Why do enterprises abandon a vendor’s product after investing so much time and resources in selecting and validating the solution? Even after training employees and integrating the product into the broader environment, enterprises will abandon it. This is puzzling because most B2B enterprise purchases are not done on a whim; there’s a clear outcome that needs to be achieved. Yet large and small businesses often change the products, hard and soft, to the bewilderment of the vendor’s sales, marketing, and customer success teams.
As the vendor’s team “What happened?” and you’ll hear that customer defections are due to missing product features, performance or roadmap issues, infrequent or incorrect product usage, a change in customer strategy, a competitor has “one upped” them, or price. From my experience, in an overwhelming majority of cases it’s none of these reasons.
Unfortunately, by the time vendors realize their customer will churn, the relationship is beyond salvage. Equally unfortunate is that most customers aren’t transparent about the real reason for churn. Not wanting to deal with the onslaught of emails, phone calls, or visits by ever higher levels of vendor executives in an attempt to salvage the account, customers gives the vendor a palatable excuse.
Yes, customers leave because of poor experiences but it’s not that black and white. What I hear from B2B end-customers — from small businesses to Fortune 100 — the number one reason for defection is lack of enough “value.” Period.
It doesn’t matter if it’s a $10,000 SaaS subscription or $500,000 piece of equipment; it all comes down to value.
“Value,” as uniquely defined by each customer, is contextual and multi-faceted, and changes over the relationship lifecycle. There is no single, commonly held definition of “value” for each industry, a market or customer segment. In other words, “value” is not solely in the product but in what surrounds it.
Three Dimensions of Value
In virtually every end-customer interview I’ve conducted, “value” was defined along three dimensions: Outcomes, Trust, and Relevance:
Contrary to popular belief, customers do not purchase to solve a problem, they purchase to achieve an outcome. The problem statement is simply how they articulate the desired outcome.
One client’s customers articulated the problem as needing a better way to engage customers. The outcome they wanted was to reduce inbound contact center calls volume. It wasn’t until after they realized their cost savings from deflected calls that their real target outcomes was revealed. From lessons learned to date, the real target outcome was to enable them to influence end buyer behavior and preferences.
The vendor was expected to act as a change catalyst. The definition of “value” changed from number of calls deflected (avoided) to how effective the vendor was in guiding the customer through change management to realize the new outcome. The vendor, however, wasn’t tuned into the value shift (or that this shift was happening widely within their customer base) and had essentially “checked out” once the initial ROI was achieved. The vendor thought they were done, yet their customer thought they were just beginning and perceived the vendor’s dis-engagement as a failure of customer service.
Outcomes change over time; vendors need to understand how, why, and what triggers the change.
At the core of customer loyalty is a trusted, human-to-human relationship — one based on transparency, honesty, and having the customer’s “back.”
For the Fortune 500 customers of a mobile security client, keeping company data, trade secrets and communications away from prying eyes was considered business critical. Security and IT teams expected vendors to honor all commitments and be full transparency; their jobs depended on it.
The vendor repeatedly missed product roadmap delivery dates. Without advance notice of the slippage, customers were often caught by surprise. Meanwhile, the sales team made promises that it “won’t happen again” coupled with deep discounts to keep the pipeline moving. Trouble tickets remained open and escalation processes didn’t seems to make a difference. Customers vocalized their frustration to executive management and engineering at annual customer advisory meetings but nothing changed.
The customers I interviewed felt betrayed, confused, and had lost confidence in the vendor. Many felt the vendor’s actions had put their own jobs at risk. What was happening within the vendor was a deep commitment to the product roadmap and to each customer’s success but the company had encountered some internal issues. Consumed with internal politics and resource shortages, the customers’ concerns were downplayed. Customers started to churn and the vendor’s sales pipeline weakened as word got out about the roadmap delivery issues.
Trust doesn’t come with the purchase order, it needs to be constantly earned.3. Relevance
In today’s world, it takes an ecosystem to keep a company relevant and vendors play a key role.
