Isn’t it shocking when “perfect couples” part ways? Whether it’s Arnold and Maria or the people up the street, it’s always a bit of a surprise. But once the shock wears off, it’s loads of fun to pour some wine and get to the ugly truths of the relationship: he was emotionally unavailable, she was a drug mule, there are rather more children than there used to be. What fun!
The same, I think, is true in our customer relationships. If you scratch the paint off that shiny loyalty program you will find a world of dysfunction, simmering resentment and clingy inertia. And guess what? The flip side of that churn report is actually a hostage-taking. Stay with me; I do have a point.
I don’t think there’s any such thing as a loyal customer. Sure, there are people who are slavishly devoted to certain electronics, coffee shops or hotel brands, but are they loyal? Maybe they’re just content. Maybe Newton’s First Law applies also to non-fat lattés. That is, without sufficient reason to go anywhere, customers are inert. But throw in an outside force – say a better offer, or a crappy experience and our “loyal” customer is out of there like a Keebler Elf in a forest fire.
Apple, which seems to be the poster child lately for loyal customers, has those customers because it makes good products and treats its customers very well. The day it stops doing either or both of those things, loyalties will shift to someone less horrible.
And yet, we continue to pour money into retention teams (let’s call them the Bribery Department) and into the subset called churn management (let’s call that Dungeons & Coupons), all based on the absurd notion that it is more expensive to get a new customer than to retain an old one (I have yet to see a credible source for that one). Indeed an entire industry has formed around the idea that if you just work a little harder, you can hang on to your unhappy customers no matter what.
Retention dashboards, report on Bribery Effectiveness, while churn planning is really an Incarceration Forecast. That’s because churn reduction programs start with the laying on of free stuff, bundles, loyalty discounts and other bribes whose sole purpose is to reinforce inertia. The better the bribe, the more likely a customer is to stick around.
And for a little insurance, we go on to shackle our customers to the wall with a big, fat contract full of cancellation penalties, all in the name of churn management. I’m fairly certain you don’t get to call it inertia when the object at rest is nailed to the floor. So why do we congratulate ourselves on taking our customers hostage?
If you are producing churn reports (and you are not a dairy) why not be honest about it and adjust your numbers to reflect the customers who can’t leave even if they want to?
A more meaningful number would reflect general contentedness: the percentage of existing customers who could leave but choose not to. Please don’t insult us by insisting they are satisfied — they very likely loathe your technical support department, they probably burn their account managers in effigy every Thursday, and if you’re hoping for a great Net Promoter Score (another myth, but we’ll tackle that later), then you won’t find it in this group. They may even be the ones sending all those pizzas to your house.
Yet your reporting will suggest they are loyal. They aren’t. They are inert. And it’s probably only a matter time until they bolt.
But you know this, which is why the exits from your relationships with your customers not only aren’t marked, but all pathways lead to the terrifying world of the Save Gate. Where nobody can hear them scream.
Bizmarketer is Elizabeth Williams
Follow me on Twitter @bizmkter
or email escwilliams@gmail.com
Leave a Reply
You must be logged in to post a comment.