Avoidable Customer Churn Costs British Businesses £25 Billion
New research released by CallMiner, a platform provider of speech and customer engagement analytics, reveals that British businesses are driving customers away for completely avoidable reasons. And it’s costing them billions. In fact, a conservative estimate of the price of switching is £25.05 billion per annum.
The report features survey responses from 1000 UK adults who had contacted a supplier in the last 12 months. Entitled the CallMiner Index, the report shows that 84% of adults switched suppliers 1.91 times in the last 12 months. The sectors that top the CallMiner Index over the last five years and the last 12 months, are:
The same four sectors top the Index over five years. In the last 12 months Insurance and broadband have changed places with Insurance moving from #4 over five years to #2.
The pace of switching is accelerating
The main reasons for churn – falling foul of the Brits’ sense of ‘fair play’
Prices are too high or have increased (71%)
After price – which is an inevitable reason to change - the next three on the list are all related to being treated unfairly. Not only is this counter to the famous British sense of fair play, but neuroscientists tell us it also falls foul of a primary need that is hardwired into our brains – being fairly treated. Amy Brann, a leading neuroscience expert at Synaptic Potential, explains: "Being unfairly treated triggers a response in similar networks of the brain that controls physical pain. The reaction can genuinely hurt! That’s why people will go to great lengths to right wrongs. In the case of suppliers this can include burning lots of time in having a complaint handled, defecting to another company, bad mouthing the supplier online and offline and in more extreme cases, pursuing legal avenues."
Unsurprisingly, the advice consumers provide on how to keep them loyal matches the top three reasons for switching. However, the strength of feeling is indicated by the fact that more people provide this advice than those that switched for the same reason: keep prices the same or better than for new customers (81% v 71%); reward them for renewing their contract (68% v 45%) and automatically apply new discounts to their existing account (64% v 39%).
Frank Sherlock, Vice President for the UK at CallMiner, said: "With 84% of people switching in the last year, churn has reached epidemic proportions. And three of the top four reasons all relate to fairness. Treating people unfairly is completely avoidable. Suppliers could slash their churn rates if they listened to what consumers are saying in this research and put treating customers fairly at the heart of their brand values."
 According to the Office of National Statistics there are 52,078,525 adults in the UK. A conservative estimate of the cost of acquiring a new customer across all the main sectors in the survey is £300 per person. This is based on the level of incentives applied to attract new customers and a conservative estimate of associated sales and marketing costs. The CallMiner Index identified that in the last 12 months 84% of adults have switched 1.91 times. This represents 43.745 million people. The total cost of churn is therefore at least £25.05 billion.
 The research was carried out for CallMiner by 3Gem Research & Insights. 1,000 UK adults responded to an online survey in May 2018.
Posted by Veronica Silva Cusi, news correspondent
Date Posted: Wednesday, September 5, 2018
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