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Avoidable customer churn costs British businesses £25 billion

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Avoidable customer churn costs British businesses £25 billion
  • Banks come eighth in the CallMiner Index – down from sixth over five years
  • Consumers want to stay loyal but bad practices with new customer offers and bad call centre experiences drive people away

New research released today by CallMiner, the leading platform provider of award-winning 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.[1]

The report features survey responses[2] 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:

        Sector position last five years Sector position last 12 months
1.       Electricity companies (43%) 1.       Electricity companies (29%)
2.       Broadband companies (37%) 2.       Insurance companies (24%)
3.       Gas companies (36%) 3.       Gas companies (24%)
4.       Insurance companies (33%) 4.       Broadband suppliers (23%)
5.       Mobile telephone company (28%) 5.       Mobile telephone company (17%)
       6.    Banks (24%)        8.    Banks (12%)

The same four sectors top the Index over five years. The banking sector has moved lower in the Index in the last 12 months, to eighth position from six over five years.

The pace of switching is on the rise
The CallMiner Index also looks at how often people have switched over the last five years by sector. The average rate of switching across all sectors is 3.4 times over five years or 0.68 times per annum on average. When you consider that the average rate for the last 12 months was 1.91 times, the rate of switching has accelerated by almost three times! But banks have the second lowest average out of all sectors, with bank customers switching three times in the past five years.

The main reasons for churn – falling foul of the Brits’ sense of ‘fair play’
The survey uncovered that consumers want to stay loyal but are ‘forced’ to switch because of suppliers’ bad practices. There is a difference between plans to switch and actual switching. For example, only 10% say they are planning to switch banks but 12% did so this year. This gap between intention and action can be seen across all the sectors.

The main actions by banks that force consumers to say goodbye are as follows:

  1. Prices are too high or have increased (69%)
  2. There is no reward for contract renewal i.e. no reward for loyalty (44%)
  3. Discounts offered to new customers are not automatically applied to your account (40%)
  4. Feeling like you are not being treated fairly (31%).

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 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 control 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 banking 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 (79% v 69%); reward them for renewing their contract (69% v 44%) and automatically apply new discounts to their existing account (61% v 40%).

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. Banks could reduce their churn rates still further if they listened to what consumers are saying in this research and put treating customers fairly at the heart of their brand values.”

Banks not seen as good at recognising vulnerability
Thirty percent of banking customers scored between 0 and 4 (when 0 is not at all good and 10 is extremely good) when asked how good they think banks are at recognising when a customer may be vulnerable/need sympathetic handling (such as when they are in debt or contacting to handle things related to a deceased family member).

Call centres are now centre stage in the battle for loyalty

The telephone remains the preferred way to contact suppliers and is subsequently the #1 channel used. Almost a third (32%) of banking customers list the phone as their first preferred method to interact with their bank. However, double the number of consumers (64%) used the phone to contact banks in the last year. This may be because the top two reasons to contact banks relate to problems with charges (65%) or resolving a technical problem with the product or service (60%). Both these issues require specialised support from a contact centre agent. Issues around charges fall into the category of avoidable triggers for churn.

Call centre experience can decide if consumers stay or say goodbye – empathy is key to success

When it comes to delivering services to keep banking consumers loyal, call centres top the list: 69% want call centre staff to be aware of their service history so they don’t have to explain multiple times.

The survey also uncovered that call centres play a pivotal role in a consumer’s decision to switch or stay loyal. When asked how likely they are to switch their banks if they have a bad experience with a call centre, 72% scored between 7 and 10 on a 0 – 10 scale (where 10 = extremely likely). This is 4% more than the whole sample. About one in five (22%) scored 10. When asked how likely they are to stay loyal to their bank if they have a good experience with a call centre, (71%) scored between 7 and 10 – 3% lower than the whole sample – with 20% scoring 10.

The ability to show empathy seems to be key to success. When asked about their emotional state before a call to a call centre, the top response by 44% of banking consumers is that they want someone to listen to them. The next four answers show what a tough job call centres staff have in dealing with the emotional state of callers. Two fifths (40%) say they arrive annoyed; almost a third (31%) arrive hopeful; 21% arrive confused and the same number arrive ready for an argument!

