Monthly recurring revenue is key to the success of a service based business. That’s why it’s so important to identify ‘at risk’ customers early. Not only can you reduce customer churn, but you can also increase customer satisfaction just by listening to customers and knowing when they are ‘at risk’.
“There’s nothing worse than bringing on a new contract and then finding out your long-standing client worth $100K/year has decided to cancel”.
Gordon Tan, Director – R&G Technologies
Here are some key indicators that can help you identify ‘at risk’ clients by using online survey tools and analyzing the customer feedback data.
1. Customer satisfaction scores are below average
Below average customer satisfaction scores are an alarm bell. Once your clients have completed your customer survey, use a tool like Microsoft Excel to crunch the data into a spreadsheet.
How to track it:
Here you want to work out the average rating for all your clients across the questions you asked. Make sure you asked questions with a rating scale this should be easy – if you didn’t… read this on creating a customer feedback survey.
Now that you have the average scores, flag each client that is below average as ‘at risk’. This doesn’t mean they are necessarily unhappy and going to leave (yet), but it is the first warning sign that they might have a foot out the door.
Your job will be to follow up with these flagged clients to see why they gave you below average scores, and identify ways to improve your service to ensure their satisfaction scores improve for the next survey period.
2. Customer satisfaction scores have dropped greater than the industry average over a given period
This indicator takes a little more work but is one that is very popular with our customers. It involves tracking customer satisfaction scores from one survey period to the next.
How to track it:
Take all your customer survey data from the two survey periods, and match up the customer satisfaction scores for each individual client so you can see both scores.
Insert an excel formula into your spreadsheet that finds the scores that have changed and highlight those that have changed by more than 20%. Any changes in satisfaction by more than 20% need extra attention. Highlight in red the negative changes (flag these clients as at risk), and highlight the positive changes in green.
Follow up with all clients that are highlighted in red or green to find out more about why their satisfaction scores changed. The at risk clients will need some shoring up, while the green happy clients are perfect candidates for becoming advocates. Ask them why their scores changed – use this feedback and match it up against any customer satisfaction initiatives you implemented since the last survey period. This will help you see what worked and what didn’t.
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3. Customer has indicated they would not feel comfortable recommending you to colleagues and friends
This is the last key indicator as to whether a client is ‘at risk’. An important question to ask in your customer surveys is this one:
This question takes some theory from the Net Promoter Score, and is a really good indicator of customer happiness. Anyone that answers no, and wouldn’t feel comfortable, should be flagged as ‘at risk’ and needs following up.
If someone would not want to recommend your company to friends, there is something wrong going on. There are problems going on that need to be resolved. It’s your job to find out the problems causing customer unhappiness, and fix them before it’s too late.
Additional tips from Gordon Tan
- Customer starts asking for passwords and credentials
- Customer stops wanting to meet with you
- Customer goes quite about recurring problems
- Customer stops responding to customer feedback and doesn’t reply to emails
Here’s a video of Gordon Tan going through his tips for identifying ‘at risk’ customers.
Use Online Survey Tools to Identify ‘At Risk’ Customers
Business growth is fueled by strong customer retention. To retain more customers, you need to listen to them and know when they are ‘at risk’.
By using surveys and asking customers the right questions, you can find out what they really think about your service. The feedback becomes actionable and can help you proactively address concerns, reduce customer churn and grow your business.