Pre-empting customer churn
How much would you invest to prevent a mass customer exodus? Everything Everywhere, the merged T-Mobile / Orange behemoth, was happy to spend £150 per customer to shore up its customer base following the post-merger restructuring.
What did it gain? A reduction in monthly churn from 1.7% to 1.3%, significant given their customers number well into the millions, plus an additional 300,000 customers locked into long-term contracts in place of short-term pre-pay contracts.
Everything Everywhere was happy to spend £150 per customer to shore up its customer base.
The Times today reported how operating profits at Everything Everywhere had dropped 12% to a still respectable £668m against revenue of £3.6bn (“Callers lured by the appeal of roaming Everywhere“). It attributed this slowdown to the investment the firm had made in ensuring notoriously fickle customers didn’t defect to competitors.
This kind of story highlights for me how anticipating customer disruption with a carefully planned pre-emptive strategy pays far better dividends than antagonising one’s customers and mopping up the mess after the event. I’d love to have been a fly on the wall when the executive presented that business case to the Board.
Some questions to ask yourself:
- Do you see changes coming up that will disrupt or spook your customers?
- What could you be doing in advance to help your customers through the process of change and even turn that disruption to your advantage, as Everything Everywhere has done?
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