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Customer Churn—Detect Drivers of Disloyalty like Sherlock Holmes

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"When you have eliminated the impossible, whatever remains, however improbable, must 
be the truth…"      Sherlock Holmes: The Sign of the Four (Sir Arthur Conan Doyle, 1890)

If you're a fan of Sherlock Holmes stories, you’ll remember some of the methods that the fictional detective employs to dazzle his companion, Watson. Imagine being able to impress your colleagues with your deduction skills. They will marvel at your ability to understand and quantify the reasons your customers give in response to your probing questions. For 14 years, I’ve been helping companies retain customers (also known as reducing “churn”) and increase their annual revenue (retention) by understanding the reasons why customers leave.

In terms of Net Promoter®, we consider this part of the “Analyze” stage. Employing Holmes-ian methods of deduction can allow you to find the “root cause” of your company’s churn.

The Case of Churn

Analyzing churn is an area where some organizations spend big. They invest in market research (or to use its more modern term “customer insights”), make an annual survey, ask numerous questions and create complex mathematical models to show linkages between the reasons a sample of customers give. And then, all too often, a presentation is given to top management; a lot of nodding is done, but little else. Everyone has a nice warm feeling of accomplishment, but no actions are taken.

revenue_dropFor NPS Leaders, this process is quite different:

  • They ask customers for a “recommendation score” frequently, and question them on the reasons for giving that score.
  • They make simple, fast deductions on the main issues—the drivers of churn.
  • They take actions by letting the most appropriate staff close the loop with customers.
  • They continually monitor what issues matter to customers and make small incremental changes.
  • They use the driver data from promoters to help acquire new customers.
  • They make bigger strategic decisions by analyzing this mass of data over a longer period of time.

Finding the root cause behind why customers are leaving you does employ methods of deduction. One of the best ways of narrowing down root cause is using techniques like the 5 Whys.

Deduction Through the 5 Whys

The 5 Whys is a deduction technique developed by Toyota that explores the underlying root cause of a problem. The technique repeats the question “Why?” a number of times with each answer forming the basis of the next question. In his newest eBook, Root Cause Analysis: The NPS Handbook to Analyze the Drivers of Loyalty, Jørgen Christensen discusses this technique in greater depth. For our purposes, to better illustrate this process, let’s use an example where you have an unusually high turnover rate for your call center. Now, we’ll employ the 5 Whys to get at the heart of the problem:

  • Why #1: Why is the call center turnover rate so high? Based on exit interviews, you determine that the folks are burnt out.
  • Why #2: Why are they burnt out? After pulling call center records over the last 6 months, the number of calls to the center are up 48% on average.
  • Why #3: Why are the calls up 48%? Calls increased immediately after the latest update to your website.
  • Why #4: Why are the call rates about the website skyrocketing? End users are having difficulty finding the functionality they desire.
  • Why #5: Why can’t the callers find their functionality? Because of the website redesign, information about the functionality is now buried under four different layers of menu paths.

Solution: Resolve the navigation issues with the website so customers can more easily access the issues they need, thus lowering the percentage of customer calls.

Deduction Holmes-Style

In many ways, Holmes often uses a similar method to the 5 Whys for his deductions.

Early on in the Sign of Four book, Holmes shows off his deduction techniques to Watson by casually examining a watch. After a few moments, he confounds Watson—telling him it belonged to his dead brother. He then added “He was a man of untidy habits,—very untidy and careless. He was left with good prospects, but he threw away his chances, lived for some time in poverty with occasional short intervals of prosperity, and finally, taking to drink, he died. That is all I can gather.”

Watson is amazed by this, but Holmes then explains the details that led him to his conclusions: scratches, cuts, and pawnbroker’s marks.

You’ll have to read The Sign of the Four for the full story…

Deducing Customer Churn Through a Net Promoter System

While not all of us can have the observational mind of a Sherlock Holmes, avid "churn detectives" can turn to modern solutions, like the Net Promoter System, that have all the Holmes-ian deductions built-in. With NPS, you can pinpoint pain points in your business through surveys and drivers.

If you’re looking to learn more about using root cause analysis to determine churn, or want to pick up deductions skills like that of Holmes, pre-order our comprehensive guide below.

root cause analysis

Next Up: The Hitchhiker’s Guide to Measuring Your NPS Score

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