Contact Center Solutions Featured Article

October 26, 2006

Call Centers: Integral Resource for Preventing Customer Defection

By Susan J. Campbell


Customer defection – for any organization, this is a bad word. Losing a customer can cost the organization the most as replacing a customer costs the organization far more than serving that customer. So it is certainly in the best interest of the organization to protect its base.
 
In the UK, however, this was not the case. In fact, key industries in the UK showed that customer defection rates increased from 16.9 percent in 2003 to 19.1 percent in 2005. According to a study: The Danger of Defection by CustomerServiceWorld.com, this increase in defection is an indication that UK consumers are becoming more mobile and companies have not adjusted their strategies to address this trend.
 
As a result of the defection trend, marketers in the UK are beginning to focus more on current customer development instead of new customer acquisition. Mobile Telecoms in particular needed a vast change in strategy as the industry claims the highest average customer churn at around 33 percent.
 
The study highlighted that in many industries, much less intellectual effort is needed to win new customers than to keep the ones that the organization already has. However, intellectual effort is not a significant drain on organizational resources. Much time is also spent predicting which customers are likely to defect as well as designing strategies to prevent them from doing so.
 
Pitney Bowes conducted research that revealed that by the end of 2005, more effort will have been expended on marketing to existing customers than is devoted to winning new ones. The key to this process, however, is developing the value of those customers. Without doing so, the organization is wasting significant time and resources in retaining that customer.
 
The marketing departments can also focus energy on profiling their customers. Not only does this give the organization a better understanding of the personalities of their customers, it also enables the company to identify the habitual defectors. By doing so, the organization can avoid wasting resources to try and retain a customer that will switch anyway.
 
The call center is an excellent resource that the organization can use to extend its strategy for customer retention. Robust customer relationship management (CRM) solutions can enable an agent to view all customer information during a phone conversation. This can be used for not only up- and cross-selling, but also to address most customer issues on the spot. Customers view this type of service delivery as a demonstration of their value to the company. When a customer feels valued, they are less likely to take their patronage elsewhere.
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Susan J. Campbell is a contributing editor for TMC and has also written for eastbiz.com. To see more of her articles, please visit Susan J. Campbell’s columnist page.
 
 


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