Reduce Customer Churn through Speech & Text Analytics
Speech and Text Analytics, if done right, can help you improve many business outcomes and Reducing Churn is no exception. Before we look at how speech platforms can help businesses improve customer retention, let’s understand what churn is and how its valuable to businesses.
In very simple terms, churn is the rate at which you are losing your customers. So, if you have 100 customers in total and you lose 5 of them every year, your churn is 5%. Each customer retained is customer gained for 2 reasons – Life time value (LTV) a customer brings and Cost to acquire a customer at first place (Acquisition Cost, AC).
How do we find the LTV for a customer? Well, first look at average revenue they bring every year. For a cellphone company, that would be $600 assuming average customer is paying $50/month ($50×12=$600). Next thing we need to find out is how long an average customer stays with the business? The answer lies in the churn rate. Assuming average churn rate is 5%, Life expectancy of a customer is 1/Churn = 1/5% = 20 years. So, average customer stays for 20 years with the business providing yearly revenue of $600. Putting it together, LTV (Life Time Value) of a customer in this case would be $600 x 20 yrs = $12,000. You can go crazy with math from here and start bringing down the value of $600 over 20 years to today’s value by taking into the inflation but we don’t have to do all that. I am assuming you will more than compensate for inflation by improving the margin for your business or cross-selling them other products/services. Another thing to consider is the cost to acquire those customers. A lot of that is driven by marketing and sales strategies adopted by businesses but it’s only fair/conservative to assume that its around 25% of yearly revenue, $120. In this case, this number is not that meaningful but can be huge for business with higher churn or acquisition cost.
Now imaging millions of calls coming to your contact center where customers are showing signs of churn like showing dissatisfaction or threatening for cancellation or talking about competitive offers being better. Most of the agents don’t capture those critical pieces of information and it’s not humanly possible to listen to all the call recordings looking for these insights. That’s where Speech Analytics comes to rescue. It analyzes all the calls, looks for phrases which indicate possible churn and then alert/update the system so that businesses could take pre-emptive measures like calling them to understand their issues better or offering them better services etc. Imagine improving churn by 0.5% for a business with 1 Million customers in this case. Yearly gain would be 1M x 0.5% x $600 = $300M. That’s the contribution to your topline every year.
Question is how much you are willing to pay for it? I would leave that question for you to answer J But we must understand one thing, we must pick a vendor whose solution is focused on driving these business results. SuccessKPIs has build platform which offers library of playbooks which are driven by these business outcomes. Importing these playbooks automatically creates and stack up all the underlying artifacts to help customers detect topics, score them and then take actions. Add to that the out-of-box BI integration with seamless blending of IVR and ACD data, customers can get 360degree view of the contact center.
Dave “Renny” Rennyson is the CEO of SuccessKPI. He is a passionate SaaS veteran, global executive, a lifelong learner, and the co-author of “The Art of SaaS.” Dave is obsessed with customer success, solving big problems for his customers, and building highly usable SaaS products that transform the customer experience. Prior to his role at SuccessKPI, Dave served in various senior executive roles at MicroStrategy, Genesys, Angel, Broadband Office, Interactions, Spirent, and Verizon. He enjoys running, reading, skiing, traveling, and trying to play Catan at times a bit too competitively with his family.