Everyone and welcome to this webinar on churn. My name is Matthias. I'm a senior management consultant here at Implement Consulting Group, and I've been here for almost four years. Prior to working as a management consultant, I actually had a real job. I was working as a sales rep in different organizations, and I've also been a part of an organization where I was a sales leader. What I've been mostly focused on in my time in Implement Consulting group is commercial transformation, commercial strategies. And one thing that I'm particularly interested in is churn. And this is exactly what this webinar today is about churn. But before we delve into the content of today, I would ask you two things. So I have my good colleague Andreas sitting here next to me. He's monitoring the chat. So if you have any questions at any time, you can post them in the chat. Sometimes I will pause and I'll answer the questions. Other times I may or may wait and only answer the questions later. Also, I will encourage you to to take a piece of paper and a pen, maybe to take note, but there are also some reflecting questions that I will ask you throughout this webinar. So that may be a big help for you to have this by your hand. So you have a couple of seconds to do that now before we proceed. So the question that we all ask and the reason why we probably are here is, is to is, is what is the business case for churn prevention. And and I think that that's a good starting point. So what is the business case. What can we expect if we become better at preventing customer churn. So when we look at the revenue that organizations or businesses drive, we can look backwards and say. This is last year's revenue. Then we made sales to new customers and we also up and cross-sell to existing customers. So this is our 100% revenue last year. But what also happens during a year like this is that we that existing customers, they may be purchased less and maybe some customers, they decline or maybe we lose some customers for good. So some of the times this leads us back to status quo. And we actually know that declining the declining sales to customers and customers, that is lost for good. It's quite costly because it requires to go out and acquire new customers, and that is 5 to 7 times more costly than to than to sell to existing customers. And when we understand that, we can look at three key parameters or three key performance indicators, one being the customer lifetime value. So the longer we have the customers in our business, the higher potential lifetime reality we have with these customers and the more customers we have for a longer time, the less money we have to spend on acquiring new customers. That means that we can lower our acquisition cost, and by lowering the acquisition cost and increasing the lifetime value of the customers, we actually end up with a higher profit. And this is simple illustration actually shows that a few percentage points in churn reduction actually had quite the significant impact. So this is a scenario of 10% churn. If we decrease that to 5% chance of 5% decrease in churn. This can actually lead to between 50 and 75 improvement on the profit. But before we sort of proceed with the with with why customers turn and what we can do about it, I just want to set the scene for what we mean. And when I say we, I mean me. What I mean when I say churn. So churn from my perspective, can be measured in three different aspects of the customer's life cycle. So when we are trying to get customers, we can measure churn in our conversion rate. So to what extent do we convert the leads that we have? We can also measure churn in our ability to grow existing customers. So when we are trying to up or when we are trying to cross-sell to existing customers, to what extent do we convert on those quotes that we send to the customers? And we can also measure churn. And I guess this is the most common way of measuring churn in our ability to keep existing customers or our retention rate. I will give examples on both of these three different ways of measuring churn throughout the webinar, and that leads me to the first reflection. And this is where you maybe need your piece of paper and your pen. Where do you currently see the biggest opportunity for improvement in your business? Is that your ability to get customers to grow customers or to keep customers. So I'll allow you 45 seconds to reflect on this. All right, so maybe you've had the chance to reflect on where do you see the biggest opportunity to improve your business. And maybe this will change throughout the webinar. Maybe you will sit with another reflection at the end of the webinar. But now we have a better understanding of the business case on why I believe that we should focus more on churn. Let's look into why the customers actually churn. And I think this is super important because for us to be able to solve this, we need to understand why do they actually churn. And there's a study done by PVC and they say that one, even one bad experience can lead to churn. So when we look at these different areas around the world, we have all countries, we have the US, and we have Latin America. Right? It varies. But that's not the important part here. The important thing is that bad experiences lead to customer churn. And this study is actually done on people who actually had a preference towards the organization they churn from. So even people that love the company that are doing business with, they will still churn in all countries in 30% of the time. So