Stemming Maintenance Contact Attrition

Stemming Maintenance Contact Attrition

Over time, the implication of achieving only industry-average renewal rates will result in significant customer attrition and lost revenue.  Industry-average renewal rates show that nearly one-fifth of customers are lost at renewal time.  As these losses compound over time, the effects are dramatic.

Industry Average Renewal Performance

A steady erosion of the customer base over a five-year period is typical for companies that only achieve industry average support and maintenance contract renewal rates.  The impact of consistently the industry average contract renewal rate (82.4%) illustrates the erosion of the customer base.  This example shows that at the end of a five-year period, the percent of customers under contract erodes to 46% of the original relationships.

This example does not take in to account new contracts added or other growth activities.  It is intended to highlight the impact of achieving only industry average performance.  Increasing support and maintenance contract renewal rates by 5% to 10% can have a dramatic impact on the percent of customers retained and on net revenues.

The Impact of Industry Average Performance

Moving Beyond Industry Average Performance

Industry average performance is not good enough.  To maximize support and maintenance contract revenue you need a clear picture of your current situation or a plan to understand and mitigate attrition. ServiceXRG offers the following recommendations to assess and improve your customer retention capabilities:

  1. Establish an up-to-date and actuate measure of your current support and maintenance contract renewal performance.
  2. Benchmark your current renewal performance – are you at, below or above industry average performance?
  3. Identify the top reasons for contract non-renewal (hint: ask your customers). See also Why Your Customers Don’t Renew Service Contracts and What You Can Do About It.
  4. Develop a mitigation plan to stem contract attrition.
  5. Forecast the impact of increasing contract renewal performance by 5%, 10% or more.
  6. Use the forecasted benefits from increased contract renewal performance to make the case for funding corrective actions (new or better tools, more staff, or changes to business processes).
  7. Continue to refine processes, tools and performance indicators to maximize retention and revenue from the current customer base.

Assessment: How effective are your service contract renewal practices?

Are you leaving money on the table? Do you know why customers cancel service contracts? Use ServiceXRG’s Renewal Assessment tool reveal your Service Contract Renewal Health Score.
You will receive immediate feedback with recommendations to maximize service renewal performance, a copy of the Service Renewal Best Practices playbook and a complimentary coaching session.

Begin Assessment

Playbook: Service Renewal Best Practices

The Service Renewal Best Practices playbook introduces the metrics, practices, and activities necessary to optimize service contract renewal performance and grow customer relationship value.

Would you like a free copy of the Service Renewal Best Practices playbook?

Use ServiceXRG’s Renewal Assessment tool and receive your copy.

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Shaping the Customer Experience (CX) with On-Line Support

Shaping the Customer Experience (CX) with On-Line Support

The way we interact with customers directly affects the way they perceive us.

Positive Customer Experiences = Retention and Recurring Revenue

ServiceXRG finds that there is a direct correlation between a positive service experience and revenue – both direct and indirect.  Providing a satisfying customer experience is critical to positively influencing the way customers behave. Anything less — even if it’s just a neutral experience — is not sufficient to compel positive customer behavior.  Customers that have a positive experience are nearly four times more likely than customers with a neutral or negative experience to buy a product from the company that delivered the experience; five times more likely to recommend a company; and over five times more likely to renew an existing relationship (e.g., a service contract).

Self-Help vs. Personal Interactions

Web-based activities have become a significant factor in shaping customer experience and influencing the perceptions customers have about companies and their products.  The majority of on-line interactions are unassisted, where customers are encouraged to serve themselves.

As self-service transactions replace personal interactions, the ability to shape the customer experience depends on the on-line tools and content provided. Poor content or an unnavigable site quickly undermines a business’s ability to deliver a positive experience.

There is a profound difference between personal interactions and self-service transactions. The factors that influence the customer experience in personal interactions — an agent’s listening skills, empathy, knowledge, etc. — are replaced by an overriding factor: whether the customer is able to quickly find relevant information. In our effort to encourage customers to serve themselves, we have removed the human factor from the on-line experience. The burden for delivering a positive experience now lies with the tools and content we offer and their relevance in helping customers achieve their objectives.

