The 6 Reasons Consumers Leave Brands

And the Strategies to Retain Them

Highlights

  • Research finds that two causes – poor customer service and poor customer experiences – drive over half of consumer churn.
  • The payback of improved customer retention is significant. Reports published by the Harvard Business School found that, on average, a 5 percent increase in customer retention results in 25- 95 percent increase of profits.
  • Similarly, research by Emmet Murphy and Mark Murphy published in Leading on the Edge of Chaos shows that a 2 percent increase in customer retention has the same effect as reducing costs by 10 percent.
Johnny Grow Revenue Growth Consulting

Why Consumers Leave Brands

There is no one size fits all solution to improve customer retention. There are many strategies to reduce customer churn but the right tactics are the ones that directly respond to the reason's customers leave.

Research performed for the Customer Service Excellence Report identified the top reasons consumers leave brands. Comparing these factors in your own business can validate your diagnosis and accelerate the prescriptive remedies to solve a big problem.

Breaking Up Isn't Hard to Do

Survey participants were limited to consumers that left brands during the prior 18 months. We know from prior research consumers generally don't leave brands based on a single cause so survey participants could choose up to three reasons they left vendors.

The top reasons consumers leave brands are shown below.

Why B2C Customers Churn

See the research which shows the top 6 reasons consumers leave brands.

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1

Poor Customer Service

The research data found poor support to be the most cited reason consumers churn. However, looking at the data more holistically revealed that this was seldom the first or only reason for consumer churn.

In fact, in almost all circumstances, consumers incurred another obstacle that led them to seek help from customer support. But when that failed them, consumers were a dealt a one-two punch that caused them to defect.

Customer support is the backstop to customer churn. Good support resolves the underlying consumer problem, feeds the product or process friction to the company sources for resolution, and retains customers.

Excellent customer service operates as a profit center, offers fee-based premium services (i.e., SLAs, entitlements) and measures their financial impact to sales, customer lifetime value, customer retention and company revenues.

We're well past the days of recognizing customer service should be run like a profit center. In other research, the American Express Consumer Service Barometer found that 7 out of 10 U.S. consumers say they spend more money to do business with a company that delivers great service.

2

Poor Customer Experience

52 percent of consumers indicated they left brands due to a poor customer experience. Their experience was characterized as a failed interaction with the brand but was magnified for vendors perceived to be delivering a cavalier attitude or feeling of indifference. When consumers have a problem that doesn't get resolved to their satisfaction and they are made to feel unappreciated, they leave.

This finding reinforces research that shows customer experience is every bit as important as product and price. And maybe more importantly, unlike product or price which are easily copied by competitors, delivering consistent, rewarding and memorable customer experiences is much more difficult to achieve, making it a sustainable competitive advantage.

Nearly every brand recognizes the importance of Customer Experience Management (CXM) but many struggle to identify where and how to implement CXM improvements.

Survey participants identified the top three CX friction areas as sales order processing, order fulfillment (including returns, credit memos and RMAs) and customer support.

To achieve successful CXs, brands need to connect with consumers at an emotional level. That means delivering CXs that go beyond basic satisfaction and achieve more emotive goals, such as making consumers feel delighted, appreciated, valued, engaged or rewarded – and making those experiences memorable where possible.

When brands design customer facing business processes built on the four CX trust elements of being reliable, relevant, convenient and responsive, they achieve CX objectives and eliminate the second most cited source of consumer churn.

3

Poor Fit

From the consumers perspective, poor fit most often means the brand did not deliver on their promise.

This can be caused by inflated marketing claims, selling to the wrong target markets or not providing enough information for consumers to properly assess the product or service for their needs.

When consumers feel they have been oversold the breach in trust is severe. Losing the customer is the first fall out. Losing future customers from disgruntled consumers who publicly share their grievances on social media networks and to other customers damages the brand reputation and impacts future revenues.

Research from the White House Office of Consumer Affairs finds that a dissatisfied customer will tell between 9-15 people about their experience, and 13 percent of dissatisfied customers tell more than 20 people.

4

Poor Quality

14 percent of consumers cited poor quality as a reason they left a vendor.

Consumers are generally willing to see poor quality issues remedied where possible. But when product or service quality issues linger on and fail to get resolved timely, this issue escalates and becomes a driving factor to consumer churn.

5

Poor Value

While price is often cited as the first factor when explaining away why consumers leave, research shows that only 12 percent of consumers cited value or price as the cause of attrition. It kind of makes sense. If the price was not reasonable the consumer would not have made the initial purchase.

Price and value still count but take a back seat to other factors that are much more influential. Many companies track exit causes in a Defection Scorecard or Customer Retention Dashboard, as part of their customer retention strategy, to measure all the variables that lead to customer loss.

6

Superior Competitor

Competitors are never far from your customers.

Innovative competitors may even offer more exciting products or compelling value propositions.

That spells big trouble for brands with mediocre customer relationships or that deliver marginal customer experiences. On the flip side, the research shows that 60 percent of consumers do not switch brands solely because a better product comes along.

Nonetheless, for most product categories, consumers expect products and services to evolve. Brands are responsible to innovate their products based on customer feedback. Falling behind will eventually render the brand irrelevant and give way to being replaced by competitors.