we only have one chance to do one bad experience, and then our customers may be lost for good. So with that in mind, I have a question for you. Think about one time, one bad experience that led to churn for you, and you are more than welcome to write it in the chat. So what was a bad experience that led you to churn? Maybe this is something that requires a little bit more reflection and that is that is also fine. I will share some. I will share some reflections of my own later. But we have one common here in the chat bad quality experience. Yes, that that is for sure. Martin, I assume, and this is an assumption. What you mean here is that if the product that you purchase, the quality is not as you expect, then that will lead to churn. That is. I totally agree with that. Jonas writing here Fullrate called me and ask if I wanted a mobile subscription. I was already a customer. They did not offer me other advantages, so I turned. All right. That is an interesting perspective, right? We actually working a lot with with insurance companies. And one thing that exactly can lead to churn is by calling the customers not being 100% sure on is this customer already in our business? What is the current plan that this customer is on? Low customer service. Customer service. All right. So thank you so much for sharing these examples I agree with all of them. So let's talk a little bit about experiences here. Because we have bad quality experience. We have another bad experience Jonas is writing about Karsten and Walter is also writing about customer service. So let's try and understand a little bit more about how we experience. And this lead me to, to the to the to the research done by Mr. Daniel Kahneman. Most of you probably already know this, but Daniel argues that we have two systems in the way that our mind functions. It's probably way more complicated than that. But for the simplicity, we have two systems. So we have system two. That is the rational brain. It's slow, requires a lot of energy, but it's logical. It can handle complex decisions and is reflective. And then we have system two. So that is the unconscious mind. It's quick. It doesn't require much energy. You could argue that we are on autopilot in this system. It's intuitive but it's also flawed. Or we also have biases. And bias is the exact thing that I'm looking for here. Because when we talk about experiences, we need to mitigate the many biases that individuals have. And we know that there are probably more than 175 different types of cognitive biases. And I'm not going to go into all of these different biases because then it would be a long, a long session. But I will double click on a few of them. And especially one bias that I believe is very important to understand and to solve churn. And how people they validate a bad experience can be subjective, but this one bias will actually be quite dominant for most individuals, and that is the bias of the path of least resistance. So usually when I show people this slide, they will smile and nod and say, yes, I can totally relate to that. Of course, I wouldn't go the long way around. I would also cross through here, and this is a very good example of why we would we would follow the path of least resistance, so keep a hold of that bias. So now we have talked about the business case for churn and how bad experiences can lead to churn. And we have a better understanding of the biases that maybe is affecting the way that we think about bad experiences. So now let's talk about how we can prevent customer churn. And when we talk about how we can prevent customer churn, I believe that there are three questions that we need to ask. If we want to prevent customers from churning. The first question is, do we have enough or do we have too much data? The second question is the second question. Are we solving the right problems? And it's always nice to put in a picture of Albert Einstein here. And God knows if this is actually what what he said. But you know what I mean. And then the third and final question we need to ask is, are we doing the right things? So let's start by answering question number one. That is do we have enough or do we have too much data. So we believe that data is good. It can help us steer make decisions. But lack of data or too much data also presents some challenges. So I want to unfold three challenges that either too much or either a lack of data can can can present. So the first challenge that we see is that and this is something that I've noticed a few times working with different organizations is that we are too focused on the actual on the data that we have. Right. So we are asking our teams to make reports on reports, on reports. And those reports seldom end up in concrete actions on how to solve whatever findings that we have. Maybe sometimes we maybe even biased in the patterns that we see. And most of the time there isn't a clear understanding for the underlying reasons behind the data that we see. So it presents a lot of challenges to have too much data. Another challenge that we may face is that if we don't have enough data, we cannot make decisions. All right. So most of the organizations that we work with, they would say we are excuse me, we are data. We are a data driven organization. So before we have the data we cannot make any decisions. Right. So we allocate and we scramble a lot of people. We do projects, we take internal resources, maybe even invite consultants in. And then we tell them, look, we need to understand the data before we understand