The SMB customers of a Human Resources SaaS client are challenged daily to find, recruit, and keep talent. Armed with knowing which jobs are trending toward labor shortages is vital information for HR managers who can make sure compensation is competitive, work environments are healthy.
Customers wanted to work with the same vendor team throughout the lifecycle of the relationship. Not because customers expected to talk to vendor personnel frequently, but because over time the same team would develop a deep understanding of the customer, their business, and labor needs. That knowledge would translate into more relevant advice, product usage training, sharing of industry information and better support.
Value was defined as receiving relevant, proactive advice based on the customer’s environment, their product usage, and new upcoming features that would make the users’ work easier. Customers wanted access to industry studies and domain experts that could counsel them on how to best address emerging labor and economic trends in their industry and geography. To customer this value enabled them to be more competitive.
This scope of interaction was well beyond what the vendor thought customers needed or wanted. And the vendor’s processes, systems, and organization were not structured to deliver this level of personalized value. With some organization and process changes the vendor found that delivering more relevant, information at each customer interaction resulted in a higher renewal and up-/cross-sell rates.
Ongoing relevance is a key driver of vendor stickiness and customer experience.
Once a vendor delivers the initial expected outcome, customers’ attention shift to other ways a vendor can help them. In my experience, most B2B vendors have 90 days from the point of onboarding to begin delivering the initial expected outcome. If successful, the customer redefines what “value” means going forward. If unsuccessful, the customer may continue to use the product but the decision is made to either churn at some convenient future point in time or reposition the product as a tactical, non-critical solution.
During onboarding, implementation and initial adoption, it’s all about the outcome. Trust begins becoming important in the middle of the sales cycle and lasts well past implementation into day-to-day operations. Trust takes a step back from importance when the vendor has consistently demonstrated trustworthiness, transparency and accuracy. Outcomes remain key until the customers’ needs and expectations change and a new definition of value replaces the initial target outcome sought. Then it’s all about relevance – which is what makes a vendor sticky.
During onboarding, implementation and initial adoption, it’s all about the outcome. Trust begins becoming important in the middle of the sales cycle and lasts well past implementation into day-to-day operations. Trust takes a step back from importance when the vendor has consistently demonstrated trustworthiness, transparency and accuracy. Outcomes remain key until the customers’ needs and expectations change and the definition of value replaces the initial target outcome sought. Then it’s all about relevance.
Vendors looking to align their marketing, sales, customer success and professional services to deliver a stream of ‘Value’ need to undergo a mindset shift. In Part Two of this article, I’ll share best practices for turning churn into loyalty. Until then, to determine your stage of customer alignment, contact us for a free comprehensive assessment and 30 minute blueprinting call.
This is interesting. In my experience its been a combination of luck, timing and your trio of 1) Outcomes; 2) Trust & 3) Relevance. Its a matter of being prepared when you’re up at the plate and making sure to hit a home run. Its amazing what business and relationships can come of such a situation!
While the three elements you’ve described pretty much encompass the real, and emotionally-driven, churn motivators, it feels like something of a stretch to, de facto, dismiss price or price changes as a contributor.
Some years ago, my colleague Jill Griffin and I wrote “Customer WinBack”, where drivers of risk, loss, and recovery were thoroughly examined. Pricing does have a major influence on b2b purchasing, even when advanced multivariate and modeling techniques are applied to understand their real impact. Part of this comes from the fact that Procurement groups are often involved in purchase decisions, and part of it comes from the fact that pricing also has an emotional subtext, making it part of trust.
It’s understood that pricing can be a red herring or deflector for the real reasons behind b2b customer turnover, but price can also directly and indirectly contribute to churn.
Christine, how refreshing. A poor experience will lead to poor value perception. More recently large buyers such as Coke and Pepsi have purposely encouraged over capacity, making them buy on price. This has increased churn. The better players have improved their offerings and found a way to de commoditise. The better buying companies appreciate the value that these suppliers bring.
Great comments everyone. Michael, thanks for sharing your research and observations. Price can play a variable in purchase but in a repeat b2b purchase our research found it did not in a majority of cases. Are there cases where someone lost budget, yes, but where that was reality (vs. the prooffered customer excuse) was in the distinct minority. Our qualitaitive research is F2000 and up in N. America and across industries. I would not say this is generalizable to EMEA.
