more detail below is responding to negative feedback. An automated apology email can go a long way to undoing some of the damage. 

(An automated outbound call would be even better if you can swing it! Obviously, only scheduling and placing the call are automatic – the interaction is still handled by an agent. For now…)

The manual part of customer retention automation… 

Yes, there is some manual work you’ll need to do first. This is the strategy stage. 

Step 1, segmentation – who are you targeting?

You’ll need to know who your automated retention processes are going to target. There are generally two reasons to target a customer:

  • They’re a ‘flight risk’ customer
  • They’re a high-value customer

Flight risk customers:

Anyone who you think could stop doing business with you. 

They may have given strong negative feedback or made a formal complaint. Alternatively, they could simply be at a point in the customer life cycle where your customers often depart. 

For example, businesses that offer strong first-year subscription discounts frequently lose customers in year two when the prices rise. 

High-value customers:

Anyone who has particular value as a customer, financial or otherwise.

Customer Lifetime Value (CLV) is a good way to determine this – it doesn’t get much simpler than the expectation that this customer will keep spending money. 

Customers who strongly promote your brand are also especially important. (You might look at Net Promoter Score for that info.) 

In a B2B setting, prestige brands and individuals in very senior positions are also factors. 

But, bear in mind:

As your customer retention gets more automated – and therefore cheaper – the bar for which customers are ‘worth’ focusing on gets lower and lower. 

Step 2, taking action – how are you reaching out?

If step 1 deals with the trigger, step 2 is about your response. 

You can sum it in with three questions:

  • Why are these customers leaving you?
  • What has prompted them to leave other businesses before?
  • What simple action will encourage them to stay?

Why do customers stop buying from businesses?

There are a few ways you can try to answer this question. Essentially, you’re going to need to ask them. 

Exit surveys are useful for any business and will probably be the best guide. 

It’s also worth getting customer feedback about the factors that have driven them away from businesses in the past – are you guilty of any of those same mistakes?

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How can you encourage customers to stay?

This is another question you could put to customers – but don’t expect your findings to be quite as useful. 

(As a general rule, customers are better at reflecting on how past experiences affected them then how future experiences might affect them.) 

The most useful resource is your own experience. What are those friction points that you can remove?

There may be some trial and error involved in this stage but it’s not a problem – remember, we’re only interested in low-cost automated actions. 

#1 Apologize for your mistakes

If you’re concerned about complaints and negative feedback, an apology is the simplest way to undo the damage. 

Around a third of customers are satisfied with some kind of compensation or gift. But a good apology takes that number up to 74%.

An automated email or SMS does the job. If you can swing a phone call, even better. 

#2 Reach out to customers at the end of contracts

Sometimes your competitors can offer a better price. (They might even offer a better product  but let’s not dwell on that!)

The enormous advantage you have over them is an existing relationship with the customer. 

About a third of consumers who ended a relationship with a business last year did so because personalization was lacking

Even something as simple as sending a reactivation link could increase retention enormously. Customers want the easiest option. If continuing to do business with you is as simple as clicking a link, that’s what they’ll do. 

Essentially, a little contact goes a long way; the easiest way to make a sale is to ask for a sale. 

Send offers and discounts

Yes, it’s the most time-honoured retention strategy under the sun. Yes, it still works. It’s relevant here for two reasons: 

  • First, it’s an effective strategy for both retaining dissatisfied and high-value customers
  • Second, it’s pretty easy to automate. 

About half of loyal customers expect some kind of reward or their loyalty. In return, they spend 67% more than new customers

The *automated* part of customer retention automation

Here’s what you should know by this point:

  • Why specific customer segments churn
  • Who you can target with retention activity 
  • What actions you can take to improve retention
    • BONUS – what level of success you need to achieve for the activity to pay off

Here’s what you may not know:

  • *How* to automate this activity

How to automate anything!

There are two steps to automating anything in the contact center. 

Step 1 is connecting up all of yours systems – things like your call center CRM, Cloud Helpdesk Software and IVR.  

Why connect systems? 

Think about our earlier example – apologizing for bad service with an SMS or email.

That involves data from a survey or complaints system moving to the CRM and then triggering an SMS. 

Any worthwhile retention activities will cross at least two systems. But if you’re relying on a human being to handle that transit between systems… well that’s not really automated, is it?

The most reliable way to connect complex systems is with API integration. APIs are like trains running data between your systems – and they’re a vital first step for any serious automation project. 

Step 2 is actually creating the automated process. Traditionally, that’s been the job of a dev team, either in-house or outsourced. 

But there are several problems with that approach: 

  • It tends to be very expensive
  • You’ll have to explain the project to the dev team, who won’t be familiar with your systems or your needs
  • The dev team won’t be available right away; you’ll have to wait
  • Actually building the process will take weeks – or months!
  • If it doesn’t turn out as you’d hoped… too bad! They’ve moved on to another project!

The alternative that a lot of contact centers are switching to is No-Code automation

Creating processes with No-Code is like putting lego blocks together to build whatever you want. 

You don’t need a special skill set. 

You definitely don’t need to make your own lego from scratch!

You’re just using pre-made components to build what you need. 

Suddenly, that negative feedback SMS message or email involves selecting the trigger (bad feedback) and the automation (an outbound message).

That’s the whole project. 

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