Tag Archives: Customer retention

Mistakes Were Made

Foodie Friday, and I’ll bet that a number of you will be going out this weekend. We’ve all had the problem of placing a food or drink order and what you ordered isn’t what you get. It’s really a problem when you’ve ordered delivery. What’s more frustrating than your vegetarian pizza showing up with pepperoni or your steamed dumplings arriving fried?

Mistakes happen. I used to run an online store that fulfilled tens of thousands of orders each year. Mathematically speaking, if we performed perfectly 99.9% of the time, there are still 100 screwed up orders out of every 100,000 (and we did way more orders than that). What I used to ask my folks was to listen to the customer (and put aside their heated and often unpleasant language), apologize for the problem (even if we didn’t cause it), and solve it. Maybe they clicked on a wrong key or maybe our inventory system didn’t react in real time, telling them that something was in stock when it wasn’t. It doesn’t matter. They are customers, and it’s easier to retain a customer than it is to find a new one.

Let’s go back to our delivery example (since today is food-related!). Suppose the cook forgot to pack the drinks ordered with the pizza. How can you catch this before the customer even knows there’s an issue? Make every person in the chain responsible for checking the order. Does it match the ticket? As an aside, I always ask the restaurant to read me back my order when I place it and I’m always surprised when they don’t ask to do that themselves. If the ticket isn’t right, no matter what steps are taken along the way, the order is wrong.

But let’s suppose there is a failure and the food goes out without the sodas. When the customer asks where they are, you have a few options. Send out a second delivery person (if you have one), make a second trip (if you don’t), or empower the delivery person to hit a store near the customer and buy what’s missing. My guess is that this is the fattest, least expensive solution since it minimizes the time to correct the mistake. Another option when the customer calls to complain might be to credit back the missing items as well as some or all of what was delivered. The reality is if they care enough to call you need to care enough to keep them.

Any business is a team effort. No one can think, much less say, it’s not my job to take responsibility for making a customer happy. Whether you’re a food business or not, read back what a customer is asking. Say something if the order is right but something seems off (“oh, you DON’T want chocolate on the pizza, you want chocolate cake!”). Most importantly, be prepared for mistakes. They’re going to happen. The real challenge, beyond preventing them as best you can, is making a customer happy when they occur. How are you doing with that?

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Filed under food, Thinking Aloud

Retraining For Retaining

As usual, I have golf on the brain this morning. It’s probably because I’m in the midst of planning the annual soiree to Myrtle Beach that has been the highlight of my year for the last 23. I’ve written about how it’s my annual Board Of Advisors meeting and I highly recommend a similar trip – whether golf-related or not – to each of you.

With this much golf on my brain, I got to thinking about what’s going on in the golf world these days. As it turns out, it has a lot to do with what’s going on in nearly every business. If you have read anything at all about the golf industry over the last few years, you keep reading about the need to grow the game. According to the latest from the National Golf Foundation, interest in playing the game continues to grow but actual on-course participation has been flat at best. Much ink has been spilled over the need to make the game more accessible, lower the cost and speed up play so that new people will become regular participants. I suspect your business spends some time thinking about how to attract new customers too.

What some folks in the golf industry are beginning to realize is that they don’t spend enough time on customer retention rather than customer capture. You might have heard (you certainly could have read it on this screed!) that it costs five times more to get a new customer than to retain an old one. Why not focus on something that is 80% less expensive?

Let me put it in golf terms and I think you’ll see the parallels. If you go to some courses, particularly the high-end courses, you’re often treated like they’re doing you a favor for letting you play. It’s almost like the customer is a distraction rather than the sole reason for the business to exist. The course does nothing to help speed up play. If conditions are poor (shabby greens, standing water in fairways, etc.), that’s never said before you pay or even acknowledged after your round is done. How about stating that you’re sorry for the course not being in top shape and offering to buy a drink or lunch at the end of the round? How about a coupon to come back at half price when the course is in better condition?

You’d be shocked if you encountered some of the rude employees I’ve met in my years of golfing. There clearly hasn’t been an emphasis on customer service at some places. Instead, the emphasis is on holding their hands out for a tip. All they want to do in the shop is to sell you overpriced shirts, hats, and balls with their logo on it. None of that aids customer retention.

What they – and you – need to be asking yourself is what can I do to improve the customer experience? How can I get this customer to come back? Little things go a long way – it can be as simple as a towel on a cart or ice in the cooler or enough sand to fix divots. I’m sure you can think of little amenities you can offer – it can be as simple as a bottle of water on a hot day to customers entering your store or a personalized thank you note for a past purchase. What are the things that will help retention?

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Filed under Consulting, Helpful Hints

Open Your Ears

First things first: I swear this post isn’t about golf.ClickZ

I recently joined a new golf club. What has impressed me so far has been the proactive customer service.  After almost every round I receive a quick (5 questions) survey about my experience at the club that day. Was the course in good shape? The food ok? Any staff issues? I also received a survey last week since it was the end of a half-year. That was a more in-depth questionnaire (but not burdensome). I know, by the way, that these are being read because I made a comment on one of them and the club GM sought me out to answer it in person after my next round. I’ll admit that this is an extreme and I can see where it might be annoying for many consumers to have a follow-up post-mortem after each interaction.

