What Divorce and Customer Loss Have In Common

Stop Believing What Your Customers Tell You

A recent article on Marketing Sherpa demonstrated the difference between what companies (vendors) believe are the reasons customers leave, and the real reasons customers leave.  While companies cite pricing as the top reason, customers say they really leave because of customer service.

Why the Difference?

The article sights two great reasons for this difference.  First, since it’s usually sales reps that report the loss, it’s easier to report price as the issue since it’s beyond their control.  Second, it’s easier for customers to claim price as the issue as it’s harder to dispute and doesn’t cast blame on sales.

Divorce and Customer Loss

I can’t find the exact study, but when asked why a couple is divorcing, an often cited reason is financial stress.  When researchers dove deeper with the individuals to get to the real reason for the divorce it’s usually not financial.  It’s just that it’s easier to say that, it’s less embarrassing than stating infidelity or abuse as the reason.  Same thing is happening here.  It’s just easier to use price as the excuse.

It’s hard for a customer to tell you straight-up that it is poor service that pushed them to leave.  It’s hard because that kind of information may lead to confrontation, defensiveness, or hurt feelings with the sales rep.  These are all experiences the customer doesn’t want to pile on top of their existing frustration with your company.

More Proof

As a customer researcher, I am often able to show companies that their beliefs around customer loss are just not real.  By conducting customer satisfaction interviews in the B2B space I have often showed clients that service and support were significant issues for clients. It can come as a shock since the company previously believed they had no problem with their sales and support staff.

In working with credit unions and member (customer) loss, you will find that many members will cite “moved out of area” as a primary reason for leaving the credit union.  Now I know the housing crunch is brutal, but there really are not that many people moving out of the service area of the credit union.  It’s just easier to give that reason when you are face-to-face with the teller when you go in to close your account.

Good News, Bad News

As the article states, the good news is that customers are less likely to leave because of price.  Also, excellent customer service can lead to stronger customer loyalty and a price premium for your company.  The bad news – if you don’t really know what your customers think of your customer service you may be headed for a trial separation or a divorce…

Wal-Mart to Online Customers: “Don’t Call Us – Ever!”

  According to a story from NPR, Wal-Mart doesn’t want it’s online customers calling them so much.  So they removed the customer service phone number from their website and want customers to use the online help instead.  This sounds a bit like Sprint’s firing of those “pesky” customers who called Customer Service too often.

I don’t have the details on why Wal-Mart decided to do this, but I imagine it was a cost-savings decision.  According to NSP Strategist, Sprint’s “pesky” customers where costing them $750 per month each. 

At some point a business needs to find out which customers it can service most effectively.  If you are thinking of firing customers or taking away support options, please ask youself these questions before you do:

1. Why are these customers calling so often?  Do you have a real problem with your products/services that is causing them to call?  Many customers won’t call, they will just switch to your competitor. 
2. Do you have a communications problem?  Maybe you need to find a better way to communicate the information that is continually requested.
3. Who are these customers?  Are they profitable?  Could they be profitable?
4. Are there other options you could provide?  What do your competitors provide?
5. What is the impact of negative word-of-mouth going to be?  What is your strategy to minimize it?  Here is an interesting case of negative word-of-mouth where the court has encouraged consumers to air grievances online.

One would have to venture that both Wal-Mart and Sprint have some idea of what is most valuable to customers, and the role that customer support has in that value equation.  If they really don’t know, they will learn quickly from these actions if they choose to – but at what cost?  For smaller businesses who may not have that level of insight, before you make a decsion to cut support you need to know the answers to the questions listed above.  You need to know what customers value, and which customers are most valuable to you.

The Customer Strikes Back

No, it’s not the title of the next movie in the Star Wars series. It is part two in a three-part series from Accenture on customer service in the technology industry. The survey mentions several review sites such as epinions.com, theconsumersreview.com, resellerratings.com, and gethuman.com. Are they effective? The report states that:

“According to Henderson research, there are now more than 25,000 websites dedicated to poor customer service, and there were more than 100 examples in the past year of actions individuals took to virally communicate their displeasure via the Internet resulting in a company’s changing its policy.”

Average customer service is not good enough. The report findings show that there is a direct relationship between how satisfied customers are with the service they receive and how likely they will be to continue to patronize a provider. According to report “only about one-fourth of customers said that they would buy again from a company that, in their minds, provides only average service, and just 19 percent said they were likely to be more loyal to such a company.”

Service is more important than innovation. According to a customer service survey conducted by Harris Interactive for Verint Systems, consumers overwhelmingly prefer good customer service over the hottest, most innovative product offerings, and most consumers will tell others about their customer experiences – whether bad or good. Some 88% reported that they find a company with good customer service much more enticing than one with the new and innovative products.

The take-aways:

1. Be sure to gather customer feedback about your customer service and know that good enough, isn’t.
2. Add customer service to your competitor analysis, and include website customer self-service tools in your analysis.
3. Monitor consumer review websites for feedback about your business and your competitors.
4. Take all your customer feedback seriously, even if you only get a few responses. Many customers will not directly tell a company about their experience, so be sure to both clarify and quantify any issues that get reported from customers.