the data. We cannot make any decisions. And then there is a third challenge and that is flawed data. So maybe we have the perfect equilibrium on data, right. We we don't have too much. We don't have too little data. But the data is flawed. And there could be many, many reasons for why data is flawed. But when we have flawed data, it's difficult to make decisions off of it. And when it's difficult to make decisions off of it, we spend a lot of time contemplating about it, and then we end up making decisions on gut feelings or other variables. So thinking about these three different challenges that that a lack of or tumors data presents, which of these do you currently find yourself in? Thank you for for sharing in the chat. Ek Inka and Jonas. So we have a couple of different reflections here. We have report and report and report and we have flawed data and flawed data. And I think that the especially the report on report and report is super time consuming, super time demanding, demanding on the teams. And and I actually have a good friend of mine who works in a big corporation and they have a big issue with with converting the leads. Well, actually not converting the leads, but when they have sold to customers, they need to onboard them into the organization and they are only onboarding 2%. Of the of the customers that they have sold to. So 98% of the customers they have sold to. They never convert, they never onboard them. And they are spending so much time making report on report on report, but they don't understand. Why don't we onboard these 98%? So is writing here the report on report and report having data available but not prioritizing, boiling it down to actionable insights and at times an issue with flawed with flawed data. So this is a these three challenges is something that we see in most organizations. So we can either talk about the current as is, what are the challenges. Or we can talk about how can we solve this. So let's let me provide a quite simple approach to how we can solve this. Maybe already today in relate to how do we prevent customer churn? So one thing that is important to say is that the data in itself doesn't prevent churn. It never will. All right. So it can predict churn, but it won't prevent churn. Other variables will prevent churn. Yes, we can use the data to predict it, but it won't prevent it. That's very important to say. So we can either do a project so employment consultant you can come up, come out to you and do a project, or maybe you have a you probably have people in the organization who can do a project on data, or you can use a no code tool, right? So you can synthesize data as you want. And then you have some predictions on what customers churn, when do they churn, but not on why they churn. So let me give you a short example of a business with 100 customers, how we would approach data in this scenario. So let's say we segment these customers into three different segments. Women aged 30 to 50, teenagers and males age plus 50. Right. So you can see here the allocation on the different segments 40%, 10%, 50%. And then we can add the average basket size. So you can see here that the average basket size on the women is a $100. That brings in a revenue per year of 4000. Now it's very simple right. So we're not doing variables and say some some leave. All of them will stay. And they will only churn on the 31st of December. And we have 15% churn rate, which means that the impact on churn or the revenue here is $600 per year. When we look at the teenagers, we have a churn rate of 25%, but the impact is only $125 per year. And then the males plus 50. The biggest customer that we have with the biggest basket size, they are churn rate is lower. That means that the impact actually is lower here. So we can use the data to to synthesize and prioritize. Boiled down as immediately saying here in the chat boil down what is it that we are looking for, but we need to look at some patterns. And if this was a real case, maybe we could unfold it even more and say, maybe it's actually only one persona within this segment of males between between plus 50 years old that account for the majority of the churn. And then we can focus on that individual. All right. We don't need to reinvent a big rocket ship. Maybe we just need to focus on that specific individual, because if we saw the churn for that individual, that would actually drive a lot of revenue. Then the second question that we need to ask is, are we solving the right problems? All right. So now we understand more about how we collect data and the importance and the challenges of data. Now we need to understand the underlying reasons behind the data that we have. So I want to give you an example from a from an American based company. And this is not a project that we have done. This is a this is a case that I have read. So this company, they were in the business of selling retirement homes. And and what they found was that once they've built these homes, as you can see here in the picture, beautiful homes, you have the lake, plenty of space, and the elder people will come out and look at these houses and they will express that, wow, this looks nice. Or I can definitely see myself live here. All right. But they would not convert. So they will say all the right things, but they would not convert. So what does a business do? Well, maybe they could hire more sales reps or they can upscale the sales reps. They can increase the marketing spending. They can increase the way the material in the