When it comes to reducing your customer churn rate, you might consider things like price or user experience. But how often are you thinking about your customers’ emotions?
A customer’s emotions are a critical yet often overlooked aspect in decreasing customer churn rates. A report by Forrester found that your customers’ feelings play a vital role in the customer experience.
As much as we think we rely on data and reports to drive decisions, psychological studies show that humans primarily make decisions based on emotions – and that includes whether or not to continue doing business with your company. Many of the leading causes of churn are due to the emotional impact they have on customers.
So, how can you address the psychological factors of customer churn head-on? Below, we explain what customer churn rate is, how emotions factor into churn rate and the top emotional triggers of customer churn.
What is customer churn rate?
Customer churn rate refers to the rate at which customers stop doing business with you in a given time frame. You can calculate your company’s churn rate by dividing the number of customers you lost in a given period by the number of customers you had at the start. Then, multiply that number by 100 to determine the percentage.
For example, if you had 1000 customers at the start of the first quarter but lost 250, you’d first divide 250 by 1,000. Then, you’d multiply by 100, giving you a churn rate of 25%. Your churn rate is essential for gauging the health of your business, not only in acquiring new customers but your ability to keep them.
What is a good churn rate?
While no one can get a churn rate of zero percent (meaning no customers canceled their service with you), you want to aim for as low a churn rate as possible. For most companies across industries, an annual churn rate of five to seven percent is ideal.
However, churn rates for services such as telecom and broadband tend to be higher. According to Statista, the average churn rate for broadband and wireless services is 21%. That means most broadband and telecom services can expect to lose nearly one in four customers.
How customers’ emotions affect churn rates
Customer emotions are an integral but often overlooked factor that leads to churn. According to the National Customer Rage survey, customers cite computer and telecom services as the top products or services they have had issues with in the last 12 months. And nearly one in three of these same customers say they suffered emotional distress due to the ongoing service issue.
Many customers rely heavily on broadband and telecom services in both their work and daily lives. When these services, such as a broadband connection, malfunction, it creates significant emotional distress or rage among customers. Studies show that customers’ negative emotions, such as rage or frustration, strongly correlate with churn.
The top emotional drivers of customer churn
Negative emotions such as rage and frustration are strongly correlated with customer churn. But how do you know what to focus on to reduce the number of customers who leave? Below are some of the top emotional triggers that lead to churn.
Failed issue resolution
Unresolved customer service issues are a leading emotional trigger for customer churn. According to the U.S Chamber of Commerce, 67% of churn is due to a service or product issue remaining unresolved after the first customer support interaction.
One of the first critical steps in reducing customer churn is focusing on improving first-call resolution rates (FCR). FCR refers to your company's ability to resolve a support issue the first time a customer contacts your business. Your ability, or lack thereof, to iron out a customer's problem within that first encounter is vital to your business's success.
FCR is strongly correlated with customer satisfaction. If a service issue requires multiple phone calls to settle it, it can lead to customer frustration. It can also create distrust as customers doubt your ability to resolve their tech support issues.
67% of customer churn is because a service or product issue remains unresolved after the first customer support encounter.U.S Chamber of Commerce
This is why companies should focus on improving FCR to reduce customer churn. A good rule of thumb is to aim for an FCR of 75%.
To increase first-call resolution, ensure you have a strong contact center agent onboarding program to train agents to resolve customer issues quickly. Additionally, consider implementing customer self-service channels to reduce contact center call volume and empower customers to resolve service problems independently.
Inability to speak with a human
Technology can do many things to improve tech support, but innovations like AI can't completely replace people. That's because human connection is still vital to creating a good customer experience.
According to the National Customer Rage survey, the number one complaint among customers is the inability to speak to a person. 74% of customers prefer speaking to a human for a service issue. This number jumps up to over 80% for complex problems.
Unlike AI, human contact center agents can understand emotions and empathize with customers. This is vital for broadband and telecom companies since these services often affect customers' lives at work and at home.
This isn't to say that your company should eschew technology. After all, technology like chatbots provide numerous benefits to businesses. But to successfully stop churn, you may still need to provide some of your tech support interactions with real people.
Poor customer service experience
A poor customer service experience can be a top driver of customer churn. 96% of customers leave after just one bad service experience. Customers won't give you a second chance if your company fails to deliver exceptional service.
Low-quality customer support can create feelings of frustration and rage. Especially for telecom and broadband services, which are 'lifestyle' services, meaning they affect your customers' lives.
Some all-too-common mistakes that lead to a poor customer service experience include:
- Lengthy contact center wait times
- Long, automated scripts before a customer can speak to a representative
- No clear indication of how to contact a business about a service issue
- Multiple transfers to resolve a service issue
Taking the time to focus on how you can improve customer support can lead to big payoffs for your business. Research shows that 93% of customers will make an additional purchase from your company if customers have a positive service experience.
Lack of personalization
There are many advantages of personalized customer service, including its ability to reduce customer churn. Personalized customer service refers to customer service tailored to the needs and preferences of the individual customer.
With customer expectations higher than ever, personalized customer service isn’t just a nice-to-have but an essential component of a successful customer service strategy. Research by McKinsey shows that more than three-fourths of customers are frustrated by the lack of personalized business interactions.
Personalization goes beyond addressing the customer by their name. It includes steps like offering tech support in the customer’s preferred language. For example, a telecom customer in Montreál might prefer self-service tutorials in French instead of English.
You could also use virtualization, also known as virtualized tech support, to provide a more tailored service experience. With these digital devices, your contact center agents can not only mimic the functionality of a particular tablet but also drill down to a specific version of that tablet. This allows your agents to address a customer’s questions regarding their device and creates a more personalized tech support experience.
Taking these steps to personalize customer service, in turn, provides huge benefits for your business. Personalization can improve your net promoter score (NPS), a key metric for gauging customer satisfaction. Personalization has also been linked to increased loyalty and higher company profits.
Customers’ emotions matter for company success
Customer emotions are a critical yet often overlooked factor in customer churn rates. How customers feel before, during, and after a tech support experience can directly impact whether they stay with your company or look elsewhere.
By identifying some of the most critical emotional triggers, your company can pivot its customer service strategy to head off churn and increase brand loyalty.
Are you looking for more ways to reduce customer churn? Verizon, winner of 185 J.D. Power Awards, successfully lowered its customer churn rate while saving tens of millions of dollars each year. Read the case study to learn how.