Effectively predicting customer churn

The promise

In 2003, there was a simple idea presented that revolutionized the thinking surrounding Customer Experience. Much like the three categories described about the respondents, I usually run into three ways of thinking when it comes to NPS: You love it, hate it, or do not see it as any different from any other types of measurements. At QuestionPro, our clients fit into that entire spectrum, and we make an effort to help them understand which situation is the best fit for their particular needs, CSAT or NPS.

Core to the success of NPS was the promise of simplicity. One question, one open-end. That is all that is needed. However, that isn’t what everyone got, particularly our customers. Instead, it was two additional questions added to a battery of existing questions. This was not the creator’s fault, rather the fault of CX professionals and their clients that kept moving the line. Some questions we kept so we could do driver analyses. Others were kept because they informed another function that was supportive of the program in some way. Of course, there were the measures that “we’ve always had”.

It’s not all their fault though. Machine-based text analytics was an untrusted art at the time, and there just needed to be a way to assess the actions that should be taken. There was also a gap in exactly what this meant to the company, and instead of connecting it to existing data, we would just ask more questions about the customer to better segment the customers. It gets to the point where a transaction survey may take longer than the actual transaction. Rather than having separate relationships and transaction surveys, we try to fit all our curiosities into one questionnaire.

Making decisions is hard work

I don’t say it lightly: “Making decisions is hard work.” It is a reason to build a solid CX Strategy. Beyond that, you should also have a strategy for your CX program. It is one of the reasons that QuestionPro recommends developing a 3-year plan for your CX program before deciding how you’ll implement it. Many of our service partners have similar thinking. However, one of the key steps you can take upon initiating a program with a new provider or simply reinvigorating the old one is to throw it all out…every question, all the trends, and all the supporter requests.

predict-customer-churn

That’s right; get rid of everything. Sacrifice those trends, the benchmarks, and the subjective KPIs. Keep that one thing called “the ultimate question”, but keep it with a twist.

Keeping the promise

I’m proud of what we’ve developed at QuestionPro. We built our customer experience software with intention. Not just an add-on to surveys, but planned features and workflows that can only be developed coming from years of CX expertise. I have worked directly with many of the CX software providers that work in the space today. I know they all do terrific things with technology. However, as a practitioner, there was always a gap. Research has shown relationships that increasing promoters and having few detractors will correlate with better business performance. We could see that in NPS, by segmenting CSAT respondents or evaluating a customer effort score. Traditionally, we were told that to make changes; we just had to respond to closed-loop feedback. It is appealing because there can be operational tactics that would satisfy that customer immediately – a quick win. I’m a proponent of closed-loop feedback; I also feel we should amplify the voice of promoters. However, we’re missing something if we just focus on the end-points of our scale.

Some industries lend themselves to enthusiastic proponents (think Apple), while others are prime examples of why we need closed-loop feedback (cable operators come to mind). Many companies really fall in the middle, though. I recall working with one client operating a call center; there were very few that walked away from the call feeling dissatisfied with the outcome; at the same time, they weren’t thrilled that they had to call to begin with. It left a large group of what we call “passives”. Even with all the extra questions, additional segments, and analytics, we struggled to find meaningful recommendations.

Like most things, “passives” were not a non-variant group. They had promoters tendencies, they had detractor tendencies. Last week, I wrote about customer co-creation, one of the ideas we built into NPS+ by QuestionPro. Another one is looking at that one question-one goal promise, how to keep retention. In addition to giving customers a way to vote on ideas discussed by others, we’re rolling out additional updates that will be key to understanding the impact of NPS on customer churn, not just at the aggregate level, but also understanding at a customer level. It is a safe assumption that detractors are at risk for churn, but a passive could have those same risks. Do we solve that problem by adding a battery of questions and evaluating ratings versus churn over time? Well, we could, but our new iteration of this already powerful feature will allow for understanding the risk of churn quickly and easily. Identifying root causes within detractors and finding similar traits in passives, which could turn them into detractors. By understanding these root causes, even before analyzing data from closed-loop feedback, one is able to find the churn risk and the root cause(s) of that potential churn. Over the next few weeks, I hope you’ll enjoy reading this series on leveraging a single question battery into an organizational KPI, a financial number, a customer co-creation tool, and root cause analytics. As surveys become increasingly passed over due to time and length, the NPS+ methodology promises a solution that will help our clients and their customers – even before we apply text analytics and closed-loop feedback.

Keep watching for more information about NPS+. While we are always rolling out new tools, these updates will change the thinking when it comes to customer surveys and building customer cultures. One of those changes in thinking comes from a post-COVID approach to surveys; you should review this webinar conducted by my colleagues’ discussion on contact-less surveys in the health field. If you want to see our NPS+ feature in action, don’t hesitate to contact me or sign up for a free trial of our CX suite here, just click on the Free Trial button.