Article

The Customer: Retention vs. Salvage

Chester Bullock

I recently went through the breakup process with a national brand that was delivering TV services to our house. While my world tends to be more technology focused, this breakup process was a clear case of misguided customer retention efforts.  And it was a perfect illustration for something that has bothered me for some time now.

Like a lot of families these days, we did an internal assessment about the expense of this service, relative to our viewing habits, and the costs of getting comparable services via alternate delivery methods (namely over-the-air and streaming).  Once we had the numbers (we are talking about a savings of close to 70%), the decision was made, and I started the process.

The first step was calling an automated voice response system and trying to get at the right phrase to cancel my service. It was intuitive enough, and then the first intriguing question came: “Are you cancelling because of a move?”  Well, no, so I said “no,” but I was left wondering what would happen if I said yes. Is there some special deal or discount for movers?

Then the voice response system delivered me to a human. It was great; I’ve never gotten to a human that fast at this company before. He was very pleasant, and I politely let him go through his whole spiel. And that’s where things got interesting.

Once I explained to him that, in addition of annoying service outages based on weather and their technology, cost was our primary driver of leaving them. At this point, he proceeded to ask questions about viewing habits (sidenote – seems like that data should be stored somewhere), and then started to inform me of a bunch of discounts we qualified for – to the tune of 50% or so of our bill. That wasn’t enough though. He then offered me a premium service (one that retails around $250 for a season) for free.  I stayed true to the course and cancelled it anyway. All of this rubbed me completely wrong.

Rather than being proactive and keeping me happy in the spirit of customer retention, they were scrambling to salvage me.

I’ve worked in plenty of B2C companies that go to great lengths to calculate the lifetime value (LTV) of a customer and also the acquisition cost of a new customer. I would expect this company, particularly in a medium that is being thoroughly disrupted, to know these numbers. So I had to ask myself why it was that these numerous discounts only came to light when I was cancelling. I even said something to the rep. I asked him, “Why these are available only when I am leaving?” He played it off well, claiming to tell people who call him about these whenever he gets the chance.  But let’s not kid ourselves here — he was going by a script dictated by someone else.

The big question in my mind is: How loyal would I continue to be if they had proactively reached out to me and let me know about discounts I was eligible for as they were introduced? Email would be a great channel for this kind of customer retention initiative — very inexpensive — and I would be far more receptive to opening those than the direct mail pieces focused on referral. If a company makes me feel like our interests are aligned, I’ll be more inclined to stay with them.

At the end of the day, this company could have retained me as a customer for 5 or 10 more years if they had previously treated me with some respect instead of like a well from which to keep drawing. My LTV would have been much higher, and the costs of running such a program would have been quite minimal.

We are in an age where most businesses are being disrupted in some fashion. The losers will be the ones that have lost sight of the customer in this highly competitive environment, and it will be quite expensive — if not impossible — to get those customers back.

About the Author(s)

Chester Bullock

Ex-Solutions Consultant. Denver, CO.

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