I’ll also admit that I’m baffled by the companies that ignore the basic customer feedback mechanisms they already have in place. Name a business without a Twitter account or a Facebook page or at least a website with a “contact us” button. Pretty hard to do. Yet studies show that 45% of consumers will abandon a purchase if they can’t get answers to their questions. They use social channels to get them and yet businesses keep ignoring them. At least a third of these interactions go unanswered.

So in the words of the Jerky Boys, open your ears, jackass. As you can see in the graphic from ClickZ, the differences in long-term results for a business are very tied to how that business services its customers. Negative experiences have ripples as dissatisfied folks tell their friends, post reviews, and go elsewhere. If they’re doing so via social channels, and most are, then isn’t it incumbent upon every business to listen and react? Especially to the customers who come to you for a response first?

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Filed under digital media, Huh?

Siriusly?

Sorry about the length of today’s screed, but the tale is a doozy and requires some explaining. I’ve been a customer of XM radio (now SiriusXM) since 2005. I love the clear sound and diversity of channels, and the fact that several of my favorite artists have dedicated channels keeps me paying those subscription fees without remorse. I’ve also found that on the few occasions I’ve needed something from customer service they’ve been helpful and efficient. That changed yesterday and it can serve as a lesson for any business.

I dropped an old XM radio a couple of weeks ago and it refused to turn on. I reached out to Sirius customer service and they offered me a new radio at a very attractive price. Unbeknownst to me, they also attached a new subscription to the radio, even though I already had a subscription (which I had just renewed) attached to the now deceased radio. In other words, 3 subscriptions and 2 radios.

I reached out to Sirius yesterday to cancel one of the radio subscriptions. The experience was like finding out that your kindly old aunt is really an ax murderer who flies into a killing rage at the mention of a secret word. In Sirius’ case, the word was CANCEL. The lovely customer service agent understood why I wanted to cancel and transferred me to what I guess is the department assigned to customer retention. I explained the situation – 3 subs, 2 radios – and was immediately offered a third radio. I politely declined – I only have 1 car and 1 house and there are radios in each. I was then told there would be a $50 early termination fee. Needless to say, that didn’t go over well and I reminded this agent (less politely, I’ll admit) that I didn’t create this problem: the agent who added a new subscription to the new radio rather than just transferring the old one over did (you don’t suppose they’re paid commissions on new subscription sales, do you?).

I was transferred to a manager.  After she began reading me a script (“when you first got the service, what did you like about it?”), I interrupted her and said she needn’t go through a retention script because I was not dropping the service – I just wanted to drop an unnecessary subscription.  After then having basically the same chat I’d had with the other agent, I was transferred to the department supervisor.  By now I’d been on the phone with them for well over 30 minutes and I was beginning to get angry.  The same chat ensues except it ends with I can send you a new radio and then we can cancel without a termination fee.  WTF?  I reminded her that her actions would cost her company money (the cost of the radio, shipping, etc.) as well as cost me the time it would take to call them back after I get the new radio to cancel.  I will spare you several other details, but the situation was resolved when I realized that they were trying to cancel the “new” subscription and not the subscription assigned do the broken radio, even though I had read them the ID of the radio I was trying to cancel.  Once I was very specific – cancel the subscription assigned to radio XXXX, we were done in about a minute.  Total time on phone: 53 minutes.

In no particular order:

  • Service” implies helping the customer reach his or her goal for the interaction.  In this case, Sirius threw up barrier after barrier.
  • At no point did any of the 5 people with whom I spoke offer to apply the money from the third subscription to extend the others.  Big missed opportunity.
  • I realize that the cost of a radio is tiny compared to the lifetime value of a subscriber, but Sirius was not losing a subscriber and was sending the radio fully knowing that the subscription would be canceled anyway.  What COULD cost them a subscriber was the ill will generated by obfuscation and delay not to mention the time it took when I should have been working.

I also realize that nearly every subscription business – cable, magazines, etc. – employs the same tactics so I’m using Sirius as an example.  I really was considering canceling all my subscriptions at one point – streaming music in the car is pretty easy these days – but that seemed self-defeating.  Still, none of us can afford to alienate our best customers, let alone the marginal ones, can we?

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Filed under Helpful Hints, Huh?

Beyond The Data

If you’ve been reading along this week, it must seem as if I’m obsessing with data. While my inner nerd is peeking through a bit, that’s not my real obsession. The data I’ve been writing about is only one aspect of what is a primary business obsession of mine: customer retention. It ought to be one of yours too.

Simply put, the only two things that should be a primary focus of your business thinking are making great products (or services) and providing great service to customers. Why? Because those are the two keys to customer retention and customer retention is the key to a successful business.

There is lots of research on the value of keeping a customer versus acquiring a new one. According to research by Market Metrics, your success rate selling something to an existing customer is around 65 percent. The probability of converting a new prospect, on the other hand, is only 5 percent to 20 percent. If you’ve been servicing those customers well and providing great products, that’s a very believable finding since the folks that know you, love you. They spend more too: research says about a third more.