Factors that Affect Customer Satisfaction

High Stakes

On-line services provide a means for companies to continue to engage with their customers in a low-cost manner. However, self-service is not simply a means to save money: Each interaction is an opportunity to reinforce the relationship and sustain customer loyalty. Though there’s a significant temptation to undertake web-based services as a low-cost alternative to customer engagement through interactive channels, it must not come at the expense of delivering an experience that strengthens relationships with customers.

Companies have a lot at stake when they move interactions to the web.  Once on-line, their customers are just one Google search away from a variety of alternative sources of information and resources to help them satisfy their needs. Brand awareness and affinity can be undermined in an instant. Creating a positive customer experience has never been more important.  It’s also never been more challenging.

When customers actively seek assistance technology vendors are presented with an opportunity to satisfy the customer’s needs.  This in turn creates an opportunity to positively influence the customer’s perception of the technology vendor helping to create satisfied and loyal customers.  The alternative is that when a customer that needs help but does not get it, can be left with an issue that inhibits their ability to use the vendor’s product.  This lack of service can potentially diminish customers’ perception of that vendor.

Factors that Affect Customer Satisfaction

Related Articles

Stemming Maintenance Contact Attrition

When achieving industry-average renewal performance the percent of customers under contract erodes to 46% of the original relationships at the end of a five-year period. Here are suggestions for moving beyond industry average performance.

read more

How Effective are Your Renewal Practices?

Use ServiceXRG’s Contract Renewal Assessment tool to get an immediate evaluation of your current renewal practices and performance. The assessment takes just a few minutes and will provide you with a customized performance scorecard with recommendations for improving contract renewals.

read more

Why Your Customers Don’t Renew Service Contracts and What You Can Do About It

Why aren’t you renewing more of your service contracts. The most common reasons for non-renewal are: Lack of perceived value; a customer stops using your product; a product reaches maturity; or poor service quality. Non-renewal is also caused by poor renewal practices. This article introduces the top reasons for non-renewal and offers practical advice for how to improve renewal rates.

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Maximizing Satisfaction with Support Case Resolution

Overall 70.5% of cases are resolved to the satisfaction of customers regardless of time to close. To maximize customer satisfaction with case resolution you must provide a satisfactory answer that solves the customer issues and do so within a reasonable amount of time.

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How Effective are Your Renewal Practices?

Service contract renewal performance is fundamental to overall corporate financial health. Existing service relationships represent a predictable recurring revenue stream and provide the foundation from which to grow revenue. Before you can grow relationship value however, you must be able to retain what you have.

Service Renewal Performance: Leaders vs. Laggards

Get an Instant Assessment

Use ServiceXRG’s Contract Renewal Assessment tool to get an immediate evaluation of your current renewal practices and performance.  The assessment takes just a few minutes and will provide you with a customized performance scorecard with recommendations for improving contract renewals.

The assessment covers the following areas:

  • Overall Renewal Health
  • Renewal Rate Performance
  • On-Time Renewals
  • Renewal Practices
  • Service Onboarding Practices
  • Success Practices
  • Value Delivery
  • Renewal Process

You will receive a customized assessment with observations and recommendations based on your input. Your report will be sent to you via e-mail upon completion of this questionnaire. Please note that your responses will be kept confidential.

Related Articles

Stemming Maintenance Contact Attrition

When achieving industry-average renewal performance the percent of customers under contract erodes to 46% of the original relationships at the end of a five-year period. Here are suggestions for moving beyond industry average performance.

read more

Shaping the Customer Experience (CX) with On-Line Support

The way we interact with customers directly affects the way they perceive us. Positive Customer Experiences = Retention and Recurring Revenue ServiceXRG finds that there is a direct correlation between a positive service experience and revenue – both direct and...

read more

How Effective are Your Renewal Practices?

Use ServiceXRG’s Contract Renewal Assessment tool to get an immediate evaluation of your current renewal practices and performance. The assessment takes just a few minutes and will provide you with a customized performance scorecard with recommendations for improving contract renewals.

read more

Improve Customer Experiences by Understanding What Users Want and Need

The ability for a service organization to maintain an acceptable level of customer satisfaction and deliver a reasonable customer experience begins with a company’s understanding of what its customers need, want, and expect. When customer expectations are not well known or more importantly not managed – the instances of dissatisfaction will rise.