houses. Right. They can spend a lot of money, maybe even make better value propositions, so that when the sales reps are equipped with these value propositions, we believe that that will lead the customers to churn. But none of that worked. So what do they do? Well, they had some consultants and they went out there and actually spoke to the customers. And what they found was the reason behind that these customers did not convert was that currently most of them had a place to live, and most of them had big dining room tables that they would sit and eat with. And in this new home that was typically smaller than what they came from, this dining room table from the old home wouldn't fit, and as it wouldn't fit, they couldn't see themselves living there because that was a part of their identity, because this is where they've had Christmas evenings with the families, New Years evenings, birthdays. This is the place they fed their child for the first time. All these memories, they wanted to bring them to the new home. So once they understood this underlying reasons behind the data that they didn't churn. Then they did the following. They made one of the rooms a little bit smaller and the dining room a little bit bigger, so that it would fit the dining room table. And then conversion skyrocketed. Don't spend more time on on sales reps. They're probably good enough. No more time in marketing. You have plenty of people in the store already, but we need to understand the underlying reasons behind why the customers do not convert. And we can do that in four different ways. And you probably have on your own a way to to do this. These are suggestions from From my side. So you can either do a journey map so you can say, well this is what the customers, this is what the customers or the customer, depending on what perspective you want. This is what they need to go through in order to, to convert or to or to buy more. Or you can establish a persona and you can test that. So you can have one of your colleagues and you can put on the persona. So now I'm a 35 year old woman, and I will go through this to this buying process, and I will see how I feel. You can also do interviews, so you can do it either very exploratory or you can develop hypothesis and test them in these interviews. Or you can do observations. Simply look at what are the customers doing. But one thing that we should be very aware of here is that real understanding of the customer's real understanding of the underlying reasons for why they churn, or why they don't convert, requires that we need to interact with these individuals. All right. So decisions make from the desk can be all right. But there is a high likelihood that we that we end up making the wrong decisions simply because we don't understand the underlying reasons behind why these customers, they may churn. And this leads me to the third and final question that we need to ask. And that is, are we doing the right things? So we can probably all relate to this. So we need to have some standard operating procedures. We need to do this and that. We need to update in the system. We need to ask the customer specific questions in a specific order. But maybe this is not really what the customer wants. Maybe they just want to convert. Maybe they just want to to spend more money in your business. Maybe they don't want these. To do this. So the question that we need to ask ourselves here is from what perspective are you preventing churn? So is this from our own perspective. So the box that you see on the left here. So are you the retirement home builder that increased the marketing budget, that made better product descriptions, that maybe build retirement homes in a new city, begin to hand out discounts, reorganize the incentive model so that the sales reps get more money or less money from when they sell or don't sell. Is this you? Are you adding more of something? Or are you increasing complexity? And maybe not only for your employees in the organization, but also for the customers? Or do you take another perspective? And that is the perspective from your customers and probably remove something, or at least make it as easy as possible to either become a customer in your organization to buy more if you're already a customer or to stay. All right, so how can I stay in this organization? And how can you make it as easy as possible for me to stay here? And so with these two different perspectives, that leads me to another question. And that is from which perspective are you currently trying or preventing churn. And you are more than welcome to go to the chat and write, but you have approximately a minutes to do that. All right. So we got a we got some reflections here in the chat and I can see that especially Emile and Jonas you are on a roll. So you are preventing churn from your own perspective with way too much data or flawed data. So sorry to to to hang you out to dry here, but I think that this is we have we have one anchor who is from the customer's perspective. And I'm very curious to know and what specifically you are doing to make it as easy as possible to either become to buy more or to stay as a customer. But the reason why, and the default approach is our own perspective. That comes down to, of course, many variables, but one one variable that is quite dominant here is that when we are trying to convince other individuals to to buy into an idea so that being a customer, that being a partner, that be a friend, that be a colleague, that we have an interaction with and say, hey, you