Your Customers Are Leaving. Do You Know Why?

Customers complain to brands every day. Still, many customers stay silent when they have a negative experience. A well-known metric in the customer experience (CX) industry states that every one customers who complain, 25 people don’t raise issues to companies.

Hidden customer dissatisfaction is a big problem for brands. When customers are unhappy, they’re likely to defect. And they’re just as likely to spread negative sentiment to others–both online and in-person.

Plus, the costs of hidden customer unhappiness are massive. According to New Voice Media study,  US businesses suffered losses of $62 billion in on year because poor service that drove customer defections and abandoned transactions.

Yes, that number is staggering, but there’s more you should know.  Losses caused by bad CX rose by over $20 miliion– nearly 50% increase–in just two years, according to CX thought leader Shep Hyken.

Here’s another issue: Social media has become an easy outlet for customer frustrations. That makes it harder for brands to safeguard their online reputations.

Sure, it’s easy to write off complainers–but research says that’s a bad idea. Consulting firm Bain & Company found that online complainers often spend more than their peers. Why? People who complain are engaged–and engaged customers spend more than disengaged ones. Unfortunately, research has shown that companies routinely ignore most social complaints–although those that complain online tend to spend more than their less vocal peers.

So what should you do? There are three reasons why many brands experience churn. Take a critical look at your business to determine if these issues affect you–and make changes or the better.

#1: You Aren’t Always Transparent

Every organization has its trouble spots–and humans make mistakes.

Although having customer complaints is inevitable, companies should take steps to minimize them. One way is by making their policies and pricing as clear as possible so that customers don’t feel surprised or frustrated when they engage with their brands.

As the Harvard Business Review (HBR) reported in a recent article, a lack of transparency can cause significant customer dissatisfaction. On occasion, a company may even choose to institute complex policies that lure customers into making poor purchase decisions–or cause customers to pay unexpected fees.

Although these companies may see short-term financial gains, they put themselves at high risk of losing customers. HBR warns:

Dissatisfaction and churn should be particularly worrisome to firms that see their customers defecting to a competitor that provides a transparent and friendly alternative.

Harvard Business Review

If a company finds its most profitable customers are the ones that are most likely to be dissatisfied, they should take heed. Those customers may not complain to the company, but they are apt to share their displeasure with others–either in person or via social media.

#2: You Don’t Act on Negative Customer Feedback

CX leaders know they must seek feedback from customers–and rely on customer feedback to discern where their frontline processes and practices may fall short.

Sending post-interaction surveys to customers after each transaction is an accepted best practice. Today, companies have gravitated to short surveys that gather insight on customers’ likelihood to recommend the brand to others–or the amount of effort expended to complete the transaction.These and other metrics provide a helpful snapshot of customers’ most recent experiences.

True service leaders go beyond simple feedback gathering to institute processes that understand and remedy customer concerns. Called “closed loop alerting,” or CLA for short, CLA practices allow managers to “close the loop” with dissatisfied customers. They can also check-in with employees who may have caused problematic interactions.

With a consistent focus on CLA over time, companies almost always see drops in customer complaints. They are able to distinguish between one-off problems and systemic issues that may require adjustments to customer service processes.

Strategy #3: You Don’t Act on Open-Ended Feedback

For companies striving for CX excellence, post-interaction surveys are only the first step in their feedback gathering efforts. Those organizations also collect open-ended feedback from customers–and have practices to distill meaning from customer comments.

Why is this so important? Academic research has revealed that some latently dissatisfied customers may leave adequate scores on a quantitative survey. This suggests that closed-ended survey formats–which ask customers to fit their perspectives into a prescribed scale–may not provide clear insight into customers’ true feelings about a brand.

Today, more companies are recognizing the importance of gathering voice of the customer (VoC) feedback. And there is a clear opportunity for brands that want to forge ahead in VoC. According to the most recent State of Voice of the Customer Report from the Temkin Group, just 16% of companies have reached the highest two stages of VoC maturity.

The small segment of companies that have advanced VoC programs are doing more than collecting feedback–they are actively using it to transform their businesses.

Achieving such success requires accurate analysis of customers’ written and spoken word–by human sentiment analysis. Only humans can detect currents of negative sentiment even when customers speak positive words. Factors such as voice volume, tone, and word choice can unmask potential detractors who may not look like one based on the survey scores they leave.

As Forrester explains, VoC is a continuous process that involves listening to and interpreting customers’ qualitative feedback to drive action:

Image Source: Forester (via SlideShare)

Meeting Customers Desire for Better-Quality Experiences

With the right strategies, companies can perfect the art of identifying and taking action on negative feedback–even hidden poor sentiment–and apply this insight to advance their CX programs. And this can lead to creating customer-facing approaches that foster a positive impression in the marketplace.

There is good news for those that take these important steps. Customers want to engage with brands that deliver positive experiences–and are willing to pay more to those that do:

What does all this mean for your company?

First, you must acknowledge that latent dissatisfaction exists–and implement the right tools and processes to help unearth pockets of hidden negative sentiment. You must also embrace the truth that customer feedback–even when it is negative–is an important asset in shaping your evolving CX strategy.

Today’s customers have unprecedented access to information–which gives them the ability to shift loyalties quickly and influence their personal networks. You need strategies to find unhappy customers who harbor negative sentiment–and must take action to stop the spread of unwanted negative sentiment about your company.

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