When customers encounter friction anywhere along their journey, from search/browse through purchase and consumption, their loyalty suffers and many of them leave. This was one of the core findings of the research that my co-author and I recently set down in our 3rd book, The Frictionless Organization: Deliver Great Customer Experience with Less Effort1.
Let’s examine the implications of friction and options to remove it by customer reason and customer value, using one of the more challenging situations towards the end of the relationship when the customer says, “I want to cancel my account (or service).” In many cases organizations never even hear this request – customers simply walk away — but let’s assume here that the customer is under some sort of contract or subscription.
First off, organizations that are not Frictionless typically address this reason (or intent) by making it hard to cancel … think back to the horror stories that AOL customers reported in the 1990s leading to a settlement in 20052 … and not learning from the experiences, roughly following these steps:
- Focus on the assisted channel to handle requested cancels, and not pay enough attention to other channels such as apps or chat bots.
- Route customers to a “Saves” desk and force them to wait on hold for long times; offer “better deals” that carried additional contact commitments; challenge customers’ continued demand to cancel; threaten to add cancelation charges; and impose other barriers. Sometimes the customer winds up staying, perhaps to avoid the hurdles in place trying to cancel, but in most cases the customer leaves.
- Do not ask, “Why do you want to leave us?” and if they do ask, not take the time to let key stakeholders know so that they can figure out how to reduce future defections. As a result, they resemble Einstein’s definition of insanity: “Doing the same thing over and over again and expecting different results”. In addition, there is significant negative word of mouth that influences other customers to consider leaving. Relying on overall customer growth to net out the defections, and not focusing on individual requests to cancel, they start to suffer dramatically when growth crests and churn increases.
On the other, Frictionless organizations handle the reason (or intent) “I want to cancel my account (or service) very differently than organizations that introduce effort that frustrates their customers, following many of these 9 steps.
- Understand “I want to cancel my account (or service)” as one of a small number of reasons, between 25-50, in the customer’s language that can be recognized in any channel (contact center, retail shop, online, app, chatbot, etc.).
- Assign this reason to one of the four main Strategic Actions (steps 3, 4, 6, or 7) using the Value-Irritant Matrix in a cross-functional workshop, with details on volumes, costs, and “customer pain” KPIs like churn (very high for “I want to cancel my account (or service)“) and NPS or Customer Effort Score (both very low, even negative NPS).
- Assign this reason to an “Owner” who usually resides outside of customer service. We usually see this reason falling into the Leverage quadrant (valuable for both parties) or falling into the Digitize quadrant (valuable for the customer but the organization would prefer not to devote assisted support). Organizations might consider factors like the likelihood to retain the customer, the CLV of the customer, and the ability to offer a new or improved solution for the customer. All three of these factors can be met in Leverage or Digitize, hence the need for cross-functional managers to meet to Assign the best action for the organization.
- Prioritize this reason with a target to increase the number of assisted contacts (to Leverage more conversations) or to reduce the number of assisted contacts (using Digitize tools). For both Strategic Actions, Frictionless organizations ask at least two of the “Five Whys”.
- Create a weekly reporting tool to track progress, with weekly meetings to share ideas on how to meet or beat the targets and to dig into details why customers are asking to cancel their accounts or services. This is best viewed on a CPX basis, meaning that instead of reviewing the sheer number of these reasons, the Frictionless Organization divides the number by total customers or total accounts, and if the rate of contacts and costs is going up, that’s a big problem.
- Develop detailed plans to Leverage or Digitize this reason, led by the “Owner” using data from all of the customer channels, once again shared across the entire organization.
- Conduct root cause analysis to determine why customers want to cancel their account or service. For example, it could turn out that customers report (a) unreliable cell phone service during their commute or at home; (b) frequent incorrect charges on their account, or (c) a much better deal elsewhere. Use a “Digital Gap Analysis” to discover why Digitize tools are operating with lower-than-expected containment rates. We encourage organizations to strive for >80% containment for each reason which is still ~20% failure, and over time climb above 90%.
- Learn from the root causes for “I want to cancel my account (or service)” to ensure that underlying problems are attacked to prevent more requests for cancellation. Listen more closely to social media and all of the channels and situations where customers express their frustrations. Use speech and text analytics to score the underlying needs. If the customer expresses frustration that is one of the reasons assigned to the Eliminate or Streamline action, such as (a) or (b) above, the organization needs to offer an appropriate alternative immediately.
- Re-design products or services based on all of the earlier steps. For (a) unreliable cell phone service during their commute or at home, the organization might Learn that it doesn’t have good coverage for that customer and therefore it was not a “right fit” in the first place. As a result, they might want to identify similarly situated customers and move them to another plan or recommend another provider. For (b) frequent incorrect charges on their account, the organization might need to double-check invoices before they go out to remove offers and promotions that are no longer in place, or even change out its billing system. For (c) a much better deal elsewhere, the organization might need to revisit its product pricing and the other “Ps” to appeal to more customers or consider reducing its price or granting discounts to preserve its account base, similar to “down-selling”.
In summary, to become Frictionless when the customer says, “I want to cancel my account (or service)“, it is critically important to find out why and offer an appropriate alternative immediately for irritating reasons. It could turn out that the customer was not a right fit for that product or service in the first place, such as living in an area with poor coverage, in which case it might make more sense to apologize for the customer’s inconvenience and enable them to cancel immediately using a quick link, a Digitize step.
This decision tree gets more complicated when factoring in customer value: If the customer appears to have low value, then an automatic Digitized cancellation might be the most appropriate and cost-effective solution. If, on the other hand, the customer has high value, it will be important to have a personal conversation and use Leverage action. There is a huge body of research about customer value. Frictionless Organizations we profiled tended to consider potential or future value, not historical purchase levels. We addressed this in our second book Your Customer Rules!3.
After attempting to offer or implement the appropriate solution to the customer’s request to cancel, whether that leads to customer retention or departure, it is important for the Frictionless Organization to ask itself, “Why didn’t we know about this problem with this customer before they had to ask us to cancel their service?” Using predictive analytics and machine learning, the organization could have made a Pre-emptive offer or reached out to that customer before they needed to contact the organization to cancel. This is also critical to reach out to customers who did not bother to contact the organization to cancel their account or service; I’ve called them “the silent majority” in an earlier post4.
The hallmark of Frictionless Organizations is that they conduct detailed root cause analyses on any reason that is assigned to the Eliminate or Streamline action so that they remove as much as possible the frustration or irritation for customers. Using the earlier examples, this might mean upgrading the speed of its network in certain neighborhoods or cities or scrubbing old charges in order to Eliminate the need for customers to complain about these reasons. Knowing the underlying problems is a powerful competitive weapon!
1 From The Frictionless Organization: Deliver Great Customer Experiences with Less Effort, Bill Price & David Jaffe, Barrett-Kohler, June 2022.
2https://www.nytimes.com/2005/08/24/technology/cant-cancel-a-service-aol-settlement-may-show-why.html, accessed 4 August 2022.
3 Your Customer Rules! Delivering the Me2B Experiences That Today’s Customers Demand, Bill Price & David Jaffe, Wiley/Jossey-Bass 2015. In “You value my potential”, one of the five sub-needs for “You value me”.