Is SMB Churn Really an Issue of Expectations Setting by Sales Reps?
May 31, 2016 | Contributed by: Greg Sterling
There have been many dozens of small businesses (SMBs) surveys over the past few years that in one way or another assess satisfaction with local sales channels and marketing performance. While there are nuances and differences among these surveys, it’s amazing how consistent the SMB responses tend to be.
When expressing dissatisfaction SMBs tend to focus on two primary areas: customer service and proof of value/ROI. Sometimes pricing/cost ranks fairly high but I tend to see that as an ROI issue too. (The implied notion is that the service or media is expensive for what it delivers.)
A very recent survey, above, from Borrell Associates (n=490) shows something quite similar. The survey asks about “what SMBs want from local media” and their sales reps.
The top answer is “better pricing and better ROI” (39%). What this effectively means is more return for the marketing spend — perception of value. Another 32% (collection of answers) would like these reps to do a better job of providing information, education and customer service.
Earlier data on SMB churn from Google (above) — the company says that 52% of churn can be controlled — cites ROI and customer support as the top two reasons for dissatisfaction with programs and campaigns.
Here’s another example (below). A 2015 Thrive Analytics-LSA survey shows ROI and customer service as the main reasons for SMB dissatisfaction with with local media providers or vendors.
I could also bring out several more such examples. But these are three surveys from three different sources all created and fielded independently.
The Google slide in the center makes an interesting observation about expectations. It points out that the “Single biggest driver of churn is a function of expectations, perceived value.” While customer service may have some “objective” qualities — more frequent reports/contact are better than less frequency — perceptions of campaign performance and ROI are mostly a function of expectations.
So this is a very interesting point to explore further: are sales reps over-promising to close business in a very competitive local sales environment, while their organizations can’t fulfill what was promised? Some reps complain about pre-existing, unrealistic SMB expectations regardless.
In my churn report, relying on Vendasta data, DIY/self-service SMBs had lower churn than DIFM SMBs. Some part of this is surely expectations. Those doing it themselves don’t expect as much as when a third party is being paid to manage digital media and marketing.
Lower costs/pricing = lower expectations. It’s why budget hotels are often much better reviewed than luxury properties. People are more prone to dissatisfaction because they’re paying higher prices and expect more accordingly.
What are your thoughts around this question of expectations? And how can sales reps set appropriate expectations and still win business without over-promising?