This article describes the factors that affect customer satisfaction and experience levels.

read more

Improve Customer Experiences by Understanding What Users Want and Need

Improve Customer Experiences by Understanding What Users Want and Need

The ability for a service organization to maintain an acceptable level of customer satisfaction and deliver a reasonable customer experience begins with a company’s understanding of what its customers need, want, and expect.  When customer expectations are not well known or more importantly not managed – the instances of dissatisfaction will rise.

This article describes the factors that affect customer satisfaction and experience levels.

Satisfiers & Dissatisfiers

 

Availability of Service

Customers’ expect support to be available when they need it. This means that regardless of when the customer needs help they should be able to get it.  This includes both service hours as well as the policies and programs that define entitlement to services.

Satisfiers

Robust self-help resources.

Free (or included) assisted support.

Generous warranty and support policies.

7 x 24 x 365 coverage.

 

Dissatisfiers

Restrictive support policies.

Limited service hours.

Costly service fees.

Poor self-help resources.

Knowledge of Service Representative

Customers expect that when they contact you for support the person that provides assistance is knowledgeable and capable of resolving the issue in a timely manner.

There is nothing worse than a situation where the customer feels that they know more than the “expert” providing assistance.

Satisfiers

Skilled support reps.

Empathetic.

Empowered.

Dissatisfiers

Unfamiliar with the product.

Needs to escalate to someone else.

Unable to comprehend problem.

Rapid Response

We live in a world where we expect instant gratification.  Customers expect their problem to be acknowledged quickly and that a response will be provided in a reasonable time.

Satisfiers

Immediate acknowledgement of problem submission.

Expectations set for the time it will take to get help.

Response and follow-up within timeframe established.

 

Dissatisfiers

No acknowledgement (e.g. e-mail or web-based cases).

Excessive amount of time to receive a response.

Failure to set or meet expectations.

Professionalism

Customers want to be treated respectfully.  Most service organizations place a significant emphasis on soft skills, but all it takes is for a customer to feel like they have been slighted for the entire service experience to go downhill.

Satisfiers

Acknowledgement that there is an issue.

Understanding about the current relationship (e.g. the customer is important).

Please, thank you, and apologies when appropriate.

Dissatisfiers

Condescending tone.

Inability to defuse an escalating situation.

Lack of empathy.

Not hearing the words “sorry.”

Rapid Resolution

Customers want the fastest resolution they can get and are looking for the commitment and effort to quickly work to resolve their issue.

Satisfiers

Expectations for the time to resolve.

Meeting or exceeding expectations.

A shared sense of urgency.

Dissatisfiers

No firm commitment to resolution.

Failure to meet expectations.

Lack of urgency.

Quality of Product

While not a characteristic of service excellence it is frequently cited as a characteristic of the service experience.  Customers don’t want to have to rely on Support for product quality issues, but are often appreciative of help using the product more effectively.

Satisfiers

Little or no need for help with errors and bugs.

Help using the product more effectively (how-to / application of product).

Proactive notification of issues.

Dissatisfiers

Excessive issues with product quality and performance.

Little to no resolution through fixes and updates.

Too many updates.

Complete Resolution

Customers’ expect that the solution offered is complete and effective.  Customers are seldom happy when told to try something and call back if it does not work.

Satisfiers

A solution that works the first time.

Commitment to see the issue through to resolution.

Ability to by-pass the normal queues to reconnect on an open issue.

Dissatisfiers

A sense that the rep has brushed off the issue with a suggestion.

Solutions that do not work.

The need to contact support repeatedly for the same issue.

Self-Help Resources

Customers want to help themselves on their terms and often do not want to rely on service.

Satisfiers

Depth and breadth of self-help resources.

Answers to their specific problem.

Easy to use (search, navigate, etc.).

Dissatisfiers

Limited self-help resources.

Difficult to use and navigate.

