Wait! Come back!
In a profession that is driven by information about current and potential customers, a source of remarkable insight is frequently overlooked. We’re referring to defecting and lost customers. Let’s face it: As managers we don’t like to relive or review our mistakes and that’s what lost customers are, right? We’ve done something or failed to do something else which results in a customer walking away. Rather than reliving the frustration by investigating the departure, we’re happier bumbling forward and unknowingly making the same mistake(s) over and over again!
Also preventing fully tapping into this source of insight are the actions of defecting customers. They can be divided according to how vocal they are. Many will simply leave in silence – the passive defectors, whose information is not volunteered to the marketer. Others, recognizing their investment in time with a supplier, will reach out to express the issue or problem precipitating their departure – the active defectors. Both have valuable information for the marketer. But the insights from passive defectors will never be heard without an outreach to them. And, because actives are the vocal minority, effort must be taken to see that their feedback is properly weighted versus any information collected from passives.
While marketers are routinely comfortable spending resources on studying current customers, interviewing lost or departing customers may be considered a waste of time. But collecting feedback from defecting customers is a sound business practice. The philosophy behind such actions is analogous to the “zero defect” philosophy of manufacturing. A manufacturer doesn't look to its acceptable products as a way to improve a manufacturing process; it studies its defects.
If you think about it, customer satisfaction studies can be thought of as being conducted among a biased population. Whether they’re totally satisfied or not, current customers are nevertheless biased toward a brand or service by virtue of their persistence to remain as customers. Lost customers, on the other hand, are the marketer's “defects.” These customers, who’ve abandoned the brand, may offer a perspective of the brand or service which is more comparatively realistic in the marketplace.
Willing to help
So they’ve left us. The door is closed, right? After all, if they’ve defected, why would they help us out? Surprisingly, defecting customers are more accessible (and willing to help) than you might imagine. You need to set aside your likely bias characterizing lost customers as unwilling to offer any useful information if asked. Consider these experiences from several studies among lost customers:
- A surprising proportion of lost customers will cooperate with a marketer's outreach (up to 20%).
- Their responses are generally constructive and thoughtful, rarely disrespectful.
- Amazingly, a portion will often indicate they’d repurchase the marketer’s brand and they'll describe exactly what the marketer needs to do to bring them back.
We have always encouraged our clients to seek customer feedback and (as painful as it can sometimes be) to listen very carefully to comments from unhappy customers. But information supplied by lost or defecting customers creates some psychological problems. We need to be careful how we mentally classify the information to be gained. The immediate reaction will be to consider the information as complaints. And this will create a defensive bias, prompting an unwillingness to accept the information.
To prevent this bias, think of a critical comment as a gift because it identifies a point of pain from the customer’s perspective which alerts you and gives you the opportunity to fix it. Welcome volunteered comments from all customers, ongoing and defecting. When companies don’t listen and respond to customer problems it’s likely they’ll not only lose the customer and the customer’s future stream of purchases but also suffer the impact of the unhappy customer’s negative word of mouth!
Still feel a bond
Customers generally develop an emotional attachment or an association of convenience with a vendor/supplier. Even though they may stop conducting regular business with a supplier, chances are they still feel a bond with the company, so an outreach from the company isn’t considered that unusual; it may actually be appreciated. There’s also the feeling of flattery – being contacted and asked for their help and opinion. Plus, any contact gives them the opportunity to vent directly to the company rather than letting off steam by complaining to friends and family about it. Finally, their defection may have been under duress but made necessary by the absence of response to a prior question or outreach or the lack of appropriate information.
Ideally any outreach to defecting customers should include: an identification process; a communication tool; a data collection survey; a diagnostic stage; and an action-planning sequence.
Customer identification. The first question to be answered is, do you know who your end-use customers are and can you easily identify when a customer has stopped doing business with you? For B2B organizations, the answer is more likely to be yes, as opposed to a B2C organization dependent on a multi-tiered distribution channel with intermediaries. A robust customer database is mandatory. (In the online marketplace of today, this information is becoming increasingly routine, if not for the entire enterprise at least for substantial lines of business.) What some customer databases lack is full integration with the transactional operations of a business. Information such as typical purchase size, frequency of purchasing, history of returns, requests for service, rebates or refunds should all be incorporated to make the database as useful as possible.
Communication tool. The approach to the defected customer needs to be well-planned and sincere in tonality and appearance. Communication starts the process but should also be involved in closure. Far too many outreaches to customers are started without ever being completed with an expression of appreciation or an acknowledgement of how the insights gained will be used to eliminate the problem or issue experienced by the defector.
Data collection/survey. Some form of data collection will be necessary to assemble the insights from the disenchanted customers who are defecting. A tool commonly used for this is the exit interview. There is, however, no widely accepted format or list of questions to be included. Exit interviews we’ve seen have varied from a short list of simple yes-no questions to the equally short-appearing but glaringly formidable open-end question asking, “Tell us why you left.” The ultimate answer is to ask only necessary questions and to allow respondents to voice their opinion in at least one open-ended question.
