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I was shocked. Consider the basic math. On average, it costs $300 to acquire a banking customer. That customer pays a monthly account maintenance fee of approximately $12. Looking only to the guaranteed income from maintenance fees, it takes twenty-five months (more than two years) before the bank earns back the initial investment in acquiring that customer. If 32 percent leave before reaching the twelve-month mark, that means the bank has the potential to lose
money on 32 percent of its newly acquired customers!

Which raises the urgent question of why. Why are customers leaving at such great personal cost? While the financial cost to the bank is staggering at scale, the personal inconvenience to customers who go through the enrollment process and then decide to leave is even worse.

Think back to the last time you opened a new bank account. Let's be honest, it's a pain in the...neck.

To open the typical bank account, you go into a local bank branch, present your government-issued ID, fill out reams of paperwork, and make an initial deposit to fund the account. After that, you order checks, request an ATM card, set an ATM code, and re-enroll for online bill paying and direct deposit. You then wait while things continue to process in your old bank account (many people keep both the new and old bank accounts open for several months of overlap)
before finally shutting down the old bank account and transferring any remaining money into the new account.

It is mind-boggling that a customer would ever leave after going through all of these steps and investing this much time, effort, and patience. And yet 32 percent do just that!

In fact, 20 percent of the customers who leave in the first year do so without ever having conducted a single transaction. Not one ATM  withdrawal, not one check clearing, and not one payment of an online bill.

A shocking 50 percent of the customers who leave in the first year quit doing business with the bank in the first 100 days! The relationship has barely started, the customer may not even have closed their prior bank account, and already they are leaving.

This revelation about banks losing customers left me with one burning question: If customer defection is an epidemic in the world of banking, where paying close attention to the bottom line, the cost of acquisition, and the rate of retention is part of "banker DNA," what must it be like in other industries?

I started researching all kinds of businesses and marketplaces around the world and what I found was staggering.

Despite the fact that cellphone contracts are notoriously draconian and require you to give up your firstborn child to break them, 21 percent of cellphone customers break the contract within the first 100 days. While no one likes it when their car breaks down, even fewer people like their car repair experience. Between 60 and 70 percent of car owners go to an auto repair shop once and will never visit that shop again because the first experience is so poor.

Restaurants live or die based on their ability to keep customers in the seats—and yet 46 percent of new customers to a Chuck E. Cheese's pizza restaurant will never visit a Chuck E. Cheese's again after their initial visit. Almost half of the new customers the restaurant worked so hard to acquire appear to dislike the experience so much that they never return.

This defection turns into a downpour in the ever-expanding software as a service (SaaS)/cloud industry. Twenty percent of newly acquired customers don't make the 100-day anniversary before leaving.

The combination of Internet, phone, and cable television services offered by integrated telecom providers sees staggering rates of customer defection in the first 100 days. While most companies are unwilling to share these rates publicly, defection rates of greater than 30 percent during these first few months are not uncommon.

Regardless of where your business operates, what industry you work in, or the size of your operation, you are likely losing approximately 20 to 70 percent of your newly acquired customers in the first 100 days of the relationship. Companies spend incredible amounts of time, money, and energy to obtain new customers, but are hemorrhaging customers after the sale.

Why don't businesses focus on retaining the customers they worked so hard to earn?


***** TABLE OF CONTENTS *****

IF A DENTIST CAN DO IT, WHY CAN'T YOU?

THE COST OF LOSING A CUSTOMER

CUSTOMER DEFECTION: A STRUCTURAL AND CULTURAL PROBLEM
WHAT IS CUSTOMER EXPERIENCE?

YOU ONLY HAVE 100 DAYS (IF THAT LONG) TO GET IT RIGHT

THE EIGHT PHASES OF THE CUSTOMER EXPERIENCE
PHASE 1: ASSESS
PHASE 2: ADMIT
PHASE 3: AFFIRM
PHASE 4: ACTIVATE

PHASE 5: ACCLIMATE
PHASE 6: ACCOMPLISH
PHASE 7: ADOPT
PHASE 8: ADVOCATE

GET STARTED: HOW TO STOP LOSING CUSTOMERS TODAY
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