Last month, Netflix's share price tumbled after it announced a net loss of 200,000 subscribers globally and expects to lose 2 million more in the next three months. Yes, there are some nuances to this news. However, the case of Netflix highlights the challenge that a lot of companies will likely go through in the coming months and even years: reducing churn and driving retention.
PepsiCo recently announced that it was making customer retention its No. 1 objective, recognizing that inflationary pressures have the potential to lead to higher churn rates. This is likely to be the same globally, with the cost of living meaning consumers are now taking stock of what is superfluous vs. what is a necessity.
For companies, instead of a growth-at-all-costs model, customer retention is slowly becoming the strongest measure of success and the ability to keep afloat. But how do they drive this customer retention? That's where the service function, and service agents more specifically, come in.
Consumer-brand relationship dynamics are changing. If we look before the cost of living crisis, recent years have seen a vast increase in online shopping and a rise in services that offer convenience as their No. 1 differentiator. You only have to look at the boom in last-mile delivery to see these effects in action.
We also need to consider the drop in how much it costs to switch loyalties and move from one brand to another. Traditionally, it has been too difficult and costly for consumers to switch allegiances, making the threshold at which consumers would opt to make change relatively high. Today, however, it's simpler and cheaper than ever, and with many brands looking, smelling, and tasting the same, the decision to switch is easier to make than ever. This is probably why, when we at Dixa spoke to 3,000 consumers across the United States and United Kingdom last year, we found that just one poor experience is enough for 95 percent of consumers to consider never returning to the brand.
Now, we also need to factor the rising cost of living into the brand-consumer relationship equation. Everything around us is getting more expensive, and it's only natural that consumers are starting to re-evaluate what's of value to them. Am I really getting the most out of this Netflix subscription? Should I be cutting down on Pepsi this month to save on my weekly grocery bills?
Taking all this together, the state of consumer-brand relations is very simple: convenience is at an all-time high, but brand loyalty and the cost of switching are at an all-time low. With the new dynamic of the rising cost of living, companies, consumers, and the relationship between the two are arguably more in flux than ever.
For companies, this climate poses a question of how they can reduce churn and ensure that customers stay with them. That is, how can they bring more stability into the equation./p>
There will, of course, be nuances across industries when thinking about how to tackle this conundrum. For example, those in the subscription economy could give their customers the option to temporarily suspend their subscriptions. However, what is and ought to be consistent across all industries is the role the service function has in not only reducing churn but driving retention and crystallizing customer loyalty.
For a lot of companies in today's digital era, the most contact a consumer has to air concerns, get problems solved, and ask product-related questions is with your customer service team. That is a key component in shaping the experience customers have and plays an important role in tackling the current churn/retention conundrum.
The challenge is that, although more companies are starting to realize that the service function is not just a mere cost center, many are struggling to get it right. In the same survey I referenced above, we found that not only are customers willing to churn after one bad experience, but key drivers of this include repeating information when reaching out to service agents, receiving a robotic, non-personalized service and, in general, high-effort engagements for getting problems solved.
Agents to the Rescue
So, what does getting it right actually look like? For me, a large part of the answer lies in the agent experience (AX).
We at Dixa also surveyed 300 customer support staff that work across retail and ecommerce in the U.S. and U.K. last year, with 88 percent reporting that they are currently losing customers due to poor customer support; and 46 percent say it takes them longer than it should to find simple information, such as a customer order status, while more than one-third (34 percent) still use Google to find answers to customer problems.
Clearly, then, it's no wonder that customers are complaining and churning, by having to repeat information and waiting too long for a response that might not come from trusted information. For companies, this should be a wake-up call for providing agents with what they need to not only protect the brand-consumer relationship but to also nurture higher levels of retention by helping consumers see the value in a product or service.
In practical terms, this starts with giving agents the right information at the right time. What is this customer inquiring about? Have they had issues in the past? Providing answers to these questions in an automated and intelligent way immediately prevents customers from having to repeat information and go through a high-effort engagement, while also allowing agents to deliver more personalized service that can help build the relationship.
It doesn't need to end there either, and giving your agents the right information at the right time should be a given. Getting AX right also means using self-service technologies more intelligently by deflecting many low-value conversations and leaving the more complex questions for agents. This results in longer handling time, but it is also where companies can build valuable relationships with their customers, even those at a higher risk of churning.
Overall, then, in a world where convenience is at an all-time high and brand loyalty and cost of switching are at an all-time low, giving your service agents what they need to protect, build, and strengthen this relationship is clearly vital. And companies that do so will be in a better position to increase retention this year.
Tue Sottrup is vice president of customer experience excellence at Dixa.