Thursday, 2 June 2011

Clients' prior business experiences and the consequences for us

In these financially constrained times it means more to retain your clients rather than put your time and effort into finding new ones. That is, of course, unless the client has more than taken advantage of the relationship to the point that the people involved are in danger of losing your company money!

That said, do you know your company's churn? The average online company churn as of 2 years ago was reported as 98.7%! 60% of first time clients dropped their company within six weeks! See Harris Interactive Src Risk, Churn Win Back Workshop, slide 9. Harris Interactive states that if you retain clients then their value/spend increases with time. Now that can mean a lot.

Why do your clients leave? Have you any intelligence on this? Perhaps you should try to find out. It tends to be the role of the Account Manager/Project Manager to understand the reasons for leaving, but is the intelligence brought together and analysed in terms of your company performance?

Harris Interactive cites several reasons for clients defecting: unmet expectations, low perceived value, competitive attraction, and unexpressed/unresolved complaints. (See slide 14 Causes/Effects of Risk and Churn.) How are you defining defections?

It is hard to find general business information on client reactions and their impact but harder still for interactive media businesses. However, Garry, in his Intelligent Positioning Blog, the Integrating Value section of The Value in Understanding the Customer Journey, May 2011, makes clear statements about the failure of some companies to fully understand the customer experience of their clients. He says that only 30% had looked at mobile habits and only 34% had taken account of social media behaviour.

If what he says is true — that winning a new client costs up to 5 times more than retaining an old one — shouldn't we be analysing the risks of churn?