Solving the Challenge of Churn

By David Swanson

“People will forget what you said. People will forget what you did. But people will never forget how you made them feel.” – Maya Angelou

Customer churn is a reality that almost every company has to deal with, especially those in the hyper-competitive energy sector.   It’s one of the most important metrics of an REP’s business strategy, having more impact on the bottom line than customer acquisition.  For example, studies show a 5% increase in customer retention rates results in a 25%–95% increase of REP profits.  Studies also show that customer retention is the main driver of REP profit.

After 10 years in the energy sector, our own data shows that, if an REP can get a customer over the 60 day hurdle, and absent a major shift in market prices, odds are they’ll be yours for 39-42 months on average.  But how to do that?

Survey after survey tells us that customer experience, customer journey, customer care, customer satisfaction…whatever you choose to call it…is what matters most to customers when it comes to loyalty.  And so we built our churn reduction strategy around optimizing reward impact in the first two months of the customer journey.  Here’s what we did…

4 CHURN REDUCING STRATEGIES

1. We sped things up.

Old Strategy:  Wait to kick off the customer welcome and deliver rewards until the customer got onto flow.  This meant some customers were waiting up to 45 days from the point of sale before they heard from the REP.

New Strategy: We sped things up dramatically, and kicked off the customer welcome and reward delivery on the day of the sale.  This allowed the REP to make a positive impression with new customers immediately, validating the customer’s purchase decision and building goodwill.

2. We made it personal, friendly, and grateful.

Old Strategy: A generic and formal customer welcome process.

New Strategy: We made the customer welcome process much more personal, much friendlier in tone, and much less formal.  We also made sure to say “thank you”.  This not only made customers feel important, appreciated, and personally engaged, but made them feel as if the service they just signed up for was part of a community that cared about them. 

3. We were generous.

Old Strategy: Deliver just the basic rewards promised at the point of sale.

New Strategy: Add a surprise reward during the onboarding process as a “surprise and delight” event.  Customers love feeling valued and love getting free stuff.  This extra generosity not only helped to put a smile on the customer’s face, but also skyrocketed customer engagement.  Offering customers something special, something they’re only getting from you, goes a long way to showing them how much you value their business and reminds them they made the right decision to sign with you – right when it matters most.

4. We were engaging and intentional.

Old Strategy: One new customer onboarding welcome communication.


New Strategy:  A series of varied communications over the first 60 days of the customer journey.  We started with an engaging welcome email, followed by a reminder prompt if we saw the customer hadn’t read the email or logged into their rewards.  We then sent the surprise bonus email, and then notifications when the customer had earned additional rewards. 

Studies have shown that 68% of customers leave a business relationship because of a perceived attitude of indifference on the part of the company.  Ongoing customer engagement turns that perception on its head and shows the customer you care.

Those four adjustments to the customer journey yielded a 55% reduction in the REP’s 60 day customer churn rate.  Best of all, those changes all came with zero new cost to the REP.

The old adage says “you never get a second chance to make a first impression”.  And, for REPs, data shows that the impression you make in the first 60 days makes real difference in customer retention.  Of course, some level of churn is inevitable.  But, with a little intentionality, innovation, and ingenuity, meaningful improvement is possible.

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David Swanson is the CEO and Founder of Optimus