I agree with Marc, “success favors the prepared”.
Hi Christine: any vendor that’s bewildered when a large customer defects to another supplier – or chooses to just stop buying altogether – has bigger problems. I don’t like to sound harsh, but it’s hard to have sympathy. Just chalk it up to the hubris that accompanies being dumb and happy with your cash cow.
I believe customers DO unplug from vendors over poor quality, poor service, lack of feature updates, ossified pricing models – and for many other reasons. As tempting as it may be to think ‘what they really mean is . . .’ business leaders have to take all of these issues seriously, because these are proximate causes for customer churn. “The last straw . . .” Vendors must know what it is – or they are.
I agree with what you’ve pointed out, there are other, sometimes ‘softer,’ issues that cause relationships to unravel. But ‘value delivered’ is a compilation, or ‘roll-up’ of so many things, which is why proximate, as well as underlying causes must never be dismissed, ignored, or simply explained away.
Andy, Powerful thoughts. Haven’t you heard: “It is always the customers fault that we lost business. We can never do anything wrong. Customers are irrational”
Most companies are “bewildered” about why their customers buy or why they leave. It’s true in B2C and B2B.
Part of the problem is that customers lie. Yes, I said lie. I’ve done it numerous times to avoid having to explain myself, or enter some kind of a “save” process.
So instead of telling the vendor the real reason, I give a palatable excuse so they’ll leave me alone.
Quite a few years ago I ran a survey about customer loyalty, and found that companies are delusional about why customers leave. Top reasons given were price, or needs changed.
When we asked customers the same question, they gave different answers. Poor customer service was the number 1 reason, with price way down the list.
And these responses came from the exact same audience — this community. When people put on their “company hat” they think one thing. When the same people put on their “customer hat,” they think something else.
I do agree there are many factors that go into a decision to defect. Speaking for myself, I’m constantly assessing the overall value of what I’m getting vs. what I’m paying vs. other opportunities. When the value falls short, I start seriously looking at making a change, and I don’t give the existing vendor a “heads up.” It’s too late for that.
But later, when they ask why I’m leaving, I lie about it. That seems to keep everyone happy.
Sometimes (rarely) the vendor makes changes that change my mind. A few years ago I was planning to change the ISP for CustomerThink.com. Costs were too high and there were other alternatives to Rackspace that were appealing. As I was about to pull the trigger on a change, Rackspace unveiled a new cloud-based hosting solution that is amazing. Lower cost, easier to manage, better all around. Exactly what I needed.
The difficulty getting at the truth of customer defection is why third parties can be helpful. I wouldn’t mind giving someone like Christine an honest earful about why I left a company, because I know she is interested in the truth, not trying to convince me to change my mind.
This points to the ongoing need for customer research and listening programs (including qualitative research) to accurately assess what customers really value, and why they leave. In general, I think companies are poorly equipped to do this well in house.
Great piece, Christine. This clearly matches my experience and research with B2B enterprises. Our customer forensics work indicates only about 5% of defecting customers give the real reason for their departure. Price is an easy one to claim and price is rarely the culprit for churn. One important point to add is the opportunity for differentiation. Customers today assume the outcome will be as promised. And, relevance is more and more a table stake for just getting in the game of business. Differentiation lies in all the factors that telegraph trust–especially the partnership nature of the relationship and the quality of the customer experience!
Bob, thanks for sharing your perspective. The behavior you described is what I see everyday with our clients. The continuous reassessment of whether and how a vendor fits into the customer’s ever evolving world is a powerful driver of their behavior. And one that isn’t obvious to vendors unless there is a deep trusted relationship between two humans – the customer and a vendor employee.
As Andrew stated it all comes down to value, which is “in the eye of the beholder”. He is correct and vendors need to invest to understand how the definition of value evolves. The evolution follows a pattern much like the much discussed purchase/buyers’ journey evolves.