need to understand my perspective. If people don't buy into it immediately, then our brain works the following way. Then it must be because the appeal of the idea that we have what we are trying to sell, it's not sufficient. It's simply because they don't understand how nice this idea is. And if the appeal is not sufficient, then we must increase appeal, and by increasing appeal, then they must buy into it. But that's not the reality, right? So how many times have you gotten a good advice from your mother in law or your mother or your partner? It doesn't work that it just increase the appeal, right? We do understand that we need to exercise, right? We don't get more motivated to exercise just because it's hammered in our head. So my argument here is that if the customers are already in your sales funnel, maybe we need to stop doing more of whatever it is that we do more of from our own perspective. And then we need to look at the customers who already entered our business. How can we make it as easy as possible to become a customer, to buy more, or to stay? So let me give you a couple of example of what this could look like. So I, I recently with my wife, we are getting to the age where we begin to purchase bets. Right. So we needed a new bet. And this is an example of one company that clearly understood my biases and adjusted their sales approach, and another company that did not right. So I went into two different the two different websites. So the way that I purchase bets, I go on Google and I write purchase a bit. Right. We're not going through the entire journey here. And what I'm met with is two nice configurations, right? Equally nice works basically the same way. Probably they're coded by the same individual. Right. That was easy. All right. So I can configure the bed I can say this is the size the length, the color, the pillows, whatever it is. But here's where the real difference happened. So on one web page, it was very visually easy to understand what was in my basket, including the price of what I put in the basket and the expected delivery time on the other web page. It wasn't. So first of all, I couldn't see the price. So for me to be able to understand the price of what I configured, I would need to contact a dealer. All right. So for now, I'm already losing my mind. But for the experiment of it, I tried to press contact a dealer, but it wasn't an interactive button. So I'm like, okay, for the experiment. This I need to see how long do they want to take this? So I refresh the side. Of course, it didn't save the configuration, so I would need to go back and make it again. And then I found this on the contact page. Chat and contact not found. All right. So for the experiment of this of course I wanted to guys I want to purchase your bed so bad. But this only leaves me one option. And that is to figure out where is this store located. And then I would have to go to that physical store the next day to purchase this bed, or, or I could go back to the other web page and then I could chat with the customer service. Actual people, not ies actual people, because we had questions. Right? I could do that until 11:00 in the evening. I imagine that they understand that most of their customers, they are looking at bets in the evening. And I can actually and actually also mitigated the biggest challenge that I was facing. What do I do with the old bed so I could pay a premium for them to carry my old bed away, whatever they do with it, I don't know, but this is definitely a premium that I'm willing to pay. So two different companies, same commodity, right? It's a it's a bed, same commodity, but two totally different ways for me as the customer to purchase this bed. So. If you were your customer. What would be one thing that you would say that you should do to make it easier for for? This is a weird sentence. So if you are your customers, what is one thing that you are encouraged your business to do to make it easier for you to either become a customer, to buy more, or to stay? All right. So. This is the exercise of of thinking as a customer. But of course this is a reflection. This is done behind a desk. So of course we need to ask this question to the customers if we want it to be really meaningful. Let me give you a couple more examples. So how this is an example of how we made it easier for an insurance company's customers to become customers. All right. So what we do is that we we want to sell. We want more leads. So we create a campaign. This is what this insurance company did. But they found that the conversion on this campaign wasn't as efficient as they wanted to. So this is how do we make it as easy as possible for your customers to become a customer? So this campaign was run on on the website. And when the customers entered the website, this is what they were faced with. So you can calculate your car insurance in five minutes. Press this link. Right. And and they didn't understand why do we not convert. So we're telling them that try and change the font on this campaign to something like this. Because we think we have this hypothesis that is simply requires too much mental energy to read this. So we change the font to what you see over here on the right. And we increase conversion with 105% only change we made simply because we made it easier for the customer to understand what is it that that that we want you to do? Currently we are working with a client and and what data tells us here is that if we decrease the response time on our quotes, we can improve the