Customer retention seems to get little thought in some companies. The fact that retention tactics only kick in when you tell them you want to terminate your contract is a significant part of the problem. Customer acquisition is an expensive business but it seems that some marketers are obsessed with it, accepting churn as a fact of life, with holding on to existing customers given only cursory attention.
Keeping customers is too important to be left to a salesperson calling the customer after they leave, you should be aiming to be so good for your customers that they never even think about leaving. Good marketers do this by making sure that all parts of the customer experience are faultless. ‘It’s not my department’ marketers on the other hand constantly have to come up with ways to retain customers that are disappointed by the service delivery.
A personal example
My dad recently decided to switch gyms. He even took the time to tell the Fitness First retention agent that called him the reasons why he was leaving.
A few days ago he received this text message:
As a thank you for being a member we would like to give you Aug for FREE.
Limited spaces – 1st come 1st served!
Contact 0208743 4444 to redeem
“OK,” he thought, “a month for free, as a thank you, that’s a nice gesture, maybe they’re trying to win me back, plus I can go to the gym with my sister for another month.”
So he called them up and said “I’d like to take you up on the August for free offer you just texted me.” Only to be told that the August for free offer was contingent on signing up for a whole year. Even as a retention offer, 8.33% extra free is pretty weak but what really irked him was the fact that they’d sent him something phrased as a ‘thank you for your past custom’ that was contingent on future custom. So he called their head office and asked them whether they knew the difference between a thank you and an offer on a future purchase. They conceded that the message could be worded better. Whether they change their approach or not is doubtful at best.
Maybe the bright spark that came up with the offer thought it sounded compelling. Maybe they thought that the best way to entice lapsed members back is by offering them 8.33% off their next year’s membership fee. Maybe they didn’t really consider what it would feel like to receive this text.
Reframe so you can think like a customer
Here’s a trick for when you’re working out an offer, whether it’s a retention offer or an acquisition offer: reframe it into a different industry. I like to use hotels or restaurants to do this – everyone knows how they work and know what it’s like to be a customer, so it’s easy to explain and get others’ opinions on. The idea is to transplant your situation to an industry that you are a customer of. This works for pretty much any kind of marketing you do – ‘think like your customer’ is rather obvious but it’s amazing how many marketers have forgotten how to do that.
Take the gym example above, reframed to a restaurant. A couple is dining at a restaurant, they decide not to have dessert and to just have coffee. The restaurant would like them to return some time and by foregoing dessert they’ve indicated that they’ll be finishing soon and asking for the bill. So when the bill is given to them, along with it is a coupon that says ‘We appreciate for your custom, as a thank you have a free dessert with your next meal’.
Is a free dessert, that the customer has to remember to bring a coupon for, on a future visit sufficient to convince them to return? Possibly, possibly not.
Ask yourself: would that work on me? If the answer is no, clearly you need to rethink your retention tactics. Think about how the restaurant could do it better and you have your answer.
What if instead of making that offer contingent on future payment, the waiter, when he takes the coffee-only order, says “how about some apple pie (offer whatever the kitchen has plenty of) with that, on us?”. Most people can make room for a free dessert. The customer is rewarded right there and then, they have an experience worth talking about – an act of unprompted generosity, and they’re more likely to return as well. Total cost – less than with printing a coupon, with more efficacy.
So how could the gym have handled it differently? Point 1, if it’s a thank you then it’s a gift, free as in beer. Point 2, don’t make people call up to claim a limited offer, tell the customer their membership has already been extended for them – if they don’t turn up it doesn’t cost you a thing, if they do, the marginal cost is negligible. Is this going to convince someone to renew at the end of the month instead of lapse? Who knows, but you stand a much better chance at winning someone back by giving them something instead of dangling a carrot.
What kind of marketer are you?
The question you have to ask yourself is what kind of marketer are you? Stuck in the 80s, with cut-out coupons, conditional offers and small print? Or evolved, aware that customers have more choice and power than ever before, aware that your job is to make your customer like you by treating them well, not beguiling them into signing something.
Image credit: code_martial