How to Avoid Being Blind-Sided by Customer Cancellations
Unfortunately, it happens all too frequently. From seemingly out of nowhere, that cold sting of an unexpected cancellation by a highly valued customer has left you embarrassed and asking yourself, “How did I not see this coming? I thought we had a good relationship.” As you scramble to identify the missed signs, you struggle to recall a specific moment or event that would lead to this development. And, to make matters worse, the negative impact of this loss extends to employee morale and the firm’s reputation in the market.
But for true customer-centric organizations, it shouldn’t be this way. To minimize churn, consider these six approaches in order to systematically build better visibility into customer attitudes and perceptions, and consequently, revenue impacts:
1. Don’t confuse frequent contact with meaningful, consultative communications.
It’s easy to become complacent about the state of your customer relationships when you engage in frequent interactions. After all, you speak to them quite often – if something was wrong, they’d tell you, right?
Like any other long-term successful partnership, you cannot take the relationship for granted. Sure, customers may appear satisfied but are you simply meeting expectations or are you actually making a real impact? Don’t fall into the trap of convincing yourself that meeting your contractual obligations or communicating frequently equates to happiness. Customer needs evolve. If you aren’t making a continual effort to dig deeper and expand the nature of your conversations, someone else will.
2. Don’t assume you’ll never get fired from a friend.
Another misconception is that building a social relationship with a customer is a sure-fire way to prevent a cancellation. You hear it all the time from customer-facing employees: “Oh, the account is in great shape. We just went out the other night and had a great time. All’s good.” That is, until they fire you.
Expensive dinners, golf-outings, and other social gatherings are all important elements of building rapport and a strong partnership. But all too often this becomes a crutch to lean on when product and service quality is sub-par.
Don’t allow yourself to think that a social relationship is a substitute for a positive experience and lasting customer success. If your organization isn’t continually solving new and future problems, offering insights that are actionable, and demonstrating a meaningful ROI for its services, then your business is at-risk. To quote the famous line from The Godfather: “It’s not personal, it’s business.”
3. Do perform safety-checks along the customer journey.
The road to customer success presents plenty of potential roadblocks. Use this journey as an opportunity to assess customer satisfaction.
Your customer journey map should be well marked for easy navigation, but most importantly, with safety checks. During these stops check the oil, the tire-pressure, and most importantly, the alignment. Don’t ignore even the smallest of warning signs. If something isn’t quite right, instruct the customer to pullover immediately while you identify a solution.
It’s important to recognize that feedback mechanisms come in various forms. Whether it’s a customer satisfaction survey, a customer advisory board, or a customer perception audit, employ appropriate measurement techniques to identify gaps in the customer journey and escalate situations in a timely manner. Remember, the goal is to continually work out issues before they grow and cause long-term permanent damage.
4. Do make sure your flagmen and pit-crew are properly trained.
So you mapped out your customers’ journey, supplied customer-facing employees with extra parts, and stationed checkpoints along the way to spot early warning signs. But do employees really know what to look out for? Are they adequately prepared to address causes of dissatisfaction? Signs of unhappiness can be crystal clear or quite subtle. This makes training one of the most critical components of a successful customer-centric strategy.
Unfortunately, many companies make tremendous investments in job-specific training that is narrowly defined, while skimping on cross-functional training that can elevate everyone’s understanding of the customer journey. As a result, internal processes and communications between customer touch points are often not aligned to properly support customers holistically.
Consider creating a playbook for all customer-facing employees – a playbook that lays out specific examples of situations that warrant an early warning escalation to the entire team. Make sure a cross-functional team is assembled to create the playbook so that the broadest possible understanding of potential issues is captured. Include what everyone should be listening and looking out for, and the reasons why. A detailed escalation process should also be outlined so that everyone communicates the same type of information in a consistent format that can easily be captured and analyzed at all times.
5. Do track your potential cancellations and at-risk customers the same way you track your sales pipeline.
Implement a cancellation pipeline to avoid surprises. This can be done by developing a set of rules across your organization for scenarios that may mean your customer is at-risk. Having difficulties getting paid? Decreasing usage of your software? Your internal stakeholder and decision maker has left the company? These may mean trouble for your customer relationship but they are problems that can certainly be resolved with the proper attention.
Create a cancellation pipeline that is maintained just like a sales pipeline – categorized by product line, by revenue impact, by probability, and by lead-time. Ask questions such as, just how much “at-risk” is this customer, and why? What efforts are being made to turn the situation around, and by whom? When would the revenue impact hit if we were not able to save it? How does this impact our revenue targets? How does this impact our reputation?
Furthermore, the ability to clearly forewarn business unit heads of the potential collateral damage they may incur because of hidden problems in another business unit is critical and impacts sales and product training, forecasting, and strategic planning, at all levels of the company.
6. Do perform appropriate post-mortems when customers defect.
You’ve just been fired by your customer, now what? Do you let your ego get in the way and rationalize the situation – letting you and the team off-the hook? Or do you set aside your pride and make a concerted effort to examine the relationship from the customer’s point of view in order to ascertain what went wrong?
If you really want to avoid repeating costly mistakes and reduce churn, employ a customer defection analysis to look for patterns with lost accounts. Be willing to ask questions you may not like the answers to, or have an independent third-party do it for you. And be open-minded to the feedback you receive. Insight from your lost accounts will underscore the most serious and systemic issues that most frequently lead to a cancellation.
Embrace this information and use it to identify actions you can take to get in front of other possible loss situations. Remember, it’s about giving your organization the best possible chance to identify and save at-risk business and reduce the chances of future defections.
So, as easy as it is to assume all is well with your clients simply because you have frequent interactions and you take advantage of social opportunities to strengthen your relationship, stop and think: What subtle, or not so subtle, signs might you be missing that all is not well? Are you overlooking risks to existing revenue and missing opportunities to prevent churn? Are you learning anything from your losses and making necessary changes in your business to reduce client churn? Careful consideration of these questions is critical in reducing negative surprise impacts to your revenue.