conversion rate with 5% per day. All right. So per day we become better at answering the customers. We increase the conversion rate with 5%. So what is the underlying reason behind why this. Why the data shows this. Well because the customers need the parts that we are trying to solve them. All right. So here we need to be able to respond to the customers quicker because they are sitting at the desk waiting to make a decision, and they don't want to wait too long. Then they will go to other competitors. And then a final example here make it as easy, easy as possible to stay. So this is an example from myself with with an airline that I was flying quite a lot with, I tried to map out the buying process from my perspective on how difficult it was to actually book through their website, and I ended up with 29 things that are needed to do before I was able to convert. And actually, at the end of the day, I couldn't convert because every time I tried to purchase the tickets, this was the message that I got. So I ended up after a couple of days writing back and forth to customer service to purchase from someone else. So here they already acquired me. They already paid for me to become a customer, but it simply was too difficult for me to stay a customer, hence I churned. This was it for the webinar. I hope that that you've had a good time. But before we conclude, I will answer questions in the chat and then I will do a short conclusion after that. So any questions that you may have, now's the time to to ask them in the chat. And then I can elaborate on them. -So. -Heidi, David, Catherine, don't go just yet. Even though you may not have questions, I will do a short roundup. It takes approximately two minutes. Thank you so much for for your emojis. Appreciate it. Sure. So you want to just asking, do you have. Do you do qualitative analysis or only quantitative analysis? I'm thinking. So the way that I interpret this question is that. Let me come back to your question when I, when I round off, because this is actually a really good question whether we do only qualitative and quantitative analysis on the data. All right. And that leads me on to to this slide here. Where to start. Right. I see that you are writing here in the chat now. But if we want to buy your service for instance to help with a problem. Oh okay. Okay. So if I do qualitative or only quantitative we can do both. Depends on the situation. But that is a that is to this what you see on the slide here now. So where to start. Because I would need more understanding before I would be able to tell you we need to do qualitative and quantitative analysis here because some problems it's simply so obvious what we need to do. So for instance you are sitting on the couch after a long day, your browsing with your with your smartphone on on whatever website you're browsing on, and you're adding the products to a basket, and then you begin to sweat because you realize that this website doesn't have a mobile integration. And when it doesn't have a mobile pay integration, you know what that means? It means that you need to get up from the couch. That requires physical energy, and it also requires mental energy, because where did I leave the damn visa card last time? Right? So we see a lot of individuals. They simply do not convert if we don't have the mobile pay conversion. And even worse thing about this, if you're buying something from Germany, maybe you need to sign up for an eBay or PayPal account, right? Never going to happen. Never going to convert. So for this case, maybe we don't even need to do many analysis. Maybe you can just say test this solution and see what happens. And Miguel is writing here. What is the best approach to do assessment of why customers are leaving or not converting compensation based questionnaires. Other things to ensure high response rate from customers. All right. So this is a really good question. So let me start by answering the questionnaires Miguel I think that the in general, I'm not fond of the questionnaires because first of all, it requires a lot of mental energy from for the customer to respond to these questionnaires. Also, I believe that the questionnaires are flawed. All right. So what I found is that typically we send out these questionnaires after an experience with the organization. All right. So depending on whether that experience was good or bad we collect the data. And and most of that data will just be quite biased. So what I would do instead I will spend more time talking -to the customers. And that can be. -We. Can we can establish hypothesis that we can test. All right. We can even try to be a customer ourselves in our own business, that that is better from my perspective than a questionnaire. So thank you for the questions. I see here that we have approximately five minutes left. So I will conclude this session now by saying that if you should start somewhere and that is the mobile peak sample that I gave you, you should start by thinking what is the path of least resistance? So how can we make this as easy as possible for the customer to either become, to grow, or to stay in our business? And I would do that by simply thinking about or asking just one customer, how can we make it easier for you to stay? How can I make it easier for you to become a customer if that is what you believe is your biggest challenge? Thank you so much for your time. It's been a pleasure. Even though I haven't seen you, you've seen me, but it's been good. 45 minutes. Take care. Have a wonderful Wednesday.