You’re Only as Good as your Last Show: How Digital Channels Help Customer RetentionAs the old show biz adage tells us, “you’re only as good as your last show.” The same holds true for many industries; for example, telecom. Imagine that your contract with your provider is nearing its end. Your last experience with them will flavour your whole perception of their brand and, ultimately, determine your loyalty. The numbers support this: Following price, poor customer service is the second greatest factor contributing to customer churn rates for mobile carriers in the US. If your last contact with your telecom was convenient, seamless, and pleasant, you will more likely renew your contract; whereas an aggravating time-consuming experience will more likely result in attrition.
Consumers gone rogue: the Interest Rate Chasers
Consumers have more choices than ever before, even in industries traditionally marked by life-long customer loyalty. Canadian banks, for example, have been aggressively courting new clients by offering short-term promotional interest rates, leading to interest-rate chasing, where customers jump from bank to bank, taking advantage of promotional rates for chequing and savings accounts. Customer retention has unexpectedly become a key concern for this industry.
Customer Experience (CX) boosts retention
We are well aware of how focusing efforts on retention is more rewarding than attracting new customers. According to Bain&Company, increasing customer retention by 5% results in a 25%+ increase in profits. It seems, however, that retention has recently become a greater priority; evidenced by the growing corporate prioritization of customer experience. Stellar customer experiences boost retention rates, which is why CX is more important than ever before.
Digital Channels boost satisfaction
How can companies boost satisfaction? A report by J.D. Power & Associates states that satisfaction is highest among mobile customers who use online chat and self-service, rather than those who receive help from traditional call centres. This does not come as a surprise. Five years ago, CFI found that satisfaction scores for customer service over SMS texting were 90%, while voice-based service only received a 77% satisfaction rate.
Satisfaction boosts revenue
How do these satisfaction rates translate into revenue gains? In their 2016 Global Banking Annual Review, McKinsey has found that every 10% increase in customer satisfaction results in a 2%-3% increase in revenue. If digital channels, like SMS texting, can boost satisfaction by 13%, this results in a 2.6%-3.9% growth in revenue. This revenue growth comes with the added benefit of reduced costs (an interaction over SMS texting takes an agent an average of 3.1 – 3.6 minutes in total, whereas phone interactions average between 6 – 9 minutes).
TD Bank: the original hipsters
TD Bank was into customer experience before it was cool. However, this key brand differentiator may prove to be more valuable than they ever anticipated. TD Bank’s mission is to provide legendary customer experiences – and the cornerstone of their brand is access. They were the first bank to extend their hours and they were also the first major bank to offer customer service over two-way texting and Facebook Messenger. Their commitment to ensuring easy, fast, convenient services strengthens the loyalty of their customers and helps to protect them from the threat of the interest rate chasers.
You’re only as good as your last show – and companies need to ensure that their last “performances” elicit high levels of satisfaction in their customer base. Offering digital service channels (such as texting, messengers, live chat, and social media) presents a straightforward and immediately achievable way of increasing customer satisfaction numbers, leading to higher retention rates and greater profits.
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