Customer Retention Strategy Cuts Passive Churn by 27%

Our client had a substantial proportion of customers who churned passively – either by purposely not paying or forgetting to pay by accident. As switching costs were very low in their market, this was a major driver of churn. Standard communications sent to these lapsing customers had very low success rates, becoming a futile exercise that provided little return on considerable investment

Insight: Supporting perceptions of ownership and value

In terms of their retention approach, our client treated lapsing customers like any other customer: using standard techniques like showing benefits as a way to encourage renewal. This failed to make the most of the opportunity to address specific psychological levers: though these customers are currently lapsing, the fact they are still technically current customers unlocks hugely valuable perceptions of ownership and loss that can be emphasised.

The Solution: A behaviourally-informed lapse journey

We transformed the approach to lapsing customers: instead of a single, standard communication, we created a journey with complementary behavioural techniques feeding into each other to maximise perceived value.

• Framing: lapsing contracts can be carefully framed with reference to concrete losses
• Endowment: as lapsing customers are still current customers, ownership can be emphasised to support perceived value

The Results

27% reduction in churn for lapsing customers using our behavioural journey compared to the status quo. This was so effective that it was rolled out to multiple products and business lines.

Big Takeaway

Lapsing customers are a segment that – when treated in a particular way with specific behavioural techniques – can be a very valuable lever for retention and growth.