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4.5 Rules for Creatively Firing Unwanted Customers

Michael Lowenstein, PhD, CMC | May 1, 2017 89 views No Comments

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Some years ago, Sprint’s public decision to cut loose 1,000 subscribers who made frequent calls to customer service was met with stromg negativity from consumers and the media, but, rather curiously, with praise from some CRM and CX experts.

Here’s a summary of the background: Sprint took a fair amount of criticism in the wake of its broadly-communicated decision to terminate the contracts of more than 1,000 customers who, the company felt, made excessive calls to customer service. Sprint had issued a terse letter to these customers informing them that it was terminating their subscriptions in one month and would waive all charges on their accounts

According to Sprint, the targeted customers made 40 to 50 calls a month to customer service. In the wake of the bad press, Sprint stood by its decision. At the time, a Sprint spokesperson explained to the wire services that the determination was made after thoroughly researching each affected account. Some CX consultants, viewing this move from the outside, assumed that Sprint had a) looked at customers they considered high and low value, and b) weighed current and potential value of each customer to see if the amount of service time invested on low-value customers was warranted Maybe; but, as we’ve seen with companies like Wells Fargo and United, Sprint would have done better to handle this in a quieter, more customer-centric and proactive manner. That’s Rule #1 for firing customers.



Moving to another consumer service sector, Merrill Lynch and Fidelity Investments went through a similar exercise with one of their management decisions, telling customers with smaller account balances that, moving forward. they no longer had access to a personal investment advisor and should use the new self-service Web site, or a centralized account service, Giving consumers a reasonable, more affordable, support alternative and then giving them the option to stay or leave – Rule #2 – is not ideal, but it a better move (providing that it isn’t broadcast to the media) than just depriving them of a service.

Rule #2.5 also applies to financial services. It is to move marginal customers to more automated servicing, such as TD Ameritrade, and others, are doing with robo-advisory apps. Related to this, some companies have succeeded in getting rid of low-value customers by adding and/or escalating direct service charges for overuse of otherwise free services.

Rule #3 takes into consideration the real-world recognition that what goes around comes around, so it’s important that, to maintain a decent image and reputation with severed customers even after ending the relationship, it’s important to:

a) be polite with scripting used when communicating the termination, giving them reasons for this decision, thanking them for their business, and perhaps recommending a competitor

b) take full responsibility for the decision, and provide some reasons for the action

c) give the customer a list of actions to follow to conclude the relationship. This will help mitigate miunderstandings

d) offer the customer an opportunity to communicate (if desired), but also be firm that this is a final decision

Rule #4 is actually the simplest of the 4.5, but also requires the most fiscal alignment focus and discipline. It is this: Target the right customers in the first place, i.e. those that are the best fit for your products and services, have the most growth potential, and want a long-term, rather than a passive transactional, relationship. Customer life cycle management is an incredibly important element of CEX, and it works best for the enterprise if it is supporting customers who are partners and desirous of the value a vendor offers.

From a vendor standpoint, it’s important to understand that not all customers are created equal. Some lack integrity, and might even be abusive toward, or take undue advantage of, a vendor in the relatonship.. Some are “below zero” in their contribution to the bottom line, with little opportunity to upsell or cross-sell over time. Some are simply inappropriate targets.

Following these 4.5 Rules can eliminate many of the headaches associated with dropping customers and provide massive financial and cultural results.

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