A Recommended Customer Retention Research Program For A Legacy Company
An established legacy company in the financial services industry recently approached us about conducting marketing research for them.
Marketing research is about filling an informational needs gap that exists, and in their case, it was why their company seemed to be experiencing high levels of
customer loss
(churn). They felt like they had a clear understanding of the marketplace and that smaller/newer firms were undercutting their percentage based service fees.
A great rule to follow with your marketing research investments is that the research must produce results that your company is willing to use to affect change, which they seemed willing to do -- let's call it market research return on investment (MR-ROI). With an established business model in place, they had predictable and fixed operational costs to consider, so decreasing their percentage fee was perhaps not an option. Since they would be willing to change other aspects of their business, however, they passed the MR-ROI test.
A first step in recommending research strategy and design was to consider the size of the current customer base vs. the number of recently lost customers. With an ample amount in each group, there were plenty of contact records with full contact information to choose from, and therefore plenty of approach options. Continuing further, the outward flow of lost customers was so consistent and numerous over the past several months that there were plenty of segmenting options to consider with that particular group.
Our recommendation in this case was to execute a lost customer survey
with the recently lost customer segment (three to six months) vs. newly lost customers (less than three months). For each of the two groups, we recommended asking the typical lost customer questions, such as service issues, pricing issues, better offer, location/situation change and service no longer needed. But for the recently lost segment, we recommended asking a series of questions regarding their new service provider.
The benefits of such an approach were two-fold. First, asking the same series of up-front questions of both groups allows for comparisons between the two groups to see if trends exist, and it also provides a larger combined sample size. Second, by contacting customer who had transitioned their accounts to another vendor 3+ months ago, a series of questions regarding current vendor satisfaction, competitor's ability to deliver on service promises, ability to deliver on price, as well as win-back potential could be explored at a far greater level of detail.
In case they wanted to get more ambitious, we also proposed a current customer survey measuring many of the same issues from the lost customer survey and asking additional satisfaction and loyalty questions. Besides gathering great customer satisfaction data, this would provide the ability to create a profile of lost customers to map back to current customers, so that vulnerable customer segments could be flagged and proactive measures could be taken. This is just one approach, of course, but the best one with all things considered.
When Not To Do Research
Just as many reasons exist for doing marketing research, many reasons can be found for not doing it -- too many to list, in fact. As a marketing research vendor, we are consulted on projects of varying complexities and methodologies, across multiple industries, and with researchers of varying degrees of marketing research experience. As a result, we see projects executed with levels of impact from great to terrible.
We've found the most common reasons for NOT doing marketing research are:
- Information is already available.
- Issue to be researched is not solvable (i.e., customer service/product is bad, but company will not pay for better people/training/products regardless).
- There's no management commitment to use the results.
- There's no budget to do it right.
- Management wants to use research only to prove their point.
- Management thinks they already know how customers behave.
- Management assumes customers behave how they say they will.
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