Vendors need to listen with an open mind and not engage in willful blindness. Thought leaders, we’re blessed that so many are in this community, need to start debating how we shift from a reductionist view of customer behavior to an emergent one. Because, based on my experience (and opinion), it’s the “soft” stuff that is the root cause of churn.
Chip, thank you for posting. Interesting your statement on relevance and differentiation. I agree that they expect the outcome to be as promised. In mature business problems, the outcome often is as promised. In early stage business problems, not so much. I’m seeing customers take ‘leaps of faith’ based on sales / marketing teams pointing to ‘model customers’ and saying “you, too, can have results like XYZ.” When that doesn’t happen the price is not just churn but damage to the buyer’s reputation and career.
This is an interesting discussion, I think we may be sharing similar ideas in slightly different terms.
One of the best explanations I’ve ever had in interviewing former customers on behalf of a client was simple stated as “Hassle Factor.” While the customer liked the product, thought it delivered the value expected, the ongoing customer experience had a higher hassle factor than they expected or would tolerate.
In drilling down, it wasn’t any single thing, but an accumulation of a number of things that simply caused the customer to look elsewhere when they were buying again.
The term “effortless experience” used by the guys at CEB is both a great team and great concept in looking at why customers leave, why they may not be loyal.
Separately, we’ve also done a lot of research on customer defections. We see some interesting recurring patterns in defections. For example in looking new customer acquisition, say in one year you acquire 100 new customers, the next year, we usually see about 60 of those continuing to do business, the following year, it drops to the range of around 40, the next 25, usually levelling out around 15. You see the same pattern year after year (e.g new customers in 2012, 2013, 2014, 2015…..)
When interviewing the defecting customers, you get some of the things you’ve outlined in terms of value, some that others have mentioned, like quality, or we found a better alternative, or we found a better price. The most surprising thing (usually around 30% of the responses), was “We forgot….”
It seems that two often, after getting a customer, we tend to take them for granted, and don’t maintain contact, build the trust and relationship, so that when they buy again, they tend to overlook what they have, and look elsewhere.
In any case, thanks for stimulating a good discussion.
Chip, how right. My feeling is:
1. If the relationship had been good, and the value was high, the company would not have gotten rid of you. If the relationship is poor, they won’t tell you why they left you
2. If the relationship is good, they will tell you what they want to (like, oh, the engineers were unhappy, or the others have a better product or offering)
David, Hunting is so much sexier than farming….Sales focuses theefore on hunting
My gosh, Christine. I find your reply to Bob to be great.
You noted: As Andrew stated it all comes down to value, which is “in the eye of the beholder”
Particularly I agree:
Vendors need to listen with an open mind and not engage in willful blindness. Thought leaders, we’re blessed that so many are in this community, need to start debating how we shift from a reductionist view of customer behavior to an emergent one.
I agree we all need to work on Creating Customer Value
Gautam, if it were true that hunting is sexier and that’s what people do, then why do we struggle so to get people to prospect? I think there is far too little true hunting, both for new customers within an account and for new customers.
Based on recent Voice of Customer research we conducted on this topic, would like to add two points to this thoughtful idea exchange.
Per the research, two additional criteria are emerging as particularly important. First, does the benefit of bringing on a new service provider outweigh the personal risk to the executive in bringing on a new company? Executives today are increasingly concerned about developing their personal brands. So they look at risk not only in terms of job performance but also the impact on their evolving personal brands. This apparently adds a new level of scrutiny and skepticism when evaluating potential new service providers or keeping existing providers.
Second, is how clients judge service providers when mistakes occur. In most businesses, mistakes or problems are a reality and expectation. A defining factor for clients is whether service providers take responsibility and how responsive are they in handling the situation in the client’s best interests, to ensure this does not happen again.
Thank you, Gautam, for engaging in this conversation. I agree with Chip, we’re all talking about the same thing, from different angles.
What puzzles me, and hopefully we can talk more about this, is how is it that thought leaders understand this so very well YET practitioners don’t know where to start, how to go about doing this and are so fearful.
Why is that? Why so fearful?