Diagnostic stage. We suspect few exit interviews have been preceded with a plan for the analysis of the information to be collected. Data analysis should never be relegated to a contemporaneous hunch. Rather, a disciplined approach should be created prior to collecting any information. This plan should specify comparisons to be made, identification of the major dependent variables and specifying segments of responders thought to be of value.
Action planning. Lastly, plans should be in place to specify: 1) how frequently/when exit-interviewing should be conducted; 2) the departments assigned as process owners with responsibility to correct identified problems; and 3) a time schedule within which remedies should be implemented. We recommend all three issues be addressed, up front, prior to implementing any customer offboarding process.
Influence the success
The following factors strongly influence the success of collecting good information from defecting customers:
The medium of the survey. The goal in choosing a medium is to maximize response rate while minimizing intrusion into a departing customer’s life. Telephone interviews command attention but often interfere with a customer’s work or personal time. Near-universal caller ID further undermines responses. Mail surveys are less intrusive but also tend to generate far lower response rates. Today’s prime medium is online communications, starting with an e-mail or text invitation and then progressing to an online interview or chat.
The presentation of the questionnaire. Conceivably this is the marketer’s last communication with the customer and how it is presented may influence the customer’s long-term memory of the marketer. The questionnaire package has two objectives: to acknowledge/confirm that the customer has stopped purchasing the marketer’s goods or services and to request information about the circumstances which led the customer to defect. The request and questionnaire ought to be as personalized as possible, reinforcing the impression that the customer is known as an individual. Also, any accompanying correspondence ought to be personally signed and appear to be individually prepared, further demonstrating the marketer’s concern.
The explanation accompanying the questionnaire. How can customers who have stopped doing business with the marketer be expected to answer their questionnaire? The answer is the marketer’s sincere request for help! The message delivered to the lost customer must be, “It appears (or we know) you've stopped buying from us,” and “We're asking for your help so that we can fix the situation to prevent other current customers from experiencing the same problem(s).” Many customers will be happy, even flattered, to provide their perspective of what is wrong with the marketer's product/service, delivery system, customer support, etc.
The structure of the questionnaire. Customers will provide information but the marketer must also be realistic. The goal, within five or so questions, ought to be to identify the problem(s) that lost the customer. Resist the temptation to ask how likely the customer might be to come back, as this appears too self-serving.
How completed questionnaires will be collected. Provide an impartial, third-party auditor or a senior executive of the company to receive the returned questionnaires. Clearly state this in your accompanying correspondence. This will help demonstrate the sincerity of your outreach by your planned objectivity.
Close the loop. Respondents deserve to hear your appreciation of their feedback and especially how you plan to use it. Acknowledge the issue they’ve identified and let them know you’ve either already addressed it or are in the process of remedying it. If it can’t be changed, briefly explain the constraints you face.
Invitation to return. Once you’ve fixed the problem and a reasonable amount of time has passed, it’s quite fair to reach out to defected customers with a message that you’ve addressed the concern/problem that caused them to defect and are now inviting them back! The offer of a “returning customer” promotion can be quite effective.
Interacting with defecting customers can provide a wealth of information. Beyond identifying the root causes of customer defection, the process can also provide a wide range of additional insights and benefits. The process can:
Broaden the understanding of systemic problems. Because so few customers ever complain, information collected through exit interviews can help complete the picture of problems and inadequacies. It just pays to attempt to interview all defecting customers.
Prepare customer service representatives to be more effective in their interactions with departing customers and suggest remedies that can be offered for common problems.
Help create a profile of the high-likelihood defector. Understanding what departing customers did (their purchases, their outreach – number of contacts and expressed concerns, etc.) before they took their business elsewhere can help a company proactively identify future at-risk customers.
Identify win-backs by uncovering the identities of lost customers who indicate they’re willing to consider repurchasing if an issue or problem has already been fixed. Win-back percentages are far greater than mass sales prospecting campaigns (after all, the “grass is rarely greener”).
Create goodwill by showing enough concern to reach out to customers. Though the process, by itself, is unlikely to cause a customer to reverse his/her decision to leave, it may make the customer more receptive to future win-back efforts or reduce the likelihood of them generating negative word of mouth about the company or brand!
Takes a commitment
Like any company process, instituting a defecting customer program takes a commitment from the entire organization and from senior management. Not all management teams will be willing to call attention to the issues of customer retention and lost customers. And, once a process is adopted, the adoption curve needs to be flexible; changes will need to be made to maximize the benefits from the program. But not having an exit-interview process in place ignores a potential source of rich strategic information. Smaller organizations (who are more likely in day-to-day contact with their customers) will find the program a more natural outgrowth of their conduct of daily business. Larger organizations will have to deal with more details and overcome siloing of information. But regardless of size, all organizations will find the insights gained from defecting customers to be of substantial strategic value!