Under what circumstances would you “break up” with a customer — and what would that cost you? According to a recent Gartner report, “By 2025, 75% of companies will ‘break up’ with poor-fit customers as the cost of retaining them eclipses good-fit customer acquisition costs.”
These future break ups are problematic for both customers and companies. Customers are not static and their situations may change. As Forbes contributor Steve Andriole writes, “A poor customer could become a great one tomorrow.” Similarly, companies evolve and their strategies change. Executing upon strategic redirection is complex. How does a company implement change equitably, communicate clearly, and ensure that their customers have other options? What happens if they don’t?
Using the PositivityTech® Intelligent Platform, you can see the risks of breaking up with customers based on data from millions of customer complaints to the Consumer Financial Protection Bureau.
A look at account closures: What happens when you break up with customers?
Since the early stages of the pandemic, a growing number of customers have complained that financial institutions are closing their accounts without warning. When banks close their customers’ accounts to reduce their credit exposure — and do not provide a clear explanation for why they have done so, banks send a message to their customers that they are “poor-fit.” This leads to an uptick in complaints and increased regulatory scrutiny. It also impacts customers’ credit profile, which leads to additional hardships during a period of uncertainty and change.
Explore two real-life complaints from longtime customers who have experienced involuntary account closures, and a PositivityTech visual that illustrates this issue’s growth:
A look at mergers: What happens when customers are deemed “poor-fit”?
Bank mergers bring sweeping changes — from strategic direction to the banks’ name and brand to technology conversions and more. As a result, errors occur: Customers are often casualties of mergers, and are left feeling frustrated and confused. Customer retention during a merger is crucial, and customers’ complaints impact an organization’s bottom line.
In the following visuals from PositivityTech, you can see the rise of complaints shortly after such mergers, as well as two complaints from customers who experienced issues during mergers.
PNC and BBVA
BB&T and SunTrust (Truist)
How does a “poor-fit” customer strategy align with a company’s ESG strategy?
Today, ESG is core to business’ strategy and their future growth. Below read what two top banks share about their ESG strategies. See how that language compares to Gartner’s wording about a “customer-fit score.”
Not only would an accurate customer-fit score need to quantify customers’ lifetime value and future value in addition to the existing value of their relationship, but the existence of such a score is in conflict with the “S” in ESG. “Poor-fit” customers will be negatively impacted, as will the company’s relationship with its customers and employees.
Below you can see three of the issues that customers complain about, which indicate relationships that lack trust and goodwill:
Turn “poor fit” customers into great customers
Relationships take work and experience ups and downs. As we’ve previously shared, understanding and addressing the root causes of complaints can reduce customer churn and alleviate future customer frustrations — turning “poor-fit” customers into great ones.
Using PositivityTech, you can turn your customer complaints into data; view potential risks and opportunities based on what your customers are telling you; and use those insights to improve your policies, products, and practices. With PositivityTech, you can transform negatives into positives.