There may be a fourth reason or dimension worth adding to the list above – Focus! Incredibly, far too many companies put all of their time & attention into acquiring the customer, then short-change the customer when it comes to attention, communication and value reinforcement moving forward.
For many recurring revenue businesses, the sales funnel is actually a sales bowtie. The middle of the tie is when the deal is closed, but little to no revenue has been achieved. It’s the bottom of that bowtie where lifetime value is realized and exceeded.
Great content Christine!
Erin, I’m thankful you raised the person risk dynamic. It needs to be added to the mix in this discussion. Part of the post-purchase value equation is how can the vendor help the buyer’s personal brand. The ‘how’ varies (based on what I’ve seen) from speaking opportunities, networking, access to information to help them be smarter, coaching, ‘covering their back’, etc. In younger buyers, I see a lot of ‘coaching’ expectation.
Matt, love the bowtie analogue. In SaaS businesses, after the top of ‘bowtie’ (which I’m equating to onboarding – let me know if I’m off base) there is only sporadic customer engagement until it’s 3-6 months before renewal. During that time the customer is expecting routine meaningful checkins and help. Instead most get a canned email ‘do you have any questions’. It’s during that time that customers ‘forget about the system’ and not realizing value decide to churn. Again the expectation gap.
The lack of focus factor that Matt Heinz cited as a reason for churn is very real. Very often, and especially in b2b products and services, this stems from two key driving elements:
1, Lack of attention paid to customer risk: http://www.targetmarketingmag.com/blog/at-risk-customers-do-you-have-system-identifying-stabilizing-them
2. Overemphasis on customer acquisition: As I wrote in a piece (“The Preoccupation With Pre-Customers”) for another marketing and customer experience portal several years ago:
“Many companies devote considerably more energy and resources to winning or capturing customers than they do on keeping them. The word ‘conquest’ is a frequently used surrogate term for new customers, especially among automotive retailers. Consultant and author Robert Tucker has stated, “Companies are often so concerned about attracting new customers that they denigrate their unique value proposition to loyal customers.” They focus instead on chasing down the next sale, competing on price, and compensating employees more for winning new accounts than for keeping existing customers happy and loyal.
A multi-industry continental Europe study by Professor Adrian Payne, visiting academic (from Australia) at Cranfield University in the U.K. showed that 80% of companies spend too much of their marketing budget on customer acquisition. He calls these companies ‘Acquirers’. Parenthetically, his study found that 10% spend too much on retention; and 10%, whom he calls ‘Profit Maximizers’, seem to get the mix right.
Dave, I agree that it’s hard to get reps to prospect. It’s hard work and discouraging.
But I also agree with Gautam that “new customers” are sexier than “old customers.” Hence prospecting, as hard as it is, gets a lot more attention than keeping and growing existing customers.
I think part of the problem is the age-old paradigm of selling itself. Selling means convincing someone to do something they didn’t immediately want to do. There’s a conquest (a sale) to celebrate.
Where is the celebration when a customer just continues buying? Why don’t more people in customer service, tech support, and product development get some credit for retention and revenue growth?
All that said, most companies need both hunters and farmers. But as Michael notes, very few get the balance right. I think part of the answer is rewarding retention and growth, which is where so-called Customer Success Managers can help.
I have a theory about the fear of corporate practitioners internalizing the real reason for B2B customer churn. Most have invested heavily in Six Sigma thinking–control/eliminate variance, very relevant for the object-making world. They are at home with their strong reliance on quantitative thinking. So, constructs like “trust” and “relevance” don’t fit neatly in that world. Marilyn Ferguson wrote in her groundbreaking book, The Aquarian Conspiracy, “In our lives and in our cultural institutions we have been poking at qualities with tools designed to detect quantities. By what yardstick do you measure a shadow, a candle flame? What does an intelligence test measure? Where in the medical armamentarium is the will to live? How big is an intention? How heavy is grief, how deep is love.” Leaders find comfort in the predictability and malleable features of “outcome.” But, direct measurement of human dimensions like “trust” and “relevance” make many feel on etherial ground relying on measurements that, to use an accounting phrase, “do not foot.” Just a thought!