It seems some call centres are good at taking the heat out of the situation. The second highest response for the emotional state after the call, by almost one third of banking consumers (32%), is satisfied. The percentages of people feeling angry, annoyed or upset, all show reductions of an average of 28% from the before-call figures.

However, other call centres may be less empathetic. The highest response by over one third of people (36%) is feeling frustrated and third highest (28%) is feeling annoyed. Despite reductions in negative emotions post call, the percentage is still high with 58% of customers reporting negative emotions (Angry, Annoyed, Upset, Confused, Frustrated) after contact with a call centre. When it comes to meeting consumers’ need to be listened to, banking companies do not perform as well as consumers would like. In fact, less than half of those who wanted to be listened to before the call (44%) felt that they had been after the call (20%) – meaning they left the call feeling ignored.

Aimee Lucas, Vice President and Customer Experience Transformist, at Temkin Group, said: “Our own research shows that call centre interactions that were more emotionally negative led to longer calls, more frequent transfers, and lower likelihood of the customer recommending the company to others. It’s imperative that companies use the available tools to their advantage to identify reasons leading to negative customer experiences and churn and coach their call centre staff on the behaviours that create more positive interactions with customers.”

callminer UK churn infographic

callminer UK churn infographic

Business

Can your company data make you famous?

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Can your company data make you famous? 1

By Kerry Gould, Associate Director, Speed Communications

Businesses gather and generate reams of data every day on everything from purchasing habits to customer behaviour. But too often, it gets ignored or restricted to ‘internal use’. Is this a big opportunity missed?

Perhaps more than in any other sector, finance and banking companies hold a goldmine of data. Of course, individual customer transactions are highly sensitive and need to be kept secure. But when these are collated into trends across an entire customer base, it can paint a compelling picture of people’s changing priorities. What are people spending money on? How are they using credit cards differently? Are they shifting their savings goals or looking at mortgages differently? And it’s not just consumer-facing businesses that can use their data to tell stories. It’s a growing area in the world of B2B marketing, especially for firms targeting the UK’s 5 million+ SMEs.

Insight in the COVID-19 era

Appetite to share data is increasing since the start of the COVID-19 pandemic, too. We’re already seeing companies step up and share this intelligence; barely a day goes by when there’s not a report on how people are changing and adapting. In an era when everyone is trying to be a ‘thought leader’, having this unique insight can really set a company apart and elevate its public profile.

There are some great examples out there. Barclaycard revealed in its SME Barometer that the number of small businesses actively taking payments has increased by 24 per cent since the start of lockdown, an indicator of recovery. Meanwhile, Bottomline revealed in its Business Payments Barometer that 89% of firms continued to pay its suppliers late and £164,000 was lost by the average mid-sized business to payment fraud.

These reports achieved media coverage in print and online, and likely to have been shared widely over social networks, been promoted in email newsletters, discussed in online webinars and provided talking points in customer meetings. In today’s multi-channel world, there are a plethora of ways to reach customers (and potential customers) and we know that a ‘layered approach’ to these communications stand the best chance of getting you noticed and remembered.

Commissioning a survey through an independent research agency is a tried and tested method for marketing and PR teams to gather insight to use for content marketing and news generation. But often, your company’s own proprietary data can be even more compelling. It’s based on actual facts and behaviours, immune from the public’s continually fluctuating opinions. Plus, it doesn’t cost you thousands of pounds to commission. If your company has a strong enough dataset that can tell a story or indicate a trend, it should absolutely be used.

Overcoming hurdles

Like all well-meaning initiatives, data-led PR doesn’t come without its challenges. Here, we tackle three.

  1. Getting buy in to go public
Kerry Gould

Kerry Gould

Sometimes, business stakeholders can be nervous about releasing data that may be deemed commercially sensitive, revealing market share or insight that competitors could take advantage of. In this case, it’s about considering risk versus reward. The marketing benefit for making yourself known could be offset by competitive intelligence that your rivals may have through other sources anyway. Ultimately, there’s often a compromise to be stuck and there may be some data that you can’t disclose. Bringing stakeholders on the journey with you from the start is often the best way to ascertain this.

