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Learn from Customer Defections

One of my favorite quotes comes from Malcolm S. Forbes, who said, “Failure is success if we learn from it.”  The central theme of that message drives much of the work we do here at Satrix Solutions.

The formal customer feedback programs we implement for our clients reveal considerable insight into customer sentiment and preferences. While it is always gratifying to see feedback from enthusiastic customers that heap praise on our clients, it is often the complaints, the concerns, the critique that yield the most actionable insight.

That is why I’m so surprised at how many companies fail to draw on what is likely a treasure trove of valuable input from customers that have recently defected.

To illustrate, let me share several recent experiences I’ve had.

After six years of exercising at a local fitness club, I canceled my membership in favor of a gym closer to my home. I also chose to consolidate my business and personal bank accounts, thereby severing ties with my business bank of three years. Finally, after evaluating alternatives, I signed a license agreement with a new provider of software for my business and advised my current provider I would be transitioning to a competitor.

In each situation, I was not asked a very simple question – “Why?”

In fact, in all three cases I was not asked any questions! No inquiry as to where I was taking my business, what prompted the switch, what could be done to retain my business, nothing.

Now, one might assume these were simply cases of front-line personnel (gym service desk, bank teller, client service rep) not following company protocol. However, it has been several months and still no requests for feedback have come.

Unfortunately for them, the window to obtain that feedback is now closed and an opportunity to gain potentially valuable insight into customer frustrations and pain-points was missed.

What can your organization do to capitalize on the wealth of knowledge that comes from understanding why customers defect?

Simple – Listen, Learn and Act.

First, reach out (or have a third party such as Satrix Solutions do so on your behalf) and engage in candid dialogue with the decision maker. Try to establish what contributed to their decision.

1) Was it service related?

2) A concern about cost or value?

3) Did a pitch from a competitor resonate?

4) Did they perceive your service offering was lacking in any way?

Feedback from one former customer may be informative but the real value comes when trends and themes are identified over time.

Then, search for the root causes of customer departures and identify trusted people in your organization to address the issues that account for the largest percentage of losses. Use defections as a guide to make improvements and, importantly, measure the results of your efforts by monitoring customer retention and churn rates.

World-class service organizations learn from failure as much or more than they learn from success. Which brings me to another favorite quote of mine –

“Those who cannot remember the past are condemned to repeat it.”