Get Them and Keep Them

Admitting Mistakes Gracefully, Apologizing and Making Restitution

Last night, my husband went to Publix to purchase a pumpkin for my son's class. The price was mis-marked. Instead of $5.99 (as advertised on the shelf), it appeared as $10.99 at the cash register. My husband pointed out the discrepancy nicely, and within one minute, a Publix manager came over, apologized and gave him the pumpkin for free.

While other companies have similar policies, what's extraordinary about this experience is the apology, combined with the restitution (i.e. a free pumpkin). Publix admitted the mistake, apologized and stood behind its apology by giving away the pumpkin. That's a powerful combination, and it's the type of customer experience that builds loyalty.

So, if you are training your customer service reps to apologize for errors, go one step further. Make sure they are equipped with a tool for restitution. Otherwise, the apology can truly appear insincere. It's similar to your children saying "Momma, I'm sorry for eating cookies before dinner." But then doing it again the next night.

Technorati Tags: retention, customer experience, Publix

"Trust" Not Good Enough for this Economy

A few months ago, I decided to clean the cushion covers for my sofa. I brought them to a local dry-cleaner and asked how much it would cost. She couldn't tell me. She said they outsource them and she didn't know how much the third-party company charged.

I was dumbfounded. I couldn't get a fixed price - or even a range - for the cleaning.

I was even more stunned when the owner defended this crazy pricing policy by saying something like: "None of our other customers seem to mind. They trust us."

Well, in this economy, trust won't fly. Consumers are very likely to shop around for the best price, even among the places they frequent most. If they can't find a price they like, they won't buy. And, they most definitely won't take out their wallets for something that doesn't have a price tag.

Thus, I encourage all sizes of companies to do some rigorous competitive analysis. Determine how your pricing compares to others in your industry, and what incremental value you can add. Your good looks, charm and "trust" among your existing customer base isn't going to work now.

Technorati Tags: customer retention, bad economy, price sensitivity

Retention Programs - Start with Free or Low-Cost Perks

If your company doesn't have a retention program, now is a great time to put one in place. With a slow economy, acquiring new customers is going to prove more challenging. So it makes a lot of sense to keep the customers you have, and ideally grow them.

The good news: retention programs don't have to be costly. In fact, you can create a very solid program around free or low-cost perks.  They can be based upon saving customers' time, or providing special hand-holding, or even advanced information (i.e. new product announcements before mass media advertising).  They just need to show that 1) your company understands that the customer has many choices and 2) your company truly values their business.

For example, one of the benefits that many frequent fliers talk about is the opportunity to avoid the big lines at the security checkpoints and/or ticket counters. Instead, many airlines have dedicated  a special queue for them at the airport.  While I have never worked at an airline, I'm sure the cost of the dedicated queue is a lot less than awarding frequent flier miles.

Sending a thank you note for anniversaries of service start dates has also proven effective in my experience. In fact, a nice note often resonated better with customers than free minutes or discounted phones, when I worked at wireless carriers.

Since all companies and customer bases are unique, it's best to try a few different benefits and test them with control and treatment groups. Look at the "churn" and/or difference in customer satisfaction between the two groups, and then make adjustments.

Just remember, it's a lot easier to show your appreciation with free or low-cost perks and step it up, if you need to, versus starting with expensive benefits and then having to scale back because the retention program is too costly.  The ladder invariably sends the wrong message to your customers, i.e. that you don't value their business any more.

Technorati Tags: customer retention, customer appreciation, control/treatment groups

Loyalty programs; No Good Exit Strategy

After spending a good part of my career up-selling and retaining customers, I have learned one thing about loyalty programs (like points and earned perks): There's no good exit strategy.

Unlike other marketing programs, loyalty programs can't be ended gracefully. If the program becomes too costly or doesn't generate enough traction, the company is over a proverbial barrel.

Should the company decide to take away customers' points, or any special perks, the company is, in effect telling its most "loyal" customers, "Your business isn't that important" and customer defections are likely.

If the company decides to stick it out, the cost of the loyalty program will invariably grow.

Thus, there's no good exit strategy for loyalty programs, even when executed as a test. That's not to say customer loyalty programs don't have their place. In some industries, like credit cards and airlines, loyalty programs are a critical part of the value proposition.

However, before committing to a loyalty program, your company may want to explore all other options first.

And then, you may want to ask yourself, "What has stopped me from getting a tattoo?"
If the answer is "I can't remove it easily." Then loyalty programs may not be good choice for you either.

Technorati Tags: loyalty programs,retention

I love churn metrics!

I love churn (attrition) metrics. It’s not that I’m a pessimist. In fact, it’s quite the contrary. I’m a big believer in continuous improvement. And that’s exactly what a churn metric encourages, especially in the wireless, high-speed internet and other subscription-based industries.

Here’s why: A churn metric that’s used universally (and ideally provided to the public)  allows companies to 1) determine if they are providing a better consumer value year over year and 2) benchmark their consumer value against competitors.

In most cases, companies with low churn rates are generally meeting the needs of their customer base better than those with high churn rates. There are exceptions. For example, prior to number portability, some older wireless carriers had artificially low churn rates because customers couldn’t port their cell number to a new carrier. That created an artificial barrier to churn.

Still, I find churn rates are a great metric for the whole company to rally around. Not only do they give a picture of the company’s financial health, but they touch every part of the business.

So in order to lower a churn rate, every department must make an all-out effort. At the very least, the company must:

1) Set realistic expectations up front in the sales, marketing and branding efforts.

2) Focus on customer satisfaction.

3) Compete more effectively and strategically for customers.

Of course, I don't think churn metrics are the only metrics to watch. But they are very important, especially for subscriber-based companies.

Technorati Tags Wireless Churn Brand Building

Who are your most profitable customers?

Don’t be fooled. The most profitable customers often don’t have the highest average revenue per unit (ARPU).

One of the lessons I’ve learned is that some of the company’s most profitable customers are the ones that pay the least each month. These highly profitable customers rarely incur incremental servicing costs, like calling the company’s customer service department.

It’s not that these subscribers don’t have additional needs (although some don’t) it’s that they have found less-costly ways to get their needs addressed. Many will use the company’s IVR or self-service section of the web site.

So, before your company starts showing the door to low ARPU customers (or discourages their acquisition), consider evaluating your customer bases’ profitability. Then, make decisions about what types of customers are important for your company to acquire and grow.