  1. Organising reams of data

It can be overwhelming to organise complex data sets, gather trends from different silos, departments and platforms. Many finance companies have in-house data analysts and insight teams whose job this is, but for others, outsourcing to a specialist provider like Data Cubed or Beyond Analysis can be a helpful move. By building a dashboard that collates everything in one place, teams from across the business, and external PR or marketing agencies, can get access in real time.

  1. Not having enough data

It may be that your business doesn’t generate reams of data or lacks a large enough sample size of customers. In this case, you can partner with an organisation that does. In the Jobs Recovery Tracker developed with the Recruitment and Employment Confederation, we partnered with EMSI to tap into their database of live job vacancies. This helped to track the employment market amid COVID-19, generating masses of media coverage, insight to inform its content marketing and talking points for its upcoming REC 2020 conference.  This can sometimes be treated as a commercial arrangement but often considered a joint PR opportunity that’s win-win.

Data journalism is a growing discipline in the world of media, with news outlets dedicating talented people and resources to telling stories with numbers. The BBC and Guardian do it particularly well. With marketeers – particularly in data-rich industries like finance – waking up to the power it can hold for true thought leadership, the future is likely to be one ever more governed by data-led insight. How long before ‘data-PR’ becomes a discipline in its own right?

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Business

Advice for contractors closing down their contracting company

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Advice for contractors closing down their contracting company 2

By John Bell is Director of insolvency firm Clarke Bell, which he founded in 1994.

Contractors with a limited company/Personal Service Company (PSC) have been going through more than their fair share of turbulent times recently.

In the last two years contractors/PSCs have been bracing themselves for the impact that the new off-payroll legislation (IR35) will have on their lives and livelihoods, as the Government ploughed ahead with its plans to roll out the reforms to the private sector; as it, wrongly in many cases, believed some contractors should be deemed as employees and not genuine self-employed contractors.  Then came Covid-19 and once again those self-employed workers were dealt another blow as the pandemic left many without work overnight, albeit there was some relief as Off-Payroll was paused until April 2021.   And let’s not forget Brexit and all the uncertainty around it which is having a huge effect on a lot of businesses in the UK.

It has been a bumpy ride for businesses of all sizes over the last few months and, despite the emergency measures announced by the Chancellor in an effort to keep the economy afloat, not every contractor will want to carry on trading. Some will want to retire earlier than they’d previously planned – to get away from all the turmoil and ‘cash in’ all their hard earnings. Others, however, will have seen their income falling to such an extent that they are now having cash flow problems and are unable to pay some of their bills.   Some may be considering taking up a PAYE role for job security whilst others may be forced to put their retirement plans on hold and continue working until they feel confident that their pension pot will serve them well.

The combined effects of Brexit, Covid-19 and the new Off-Payroll tax have hit businesses hard and some company directors now think that closing down their company is the best course of action for them.

A Members’ Voluntary Liquidation is the best option for contractors

If a contractor is planning on moving into an employee/PAYE role, retiring or pursuing some other life or career plan then a Members’ Voluntary Liquidation (MVL) is likely to be the most tax-efficient way to close a solvent company – particularly if the assets of a company are more than £25,000.

An MVL is an HMRC-approved process and a licensed insolvency practitioner must be appointed. While it may have a negative-sounding ring to it – with terms like ‘liquidation’ and ‘insolvency practitioner’ – there is nothing negative about it. Quite the opposite, in fact. By placing a company into an MVL it is a clear illustration that someone has been running a successful company.

An MVL allows a contractor to draw any remaining profit as a dividend, paying income tax on the dividend amount.  With the help of the licensed insolvency practitioner who will liquidate a company, the reserves can then be distributed as capital, which are then subject to capital gains tax (CGT) at either 18% or 28%.

Through an MVL, a contractor can also take advantage of Business Asset Disposal Relief, formerly known as Entrepreneurs’ Relief before 6 April 2020.  If someone qualifies for this relief, this can mean that CGT will be paid at a rate of 10% on qualifying assets, which can translate into considerable tax savings.  Each shareholder of the limited company could also benefit from a tax-free allowance of £11,000, the Annual Exempt Amount.  If there are multiple shareholders, this can be highly efficient.

