Churn and Customer Experience: Keeping Customers – and Employees – Loyal
You’re probably well aware of the concept of the customer experience, at least in the context of its value in generating revenue for your company. If the buyer’s experience with your company is good, he’s more likely to become a customer; if the customer’s experience is good, he’s more likely to be a customer for a longer time and spend more money with you. Investing in a good customer experience – and the tools to understand that experience and how the customer feels about it – is money well spent. But it’s not only well spent because it’s adding to your top line in an immediate ways. Well-crafted customer experiences work in both directions. In a B2B sale, customer experience means making the sale more frictionless – eliminating the speed bumps caused by inefficient processes and misaligned internal procedures to enable buyers to buy more easily. But every action has an equal and opposite reaction – and the reaction, in this case, is that frictionless business makes for happier employees as well. Look at the example of the typical call center. The employees in that environment are besieged by dissatisfied customers asking for help with problems. All day, they deal with people who are having poor customer experiences. And, often, they are powerless to help because of poorly designed processes, a lack of resources, or simply a refusal to give agents the power to solve problems. This further degrades the customer experience, and callers may hang up more upset than they were when they dialed in. This obviously has an impact on that can be measured in terms of lost customers – but it also has an impact on lost employees. The attrition rates in call centers are brutal – on average, 26 percent each year, according to Response Design. In some cases annual churn can be 100 percent or greater, according to Kate Leggett at Forrester. And while some call center managers may see agents as mere cogs in the machine, it’s unlikely their CFOs would see things the same way if they had the numbers associated with employee churn handy. According to a study by the Center for American Progress, a liberal think tank, between 1992 and 2007 the cost of replacing employees amounted to 21.4% of those employees’ salaries. Response Design’s numbers were even more dire: the average cost to hire an agent was $4,000; the average cost to train that new hire was $4,800. That means in a call center with 100 agents, 26 of them will leave in an average year, and it will cost $228,800 to replace them. That’s simply in the call center arena. The same applies to any employee who deals with customers and works for a business that does not value customer experiences. The chief victims of this are the employees who spend the most time talking to customers: sales reps. When a sales rep has to cope with things that create sub-par customer experiences- slow delivery and approval of quotes, mistakes in the ordering process, fouled-up billing, incorrect product delivery – it makes his or her life much less pleasant. When the same problem confounds customers again and again – and it’s clear that dealing with this hassle is going to be a regular fact of life for the sales rep – there’s a natural tendency for them to start looking for better opportunities. That could be very costly for your sales organization – even more so than for your call center. A study by DePaul University found that the acquisition cost of a new sales employee was $29,159 and the training costs were $36,290. Even without including the opportunity loss of having an undermanned territory as a business hires a new salesperson to cover it, that’s a total of $65,449 to replace a lost sales rep. An Aberdeen Group study found that the sales turnover rate was 20.6 percent per year. That means, in a sales organization with 100 reps with an average churn rate and a hiring/training expense that are average, losing 21 sales reps results in an annual cost of $1,374,429. Ouch. These numbers exist because this very scenario plays itself out with regularity: companies are suffering from excessive employee churn, and that churn is often exacerbated by the same factors that lead to customer churn. The inability to deliver a satisfactory experience is itself an unsatisfactory experience, and too many businesses put employees in this position. So how do you make the employee/customer experience satisfactory? Step one is to put systems in place that shorten the sales cycle, making it easier for B2B customers to get what they need quickly and effortlessly. One of the chief tools for this is CPQ. Another way to do this is to increase the opportunities for customer feedback during the sales process (tools like Clicktools provide opportunities to integrate this into the sales process, allowing you to both modify individual customer experiences and use aggregate data to fix systemic issues). Whatever methods you use to attack this problem, the secret is to examine the issue of experience from both sides of the looking glass. A poor customer experience is rarely delivered by happy employees, nor is a good one delivered by frustrated employees. Almost always, there is dissatisfaction on both sides. Remedying the issues that bedevil one side is likely to improve the experience for the other side, too.
Chris Bucholtz | November 4th, 2014