Interesting. It occurs to me that it would be great if life were only this neat. Can we distill the essence of human relating and breakdowns of human relating into just three domains? Outcomes, value, and relevance? And why is that just about nobody wants to deal with price? Price doesn’t matter to customers – so those who do surveys say. Pay is not a key factor in employee engagement other pollsters say. Sounds like the articulation of a deep ideological commitment to me.
I also find it interesting that folks say in effect “Customers lie”. Actually folks say, “Customer lie to you. Yet, these folks who lie to you, they speak truth to me.” What makes you think that customers aren’t also lying to you? What if customers are lying to themselves?
What about boredom? Look we have been in a relationship for 6 years. It works. And you know, I find myself bored. Bored! Oh, look here we have a shiny new vendor. Seems to be HOT! Everyone is talking about this one. Let me go and see.
What about politics? I am new to this role. Got to make an impression here. Got to let the folks around here know that change is on the way. Gonna set an example. Let’s start with scaring the living daylights of vendors. And chaining some of the oldest, most visible, vendors – and existing ways of doing business?
What about plain meanness? I like to jerks the chains of my vendors. I like to see fear in their eyes. I like them to bow to me – make me feel like God. Problem is that the game is not that interesting-fun with the existing vendors. So lets drop some of these folks and find new vendors to play with.
What about a temper tantrum? And in the process I fired the vendor. Regret it now. But to save face I cannot go back to the existing vendor. So gotta find a new vendor.
What about price? Money didn’t use to be tight. It is tight now. So got to look for a cheaper solution and that means a new vendor? What about money used to be tight and no longer is? Now I/we want to make a statement (send a message to the world) by going with a more expensive product/vendor to showcase new found wealth.
At your service | with my love
I was thinking about other experiences where I’ve changed vendors. Over the years at CustomerThink we’ve changed email platforms every few years. We’re on the fourth one now, so that’s three major changes.
The first one was because we started with a simple and very cheap list system. When we needed a database-backed system, we switched and paid a *lot* more money. It was well worth it, because it allowed us to support our members and sponsors in ways we couldn’t with a simple list.
Unfortunately, the vendor we chose had issues. The solution wasn’t reliable, and when we had problems they didn’t pay attention. In fact, things got so bad I remember yelling at the CEO in one meeting, because he basically didn’t seem to care when their problems impacted my business.
So I fired that vendor (literally) and switched to an enterprise-grade email system that was backed by a company I knew would provide great service. And they did. The solution was designed for large company techies, however. I still remember trying to understand the difference between and inner and outer join to create a report. But we worked around those issues.
After several years, a new cloud-based email solution appeared, designed for small businesses. It lacked a few features, but was very easy to use and *lot* cheaper. We cut our costs by over 90%. I switched vendors with some regret, because the prior company was a class act, but the saving were huge and we didn’t need all the advanced features built into a product designed for large enterprises.
So, in one case we switched to get more function and paid more. In another we switched to get better quality and service. And the final time we switched to save money while improving ease of use as a bonus.
Every situation is different, and I can see elements of Christine’s three factors in my decisions. But these churn events show that the basics of quality, service and price can all drive churn as companies grow and their requirements change.
It should also be noted that churn is not always a bad thing for the vendor. The 3rd company went up-market and over a few years it was clear that we were not in their target market any more, both in terms of size and requirements. So we parted ways amicably, and they focused their attention on prospects that aligned better with their business strategy.
When I was at Continental Can, our sales force really did not sell, but were relationship folks. Our man at ABC company (I am not naming companies), all multi billion dollar food an beverage companies, our sales person knew many people in the company, third shift supervisors, finance and accounting, marketing, CEO’s etc etc and kept in touch with all of them. He knew whose daughter was graduating, who was being promoted
People in the company wanted to meet our salesperson because s/he new more about the company than the executive, and they needed the gossip and be part of the ‘what’s happening’. So we knew about a product problem when running on the line, or when a new bid was coming in from a competitor. It was difficult to dislodge us.