To ascertain eligibility for Business Asset Disposal Relief / Entrepreneur’s Relief, contractors should speak to an accountant and also look at the Gov.uk website.

Off-Payroll (IR35), Brexit and Covid-19 are all things that are likely to have a huge impact on contractors and their limited companies and most firms of Insolvency Practitioners will offer free and confidential advice.

My advice to contractors is to talk to their accountant and help decide whether an informal strike-off or an MVL is the best option.  If a contractor is having serious cashflow problems then an insolvent liquidation might be the best option.

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How we as female entrepreneurs can inspire and educate the next generation of female leaders

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How we as female entrepreneurs can inspire and educate the next generation of female leaders 3

By Vaishali Shah, serial entrepreneur at Creativeid

There is tremendous enthusiasm and aspiration amongst the next generation of women who are passionate about being successful in their chosen career, whether it’s running their own business or rising to the top in the company they choose to work in. It is up to those of us who are already in the shoes they want to fill to be the role models and help them along the way. They need our support and guidance and access to tools and resources.

The Alison Rose Review of Female Entrepreneurship found that only 39% of women felt they had the capabilities to start a business compared to 55% of men because they did not fully believe in their entrepreneurial skills. The Review also found that only 30% of women said they already knew an entrepreneur compared to 38% of men.

Here are some ideas and suggestions of how those of us who are successful women in business can help and support the next generation of leaders:

Mentoring – connecting the leaders of the future with experienced and established entrepreneurs and leaders in their industry who know the steps and have already overcome the challenges. Meeting on a regular basis (in person or via video technology), answering questions, offering resources and helping them to define their vision clearly while pointing out opportunities would be extremely beneficial.

Female only networks – most events, especially in the financial and banking sector, are attended by a majority of men. This can be a bit daunting for women who tend to feel isolated. Unfortunately, there are very few female-only business networking groups. We need many more. Women have a different networking style than men. A female only network can give members a safe place to network, build confidence and relationships, while sharing some of the challenges they are facing and ask for guidance and support.

Panel discussions – invite successful female entrepreneurs and leaders from different industries to share their journeys to success. Their challenges, how they overcame them, what kept them going and any nuggets that could inspire the leaders-in-waiting. This could be run around International Women’s Day in March, for example.

Vaishali Shah

Vaishali Shah

Workshops/seminars – offer a seminar or workshop on topics that give valuable information on various aspects of running a business for entrepreneurs. In the workplace, have a system in place for ongoing training, development and engagement. Providing support, tools and resources will help to develop female talent. Make the workshops free or low cost so there is no barrier to entry. Help them to formulate a clear vision and a strong ‘why’ for their vision. This vision and ‘why’ will carry them through the tough times and be an important reminder and motivation to stay the course.

Recommendations – emphasise the importance and benefit of continual learning. Suggest podcasts, webinars or books to listen to or read. Being open to others’ experiences and ideas will help to educate and inspire them. People who achieve great success have a thirst for knowledge and are eager to learn from others.

Confidence and encouragement – give the next generation of leaders a sense of their own value and the value they bring to their market by the products and services they offer. They fill a need – they bring value. Help them understand that setbacks are a part of any business, but they should not be considered failures, rather, as gaining experience. Using setbacks as stepping stones towards their goal is what differentiates those who achieve great success from those who let setbacks define who they are, thus diminishing their chances of success.

Time for them – running or working in a fast-paced business can be all consuming, demanding and overwhelming at times, especially if they’re ambitious and want to get ahead. Teach women in business the importance of taking time out for themselves every day and to celebrate even the smallest success. Taking time out may seem counter intuitive, however it gives the mind time to relax and be open to inspiration and creativity and therefore being more productive.

Dame Karren Brady says – “If you have passion, drive and an entrepreneurial spirit, being female shouldn’t prevent you from getting where you want to be, and sometimes we must have the determination not to let it”.

Whether the next generation of female leaders are students about to embark on their business career, already running their own business or those in employment, we who have the experience and knowledge can play a crucial role in their climbing the ladder of success.

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