Can proactive customer retention efforts backfire?

I found this note on “When It Comes To Retaining Your Customers, Sometimes It’s Best To Leave Them Alone” very thought-provoking.  Please note particularly:

The research involved 65,000 customers of a South American wireless communications firm. Some of the participants were randomly selected to receive a recommendation for a plan that was predicted to save them money based on their past behavior and others did not receive the same encouragement. As a result, only 6% of the customers who were not offered a plan suggestion left the supplier within the first three months after the program was launched. However, 10% of those that were given a recommendation left the company high and dry.

Please also note a similar study on managing “walking dead” customers:

The walking dead are “customers who currently maintain service but whose next action will be to discontinue all services, an important economic consequence to the firm,” according to a new study that examines how the customers of a telecommunications firm acquire and discard services over time. Companies would be wise to identify their walking dead and not market additional services to them because there may be an unintended effect, the paper suggests.

In my view, in both cases, the best approach to proactively retaining these customers is not to leave them alone but instead to more effectively engage them earlier on in their lifecycle, well before they become “walking dead”.  More specifically, customer acquisition, customer onboarding, and customer development efforts should all be infused with proactive customer retention consideration.  Deferring proactive customer retention to the end of the lifecycle could often produce the surprisingly negative results that both studies are observing.

Please add your perspective in a comment below:

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Finding the right job for your product

In his Sloan Management Review article on Finding the Right Job For Your Product, Clay Christensen defined the Customer Jobs-To-Be-Done concept:

“When customers find that they need to get a job done, they “hire” products or services to do the job. This means that marketers need to understand the jobs that arise in customers’ lives for which their products might be hired. Most of the “home runs” of marketing history were hit by marketers who saw the world this way. The “strike outs” of marketing history, in contrast, generally have been the result of focusing on developing products with better features and functions or of attempting to decipher what the average customer in a demographic wants.”

The Whirlpool smart washing machine is a good case of a product struggling to find the right job and the consequences thereof:

“We’re a little bit of a hammer looking for a nail right now,” Chris Quatrochi, Whirlpool’s global director of user experience and connectivity, said last week at a conference hosted by tech blog Gigaom. The buyers of web-connected washers, more than a year after launch, are still “not at all widespread,” he said. “Trying to understand exactly the value proposition that you provide to the consumer,” he said, “has been a little bit of a challenge.”

 

Posted in Consumer-Driven Innovation, Customer Insight, Innovation | Leave a comment

Co-designing your customers’ experience with customers

I am following the Barclaycard Ring credit card concept very closely since inception.  It is a very good example of how a company is co-creating a product with a community of customers:

Barclaycard Ring is a credit card that’s driven by its community of card members. The community is a forum where you can exchange ideas, share knowledge and make Barclaycard Ring whatever you want it to be. It’s also a place where we can hear you out and better understand what you need from us. After all, if it’s your card, why should we have all the say in how it works. It’s time to put you, the customer, back in the driver’s seat.”

Barclaycard Ring is particularly collaborating with its customers on designing their customer experience:

“The second vote asked whether or not we should keep the servicing calls in the United States. Here are the blog and community comments from last year’s discussion. The comments overwhelmingly favored the idea of keeping the calls stateside, despite the fact that moving calls offshore would lower operating costs by roughly $4 per active account, per year.

The results are in and 84.4%, an overwhelming majority of voting community members, stated they’d like to keep Barclaycard Ring calls routed to the U.S. based call center. We hear you loud and clear on this one!”

Posted in Consumer-Driven Innovation, Crowdsourcing, Customer Co-Creation, Customer Collaboration, Customer Communities, Customer Experience | Leave a comment

What is the best way to prevent customer failures?

I still find this 2006 Sloan Management Review article on How to Prevent Your Customers From Failing very timely.  Please note particularly:

Research indicates that about one-third of all service problems are caused by the customer.  As companies increasingly shift work to customers and incorporate more self-service technologies, customers will take on even greater responsibility for service quality. As a result, their failures will become more critical.”

The Fifth Third NextJob practice is one unconventional example of preventing a certain customer failure.  More specifically, Fifth Third is preventing their unemployed mortgage customers from losing their homes by helping them find their next job.

Posted in Customer Collaboration, Customer Experience, Customer Insight, Customer Loyalty, Customer Retention | Leave a comment

Placing your products in your customers’ natural habitat

I found this Lowe’s Holoroom concept by the Lowe’s Innovation Labs very intriguing.  Please note particularly:

“We know that for many homeowners, the struggle to visualize a completed home improvement project or to share that vision with others can stop a project in its tracks,” said Kyle Nel, executive director of Lowe’s Innovation Labs. “The Holoroom is our solution, enabling consumers to visualize their project and share that vision with family and friends.”

 

See also the similar Place IKEA furniture in your home with augmented reality concept:

Posted in Customer Co-Creation, Customer Experience, Personalization | Leave a comment

Should companies focus on customer acquisition or customer retention?

The choice between customer acquisition and retention is a false choice.  I recommend instead employing a diversified and balance customer lifecycle management approach with customer acquisition, onboarding, development and retention elements.

Customer Acquisition, Development and Retention are very connected and have many downstream and upstream implications.  For example, many Customer Retention challenges are embedded in downstream poorly designed Customer Acquisition and Onboarding programs.  Therefore, focusing on any one element and not the others can produce underwhelming results.

Posted in Customer Acquisition, Customer Loyalty, Customer Retention | Leave a comment

Does customer behavior speak louder than words?

I found this note on “Don’t listen to what your customers say, watch how they behave” by Rita Gunther McGrath very thought-provoking. Please note particularly:

“I am often asked by companies with whom I work whether focus groups, surveys or customer panels are useful in learning what customers want and more importantly, what they will pay for. Sure, these techniques are helpful and sometimes can lead to useful insights. But it is usually a huge strategic mistake to base investment decisions or innovation projects on data gathered through these means. Why? A benign explanation is that we are all massively unaware of what really does drive our behavior. A less charitable explanation is that when people are asked questions, they tend to respond the way they think the person asking would like them to (which is one reason why doctors always double the number of drinks per day patients report consuming).”

See also a similar perspective from Russ Ackoff: There is no point in asking consumers -who do not know what they want – to say what they want.

Posted in Customer Insight | 2 Comments