Knowledge articles that are difficult to understand.

Outdated resources.

Proactive Updates

Customers want to be made aware of updates with an option for their technology to be proactively updated (don’t force the update).

Satisfiers

The ability for products to update themselves (don’t force the update).

Flexibility to configure how and when products will update.

Dissatisfiers

Inability to configure how and when updates occur.

A call to support acknowledging that they know about an issue (but made no effort to communicate it proactively).

Updates that cause more problems than they fix.

Essential Customer Success Activities

  • Customer Success is a series of interrelated activities performed throughout the customer relationship lifecycle.
  • The most effective customer success initiatives include activities from onboarding to expansion with an emphasis on assuring customers’ successful use of products.
  • Typical customer success initiatives include multiple success-focused activities, yet nearly half of companies focus on just one or two.

Essential Customer Success Activities

Customer Success Activities Defined

Customer Success Activities Commonly Used

Source: Customer Success Practices and Metrics Study (December 2018)

Related Articles

Stemming Maintenance Contact Attrition

When achieving industry-average renewal performance the percent of customers under contract erodes to 46% of the original relationships at the end of a five-year period. Here are suggestions for moving beyond industry average performance.

read more

Shaping the Customer Experience (CX) with On-Line Support

The way we interact with customers directly affects the way they perceive us. Positive Customer Experiences = Retention and Recurring Revenue ServiceXRG finds that there is a direct correlation between a positive service experience and revenue – both direct and...

read more

How Effective are Your Renewal Practices?

Use ServiceXRG’s Contract Renewal Assessment tool to get an immediate evaluation of your current renewal practices and performance. The assessment takes just a few minutes and will provide you with a customized performance scorecard with recommendations for improving contract renewals.

read more

Improve Customer Experiences by Understanding What Users Want and Need

The ability for a service organization to maintain an acceptable level of customer satisfaction and deliver a reasonable customer experience begins with a company’s understanding of what its customers need, want, and expect. When customer expectations are not well known or more importantly not managed – the instances of dissatisfaction will rise.

This article describes the factors that affect customer satisfaction and experience levels.

read more

Beyond Deflection – What to Do with Your “Savings”

Featured: Measuring the Return on Knowledge Management

As knowledge management initiatives take hold and mature, it is essential to conduct a formal cost – benefit analysis to determine the proper level of investment for knowledge management and define the expected return on this investment. Continued success will come from efforts to enhance content creation processes, employ enhanced technologies and deliver tangible business value by leveraging knowledge assets. This research report introduces an approach to measure the return from knowledge management initiatives.

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Self-help and service automation (e.g. chatbots) provide a means to save money and lower the overall costs of service delivery.  Consider however that savings from deflection represents an opportunity to reinvest to improve service outcomes by reallocating staff to high value activities (e.g. onboarding, adoption, retention, expansion, etc.).  This article introduces the top opportunities to reinvest in service.

Potential Savings

Knowledge management, self-help and service automation offer significant opportunities to achieve cost efficiencies by developing and sharing information to help customers resolve cases without the direct assistance of service staff.  Efficiencies from self-help and automation create a potential dilemma for service organizations.  They can bank their savings or invest in customer success focused activities that yield increased satisfaction, retention and revenue growth.

Deflection

Deflection measures the impact that service automation, self-help tools, and content have on assisted demand.  When customer issues are resolved through service automation or self-help resources, thus no longer need assistance from service staff, they are considered deflected (there is more to deflection so check out our article on Defining and Measuring Deflection).

On average companies deflect just over 23% of cases by providing answers to customer questions through self-help or unassisted automated means.  When cases are successfully deflected fewer support staff are needed to handle assisted demand.    The cost efficiencies realized from deflected cases can be significant.

Bank the Savings or Invest in Growth

It is possible to view self-help and service automation as a means to save money and lower the overall costs of service delivery.  Alternatively, consider how savings from self-help, knowledge management and service automation can be reinvested to improve service outcomes by reallocating staff to high value activities (e.g. onboarding, adoption, retention, expansion, etc.).

New Opportunities

Consider opportunities to reallocate staff to the high value activities outlined in the table below.

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.