Front-line offense:Is your front office helping or hindering customer retention?By Rob W. Honts and Shawn D. Meyer

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If you’re losing customers, you’re not alone. Accenture research shows that frustration with poor customer service drove 65 percent of consumers into the arms of alternative providers in 2015— 17 percentage points more than 10 years ago.1

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Customers can leave because thanks to digital, they’ve never been more informed, connected, and knowledgeable about competing products and services. Clearly, companies need to provide superior experiences if they are to keep their customers. But because most incumbent players aren’t delivering, customers have migrated toward an entirely new sort of provider: agile digital disruptors that can fulfil service promises conveniently, consistently and at speed.

Why do so many incumbent companies miss the mark? Largely because they have front office operating models that can only tackle the churn challenge reactively.

Traditional operating models are organizationally siloed—and that inhibits them in several critical ways. They can’t understand customer needs and preferences, across all channels. They can’t deliver a cohesive, connected and consistent customer experience across all channels. And they can’t view customer-service initiatives as business growth opportunities that require a significantly more proactive approach.

A standardized, simplified and streamlined operating model, empowered by digital technologies, would help make all channels more responsive to customer needs. Indeed, it could turn your front office into a customer-service star.

First, however, you need to recognize the full extent of the churn challenge.

The stakes are bigger than you think The cost of dissatisfied customers to the organization is enormous. Accenture analysis indicates that the global switching economy is already worth some $6 trillion—and growing at double the rate of global GDP. Worse yet, traditional strategies to deal with churn may be compounding the problem.

Many companies attempt to compensate for churn by focusing on acquisition efforts. But studies suggest that acquiring new customers is five times more costly than retaining existing ones.2 What’s more, the poor experiences of existing customers hinder the acquisition of new ones. Digitally empowered customers can tell friends and family about their negative experiences online, in real time. And connected digital communities drive a significant multiplier effect.s

A better customer experience is plainly critical to company growth and long-term viability. The good news is that most incumbents are already well-positioned to provide it.

Accenture analysis indicates that the global switching economy is already worth $6 trillion.

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Your customers don’t want to leave Despite their openness to disruptors, most of your customers would really like to stay with you. Eight in ten customers who switch providers say they could have been retained if the company had been more responsive to their needs.4 Furthermore, most customers say they prefer a mix of human and digital interactions—a key strength of traditional providers.

All this suggests that the benefits of making your front-office operation more proactive could be dramatic. Indeed, by strengthening company “ownership” of customer issues, a lean, responsive, digitally-driven operating model focused on customer outcomes has cut churn and enhanced operational performance across a range of leading companies:

Improved customer retention: One large wireless company reduced churn by 20 percent after reorganizing its front office to create a Chief Retention Officer role and

supporting organization, and leveraging analytics to better identify its high-risk customers.

Reduced operating costs: Service centers in several industries have shown that driving accountability for a customer resolution to a single point of contact not only

reduces churn by boosting issue resolution rates and decreasing the overall number of service-related contacts. It also reduces operating costs because repeat interactions are fewer.

Increased operating margin: Best Buy’s suite of churn-busting organizational initiatives5 has included a completely redefined route-to-market approach. The electronics giant

leverages stores to enhance the online experience—an initiative that has also unlocked $2 billion in inventory for potential sales. Its renowned Geek Squad, which makes four million house calls per year for customer service, provides an end-to-end experience that even leading online retailers can’t match. This proactive, multi-channel approach helped grow operating margin by 150 basis points between FY 2012 and FY 2015.6

Eight in ten customers who switch providers say they could have been retained if the company had been more responsive to their needs.

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You can have it allPleasing customers and improving the bottom line is no longer a zero-sum game. By leveraging digital to make the front office more agile, and empowering inspirational change agents to encourage cross-channel cooperation and collaboration, leading players are both driving costs down and boosting customer satisfaction.

Cases in point: A high-tech manufacturer deepened customer insights and reduced operating expenses by incentivizing the sales force to drive more customers to a digital platform; and a large insurance provider significantly strengthened customer engagement by defining the social media responsibilities of all internal stakeholders and building a dedicated, multi-channel customer experience hub.

You too could build an operating model that turns digital disruption to your advantage. And the following steps will help kick-start your transformation:

Learn more about your customers. It’s critical to identify the KPIs and metrics most likely to help you understand the impact of your customer experience on churn. Align those

metrics to the right outcomes, and leverage analytics to gain insight into what determines optimally differentiated customer experiences.

Focus operational design decisions on driving end-to-end customer outcomes. Take an outside-in approach. Instead of creating functional teams (e.g., billing, technical support,

sales) that align to your existing operating model, organize employees around customer intent (e.g. onboarding, service upgrade, service issues), and empower them to conduct all aspects of support across those areas. The benefits of such a customer-centric operating model include fewer transfers, greater employee ownership and happier customers.

Develop an organizational culture that can adapt to changing customer needs. Abandon siloes and foster a culture that’s consistently focused on improving customer

retention. Incentivize behaviors that will drive the right customer outcomes, and communicate consistently with your teams, leading from the top.

Establish a process to allow for continuous improvement. Implement a “review, approve and prioritize” process to drive customer value generation and ensure future value is unlocked.

Continually monitor, evaluate and adjust your performance metrics to prioritize opportunities to adapt, while identifying risks.

Drive costs down and boost customer satisfaction by leveraging digital to make the front office more agile. Empower inspirational change agents to encourage cross-channel cooperation and collaboration..

By taking these steps you will enable a proactive front office that is agile enough to embrace constant digital disruption. What’s more, you will significantly improve the customer experience and reduce your cost-to-serve: a win-win—for you, and for your customers.

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Contact the Authors

Rob W. Honts rob.w.honts@accenture.com

Shawn D. Meyer shawn.d.meyer@accenture.com

References1 Accenture Global Consumer Pulse Research, 2015.

https://www.accenture.com/us-en/insight-digital-disconnect-customer-engagement

2 “Cost of Customer Acquisition vs. Customer Retention”. CAM foundation. 2015.

3 https://research.facebook.com/blog/three-and-a-half-degrees-of-separation/

4 Accenture Global Consumer Pulse Research, 2015. https://www.accenture.com/us-en/insight-digital-disconnect-customer-engagement

5 http://fortune.com/2015/10/25/best-buy-turnaround/

6 http://financials.morningstar.com/ratios/r.html?t=BBY

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