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Customer Retention, A Rant

by David Brock on March 20th, 2012

Business is tough everywhere.  As sales professionals, we struggle to find business and meet our quotas.  Losing business that you had previously won is tragic.  Over the past couple of weeks, a couple of companies that I have done business with have lost mine–perhaps not forever, but as a potential buyer, I will be very cautious about doing business with them again.

The first is one of our company’s banks.  We keep accounts in a few banks around the world.  Originally, we established multiple accounts to help make it easier for our people to do business.  Each account is a reasonable amount (read six figures).  Over time, I had noticed, things that we previously got for no charge, we are now being charged fees for.  Additionally, there is wide variance in interest rates between the banks.

So I decided to start consolidating accounts.  I called one bank, got my “relationship manager,” a person I had never known about before, but I suppose was assigned because of the type of account we had.  I said I wanted to close the accounts we had with his institution.  He was very polite and efficient in the transaction, at the end, he shook my hand and wished me a good day.

He missed something, he never asked me why I was leaving.  He never tried to understand if he could do something to retain my business.  He never tried to learn if there was something they might do to improve their service for accounts like ours.  It was a tremendous missed opportunity.  I suspect, he could have retained our business.  I suspect, if we shifted the kinds of accounts we had with his bank, we might have reduced some of the fees we were incurring, or if we changed some of the things we were doing, we could avoid other fees.

But he never asked, he and his management will never know, never be able to avoid similar defections.

We’ve also done business with a computer company for close to twenty years.  Virtually all our computer purchases have been from this company.  Granted, we aren’t a huge customer, we’ve bought dozens of computers over the years, but not hundreds or thousands.

A few weeks ago, on a business trip, I had a problem with my laptop–it’s batter wasn’t charging.  One evening in a hotel, I spent over an hour on the phone with a technician diagnosing the problem.  We determined I needed a new battery and charging pack.  I said it was critical that I get these as quickly as possible.  I spend 80% of my time traveling and the battery is critical to keeping me functioning on the road.  He assured me it would be delivered within a couple of days.

You probably can guess what happened.  It didn’t arrive.  I had the tracking number, found it was stuck somewhere, also learned it had been shipped the slowest least expensive way.  I called the customer service department anxious to see if there was a way to accelerate the shipment.  They couldn’t do anything.  To their credit, they called me a couple days later, telling me that it would be delivered that day–I appreciated their tracking it and the personal touch of a phone call.

The battery arrived, I put it in, immediately started charging it, because I knew I had another trip the next morning.  It didn’t charge.  After a few hours of seeing nothing happen, I called customer service.  I gave them the case number but the agent had to take me through the whole process again–my name, contact info, the computer serial number, the problem, everything.  I asked, isn’t it in your notes on this case.  He ignored me.  After some time trying to diagnose my problem, he said he’d have to send me to another department.  I was transferred, the agent went asked me to go back to “Go,” not collecting $200, asking me all the same things again, frustrated, I said, “I was just transferred to you, don’t you see all the information in the notes?”  He reviewed them saying, “Oh, I can’t help you, you need a different department.”  Now I’m talking to the third agent, going through the same conversation……  Well, they said I needed to get a new battery and they would ship it immediately.  I sighed, defeated, gave them the information and hung up.

Anticipating another few days, being crippled on another trip, I decided to call a competitor.  I explained the situation, told them the urgency of my need, they had an immediate solution.  They sold me a computer–they even offered to transfer all my files and data that day so I could take it on my trip the next day.

I’m still waiting for my battery, but as I type this post, I’m sitting in an airport lounge, between flights, thoroughly enjoying my new computer.  Their understanding of my situation, going the extra step of helping me out with my programs and files has won them a customer for a long time.  The other company–the one we did business with, by default, well I’ll use my old laptop as a backup machine.  However, as we make new purchases, they will all be with the new supplier.

Business is tough, serving your customer post sale is important to earning their continued business.  If they leave, try to understand why, see if there is something you can do to retain them.  If you can’t at least learn.

Clearly, the second case was a failure of customer service.  They were following their procedures–the problem was they were following their procedures.  Their focus was on the repairing the computer, but they were insensitive to helping solve my problem.  They didn’t have the ability to, even for a fee, deal with a customer that had a crisis and needed the problem solved.

n the first case it was sales error.  There were no penalties to the sales person for losing my account.  All he was measured on was new business.  Perhaps we should measure people on lost accounts.  If they earn commissions for winning business, perhaps they should lose commissions for not retaining business–there are some organizations that do this and it makes a difference.

What are your strategies for customer retention?  Do you see if you can keep them?  Do you learn from them if you can’t?

What are your strategies for customer experience?  Do you have the ability to respond to their need, or do you follow your policies?

  1. Promit permalink

    Interesting post Dave!

    I think it is imperative these days that organizations place as much importance in retaining customers as in acquiring new ones. More and more organizations are realizing this and the ones who aren’t are slowly but steadily falling behind in the race. In fact one of the major roles which analytics plays these days is in understanding existing customer behavior and trying to address his issues before he reaches the tipping point.

    A classic case in this regard is a leading DTH provider in India, who quickly realized that if he has to survive in a market flooded with local cable operators – he needs to focus on customer experience and try and retain customers by keeping them happy. They started using analytics to understand customer behavior & trends and then started providing personalized product plans based on the kind of content viewed by the customer. This simple yet effective plan boosted customer experience considerably and led to positive ‘word-of-mouth’ which in turn translated into more business from existing as well as new customers. Right now they have the maximum market share and lead the second placed provider by a huge margin.

    In this case, their focus on customer retention through improved customer experience not only kept their existing customers happy but also led to considerable addition of new customers.

    Companies might go chasing after new customer addition, but the point to be remembered is – It is cheaper to retain an existing customer than to acquire a new one!

    • Promit, thanks for adding the example of leveraging analytics! Analytics can be very powerful in a number of areas of customer retention–from predicting potential defections, to identifying new offerings current customers might be interested in, to a whole variety of things. Great comment!

  2. Aidan permalink

    Hi David,
    Love the article, I can feel your frustration, while reading it. Unfortunately, too many companies follow procedures, as opposed to solving the problem. I recently had, untold issues, with a telecoms company and finally pulled the plug, as I was wasting my time and energy and getting no satisfaction. Mistakes happen, its how you deal with them that counts. I am also aware that there are factors that you can control and factors you cant. I work very hard, to ensure everything under my control, goes to plan. For the items I cant control, I do my best to keep my customer informed and give them solutions. I may be biased but I find that the closer you are to your business, the more likely you are to go that extra mile. Your “friend” in the bank is a perfect case in point, he doesnt own it nor does he loose out when your account moves, so what is his motivation?

    • Thanks Aidan! I really like your point that mistakes happen, it’s how you deal with them…. That’s critical. All of us understand this, we just want to be heard and we want to know what will happen. Thanks for joining the discussion. Regards, Dave

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