For any business, customer churn is an indispensable, bitter truth. But it’s always possible to minimize the churn risk. Most businesses – in some or the other manner – already have a churn reduction mechanism in place. However, the problem is that many of these mechanisms are centered around end-of-term churn risk, which is reactive in nature for the most part.
In my experience while working with the leaders of several recurring revenue businesses, I’ve realized while customer retention is a critical business metric to them, the traditional, reactive framework poses a lot of constraints, primarily because it fails to provide the risk build-up over the entire customer lifecycle. Below are the repercussions of not having a lifecycle-focused churn mitigation model.

• Risk detection may be too late.
  Churn isn’t an overnight occurrence. It’s an outcome of accumulated, unresolved concerns and a series of poor experiences. When you only realize the risk when a customer calls to cancel, doesn’t renew the subscription, or falls behind in making payments, it’s too late. The right moment to intervene and deliver customer delight is already long gone and you have little time to intervene and mitigate the risk

• Risk may multiply in the background.
  The end-minute, reactive approach leaves a lot of room for oversight of the gravity of the risk. If neglected, even a small concern at an early stage in the lifecycle can continue to add in the background and, with every bad experience, incrementally grow up to become a severe dissatisfaction.

• Their decision to cancel may be irreversible.
  It’s still of some help if your canceling customers call you to terminate their relationship with you. In many cases, they won’t. Either way, the chances are extremely high that they have already made up their minds to leave you and even chosen another service provider. The risk, in the reactive retention approach, may be simply irreversible.

• There is no contextual insight into the root causes.
  Without the focus on the entire customer journey, you don’t get contextual insights into what concerns or experiences led to the cancellation as it happens, which is much easier to address. In this case, you may not only end up extending irrelevant last-minute offers but also face cancellations due to the exact causes in the future without first addressing the underlying root causes.

• Retention is usually expensive at this stage.
  Retention efforts involve cost, which is directly proportional to the level of risk, and the risk is the highest when a customer chooses to call to cancel. Considering limited to no insight into the churn cause at that stage, you may try to retain a canceling customer with expensive offers. It significantly cuts down on your marketing ROI and loyalty scores.

• This approach neglects customer lifetime value.
  Traditional customer retention approaches often tend to neglect the lifetime value of customers. Without insights into the present and projected lifetime value, it’s challenging to identify who your high-value customers are or where the churn risk is worth addressing.

 
That’s why it’s critical to look at multiple customer journeys and focus on every customer lifecycle stage. Below is what I’ve seen work:

• Get a comprehensive lifecycle view.
  Remember that every customer’s buying journey is unique. There are multiple factors that contribute to their decision to cancel and these factors may exist at any stage. Therefore, you need to create a complete risk view of the customer lifecycle. Treat customer churn as not an end-of-contract issue but a problem that grows as the customer journey progresses. This involves leveraging their interactions to decode their sentiments and intent.

• Transform customer care by investing in agent training.
  Train your customer care representatives or frontline agents for proactive engagement, resolution, and building loyalty during every interaction with customers. This requires a change in mindset to see EVERY interaction as a retention opportunity by addressing not just the reason for the call but proactively improving customer lifetime value. Sometimes this requires offers, sometimes it’s data collection and sometimes it’s about reinforcing the value drivers. Give them the required tools and intelligence to improve retention rates by addressing lifetime value increase opportunities at various stages in the customer journey.

• Enhance retention impact by leveraging unstructured data.
  Include unstructured data in your analysis to decipher complex customer behavioral patterns. Sole reliance on structured data sources will fail to understand the risk until it is too late or missing several addressable opportunities. Such high-value unstructured data includes textual and clickstream data from contact centers, chat sessions, email exchanges, and web and mobile app interactions. It not only improves predictive models and offers but also turns the retention program into a large-scale, continuous operation across the customer life cycle.

In a landscape where customer expectations are constantly evolving, being on top of churn risk signals is a must. Instead of the end of the term, retention efforts must involve visibility across every stage of the customer lifecycle. Addressing the churn signals early and smartly depending on the customer journey stage will always give the most accurate picture. Consequently, it will improve the overall customer lifetime value, ensuring a smooth and profitable business.