So why aren’t you spending more time thinking about customer retention and about how to cut down the churn rate? Probably because the data points you’re reporting as KPI’s are emphasizing customer base growth. There is a place in the dataset for acquisition information and an important one at that. But, for example. when Google reports that 25% of new app users leave after the first day they install an app, obviously new users can only take you so far. Are you looking at retention rates by acquisition channel? Didn’t think so.

Data is a tool, not a crutch.  The business is about growing and retaining customers.  There are lots of ways to do that but at the core of every one of them are a great product and even better service.  Is that what you can honestly say you have?

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Filed under Consulting, Reality checks

Rusty Tanks And Being Ripped Off

20 or so years ago, we installed two large propane tanks to power our cooktop and a new furnace. Since they have an expected lifespan of about 15 years, we asked someone from our propane company to come take a look at them. We had noticed they were rusting a little, so better safe than sorry, right? Sure enough, they need replacing. How this leads to us replacing the propane supplier as well is a tale from which any business can learn.

English: 2 larger propane tanks, one with a re...

(Photo credit: Wikipedia)

We have been very happy with this company. Service has always been prompt, they deliver on a regular schedule and we’ve never run out of propane. That was the case when we called this time to come have a look at the tanks – they were there the next day and came back to us with a proposal to replace the tanks. We made an appointment for later this week to have the work done.

Just out of curiosity, we made a couple of phone calls to other suppliers. What we found out enraged us. Not only was what our supplier proposing to charge us to remove and dispose of the tanks way out of line with the market, but what they had been charging us for propane over the last decade was substantially higher as well. I’m talking about higher to the tune of over $1 a gallon, and when you’re using several hundred gallons a year, that’s a big difference.

In addition, these guys never offered us the ability to “lock in” a price for a heating season. Our oil supplier, as an example, sends us a letter every year with three different lock in options. It shouldn’t surprise you that when our supplier called to confirm the appointment, we cancelled it, informing them that we’re talking to other suppliers and had discovered that we were being ripped off for years.

10 minutes later, the phone rang. Suddenly, the cost to remove the tanks had vanished. Our rate for propane had dropped a lot, and we could lock it in for the year if we so chose.  While we still might stay with them, our opinion of them has changed substantially.  Customer service isn’t just about answering the phone and handling issues when they arise.  It is caring for your customer even when they don’t know that they need care.  Would we pay a little more for great service?  Probably.  The propane is a commodity so the difference is service.  That needs to have transparency, and now that we see what that service has been costing us, we are angry.

There are no secrets anymore.  Yes, it’s our fault for not asking about pricing and plans, I suppose.  That, however, demonstrates the value in keeping customers happy.  We didn’t ask because we were happy with them.  Now that we have asked and have realized that this has meant the overpayment of thousands of dollars over the years, we are far less content.  If you’re keeping customers happy by keeping them in the dark, you had better be damn sure there isn’t a rusty tank out there waiting to expose the issue.  Is there?

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Gagging Your Customers

I love the Streisand Effect.  You know – some person or company takes umbrage at what someone else has written somewhere and decides to “fix” things.  Usually, that fix creates even more awareness of the original negative  item and so the attempt to hide it has just the opposite effect.  Some genius at a Florida company that sells weight loss products decided to solve the negative item problem in a different way.  It allegedly made false claims for their products, and then threatened to enforce “gag clause” provisions against consumers to stop them from posting negative reviews and testimonials online.  How great an idea was this?

Seal of the United States Federal Trade Commis...

(Photo credit: Wikipedia)

In a complaint filed in federal court, the FTC alleges that Roca Labs, Inc.; Roca Labs Nutraceutical USA, Inc.; and their principals have sued and threatened to sue consumers who shared their negative experiences online or complained to the Better Business Bureau, stating that the consumers violated the non-disparagement provisions of the “Terms and Conditions” they supposedly agreed to when they bought the products. The FTC alleges that these gag clause provisions, and the defendants’ related warnings, threats, and lawsuits, harm consumers by unfairly barring purchasers from sharing truthful, negative comments about the defendants and their products.

Hmm.  Maybe not such a good idea after all, huh?  Telling consumers that they would be subject to $100,000 in damages for posting reviews isn’t exactly embracing the customer.  In fact, I can’t really imagine a circumstance where preemptively threatening to sue a customer for anything short of non-payment makes any sense.  In this case, not only has the Streisand Effect kicked in but so too has a stream of legal fees and, potentially, fines and damages.  As it turns out, the FTC alleges that the product’s weight-loss claims are false or unsubstantiated – you know, the stuff they’re selling just doesn’t work. That will move a lot of product, right? Just to kick them a little while they’re down, the FTC also charges that the defendants failed to disclose that they compensated users who posted positive reviews.

The takeaways (none of which are news to anyone who has read this screed before): don’t threaten your customers, don’t lie about your products, don’t pay for fake reviews and don’t actually follow through and sue them when someone posts a negative comment (these guys did file a number of suits).  Sure, if someone is spreading out-and-out lies, you need to respond but hopefully not in court.  If what they are saying contains a fair amount of truth, however, the fault isn’t the customer’s.  Agreed?

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