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Customer Churn: The Top 5 Causes

This article on customer churn is part of our CX Optimisation Guide

“If I had an hour to solve a problem, I'd spend 55 minutes thinking about the problem and five minutes thinking about solutions.”

Einstein made a good point. Defining the problem and identifying its causes is most of the battle won.

The major cause of high customer churn is a poor customer experience. But we need to go deeper. What underlies a poor customer experience? It all comes down to complexity, inefficiency and an inability to change.

In this article we are going to run through the most common pain points affecting your customer churn rate. Only once you know the causes can you begin bringing it down.

1. Relying on paper forms and documents

Going paperless is one of the most effective ways to increase customer retention and reduce customer churn.

Printing and posting your communications takes time, typically no less than two days, and often longer, which introduces a latency into customer journeys that can trigger unwanted and mostly unnecessary customer contact.

Paper communications can lead to inefficiency in your back office, especially when processing forms and letters sent directly by customers. By removing manual processes associated with printed documents, you can increase the efficiency of your team and reduce costs.

Being more efficient and joined up on the inside leads to a better service on the outside. Customers receive a better experience because processes are quicker, they are kept up to date and feel they are in safe hands.

Everybody wants to feel like they’ve made the correct choice, and customers stick with the brands that prove them right.adaresec-ccm-thumbnail-30With a paper-based communications system, you are not just impacted by inefficiencies and time-consuming back office tasks; but also data quality issues. Human errors made when translating paper forms into customer data inevitably cause challenges later on. That means follow-ups, which means even more letters or calls, potentially damaging your reputation with customers.

A digital, multi-channel customer communications management operation can remove paper from the equation.

And if completely removing paper is not possible, as it is for some industries, there are other solutions – like Hybrid Mail. This service outsources and improves the efficiency of the manual side of paper communications, by driving operational efficiency, delivering postage optimisation, and simplifying back-office tasks. Take a look at our comprehensive guide to Hybrid Mail if this sounds like it might work for you.

If nothing else, reducing your paper usage reduces the need for paper manufacturing and is better for the environment. Something customers and employees can both appreciate, and something to help towards your company’s green strategy – an area of significant focus for all industries.

2. High-volume calls into the contact centre

You can take an indicative measure of poor customer experience by the number of unnecessary calls made to your contact centre. When customers are confused by or don’t trust your process, their go-to is to bypass it completely and talk to someone to gain clarity.

On average it costs businesses £10 per call to their contact centre, in terms of FTE salaries and operational costs. Imagine the cost savings by halving those calls.

Our own research shows that 72% of senior managers with responsibility over customer communications management expect their customer engagement will be dependent either fully or heavily on digital processes in the next 3-5 years. 44% said they would only have a limited telephone contact centre, supporting a digital system.

If you’d like to read more about our research, you can read our full report Customer Communications Management in the New Normal 2022.

adaresec-ccm-report-01Building on the first cause – paper – one of the biggest reasons people make calls is because they have lost a document or a form. Reducing paper with a digital solution is a quick win that will help alleviate these problems across multiple departments.

3. Complex processes

A customer communications operation that runs on paper and contact centres is already likely to be a drain on resources and customer experience, but there are other complexities that can magnify inefficiencies further.

Many organisations rely on legacy communications solutions. Often they were implemented years ago. But now, things have evolved – there are new regulations to adhere to, new business acquisitions and new ways of working to integrate.

The complexities compound; different departments are using different systems, running with disparate, poorly kept customer data. Back office teams are making do with what they have, and even though it’s inefficient and time consuming, they often don’t have the knowledge and expertise to resolve these challenges.

No catastrophes yet. But customer churn is high. (As is employee attrition.)

With a single-view digital solution, organisations can implement processes that follow a simple customer journey.

4. Siloed departments

If you zoom out and look broadly at why an organisation’s customer communications are hampering customer experience, one major reason is that there is no coherent single view of the customer journey.

The senior decision makers we surveyed for our report said that the biggest cost drain in their operation was due to inefficiencies caused by an inability to share information quickly and accurately across their business.

A siloed structure with teams running different parts of the journey, not talking to each other or sometimes even using conflicting customer data – this is when customer experience suffers, and retention falters.

We often find with our clients that it is not that the customer journey is complicated, it is that the back office processes do not back up the promised behaviours.

For example, when a credit card application is declined the provider may send the customer an income and expenditure form to help determine affordability, which is then returned to the provider’s back office underwriting team. The team processes the information and sends out additional letters depending on the outcome of the application. However, this entire process is detached from the provider’s standard communications platform, so the customer does not receive regular updates on the status of their application.adaresec-ccm-thumbnail-24When it comes to fixing the problem, a siloed structure can be self defeating. It’s often unclear who has the responsibility to address customer churn. So, building the case for a solution takes a long time when you don’t know who the stakeholders are and you don’t have accountable owners, so things stay the same.

Worry not. This doesn’t have to mean an entire organisational structure revamp. By opting for a smaller ad-hoc solution, departments have the ability to quickly implement change. Small steps can deliver big advantages.

5. No business capacity to fix the problem

We know what is causing the most customer churn, but what compounds those problems is the inability to fix them. Even if the business case for change is clear, there are usually two major objections which make building a feasibility case challenging.

The first is time. Often there is simply no spare capacity to manage or implement the project. New digital solutions can be blocked by stretched IT teams who envision they will need to invest a lot of time and effort to install any technology.

The second is money. We often hear that a large obstacle to change is the perceived cost of bringing in an expensive consultancy or a large software platform.

You don’t always need a big solution. Sometimes the answer is to take small steps with tactical solutions and deliver a tangible business benefit quickly so that an ROI can be realised in months not years.

A solutions provider that can deliver with only a light involvement from your IT team will help you identify the problems, then solve them. They will be able to initiate change by minimising the red tape and internal wrangling that usually stops progress before it can begin.

Your vendor should do the heavy lifting, quickly and affordably.

Remember, there is a cost to doing nothing. Only 2% of the senior decision makers we surveyed for our report said there were no cost drains in their customer communications management journey. And the biggest costs cited were all to do with operational inefficiencies.

Thinking about solutions

There we have it. Our answer to bringing back your churned customers is to increase efficiency and lower costs in back office processes by introducing digital solutions that enable multi-channel, two-way customer communications that can be delivered quickly and with agility.

Solutions that remove the need for high volumes of paper and calls, and that are cost effective and simple to implement.

With digital-first customer communications management that matches behaviour to your customer journey, you will improve the effectiveness of your back office teams. Their ability to keep customers up to date in a shorter space of time will inspire customer confidence in your service capability.

The bottom line: it will improve customer experience and lower your churn rate.