I guess companies like IBM had this kind of a sales force
Point is if you have this relationship and focus, you will have less chance of being thrown out unless you really screw up
While this article focuses on B2B, I think the ideas can apply to just about any business. The three ways this article describes why companies lose customers are also the three ways you can keep them. If the customer defines value as outcomes, trust and relevance, lacking in any of these areas can cause a loss of business. Excelling in them can gain an increase in confidence, which ultimately leads to more business. It’s been said that people want to do business with people they know, like and trust. The knowing and liking are easy. The trust is hard. Trust comes from consistency and predictability, as well as meeting the customer’s value expectation.
While not wanting to take this conversation into a different direction, I often wonder how much all this automation has damaged and inhibited real relationships. Gautam, nailed it as did Shep. People buy from people.
I am increasingly moving away from email and picking up the phone. I find the conversation more valuable and fun. Folks are more responsive on Twitter and Skype SMS than other forms and often will respond with a video call.
Maybe part of the customer-alignment movement requires the pendulum to move in the other direction.
From our research, Bob nailed this in his first comment.
In B2B price comes in about 3-5 in the list. Poor delivery of value (you’re not delivering what the customer wants) is at the top of the list and drives the organisation to go back to the market to search for a solution that meets their needs: supplier is responsive, supplier delivers what they need, etc.
So, yes often price is the stated reason but only comes into the picture after you’ve driven the organisation to look to alternatives.
On the find a new customer/ keep an existing customer topic: by now everyone knows that keeping a customer is the lowest cost approach.
The issue is generally that companies do not properly calculate the value of retention PLUS the key motivational issue that no-one rings a bell and hands out at-a-boys when a customer stays. Those issues lead to an under investment in retention and over investment in new sales.
Christine, such a breath of fresh air. I am so tired of fixing con calls. First you email and then spend time on fixing a time to talk. What happened to informality? and getting things done right away instead of posponing to 1 days from now. This attitude is seen by the customer too, often as a lack of interest
Absolutely brilliant. Love the comments as well. If customers are receiving value, i.e., the outcomes they anticipated, they will stick with you through missing features and occasional lapses in support levels. However, I think very few tech companies are capable of assessing customer outcomes, and are not sure what to do to improve them. Renaming your customer support organization as :”customer success” is not solving the problem. I also echo the comment from Gautam: “It is always the customers fault that we lost business.” I hear both sides often when companies move to a new vendor. The customer talks lack of value received, the vendor usually says it was a price issue.
Hi John. Glad to have your voice on this. There are lots of ways to assess customer outcomes. It requires a mindset change though. I’ve had many c-level folks tell me “yeah, we’ll get to measuring outcomes, it’s on the list. but first I need to increase sales, and …..”. Same with marketing “yeah, i’ll align messaging, campaigns….with journey maps but first I need to fix the website and sales tools.”
I stick by my statement that it will take a crisis of major portions before companies get serious about aligning their ENTIRE organization to the customer. It took security over a decade and many breaches + legislation before companies woke up. We’re in for the same.
Christine – I’ve learned much from this discussion, and will cover a few of the ideas that have been voiced when I post my next blog. I agree with John that some customers will suffer through missing features and support lapses – to a point. The question is, what is that point? And, does that internal confidence create dangerous complacency? I don’t have an answer to the first question, but I can answer the second: emphatically, yes. I’ve seen it happen more than once. Way more.
As far as your observation that it takes a major crisis to get companies serious about aligning the entire organization to the customer. Unfortunately, this appears true. And sometimes, not even a major crisis spawns any meaningful changes. But I think undertaking the task of ‘aligning the entire organization to the customer’ – however admirable – is so gargantuan, that many companies won’t take it on – or can’t. The C-level quotes you cited can be interpreted as scatter-shot, throw-spaghetti-at-the-wall-and-see-what-sticks. But, assuming these initiatives are part of a plan, such smaller projects represent a sensible, achievable way to accomplish the goal you have described.
Andrew – transformation don’t need to be scary. We eat the elephant one bite at a time. The problem with tactical projects is it reinforces silos which leads to inconsistent cross-channel customer engagement, leaving the customer dissatisfied and the organizational nay-sayer claiming “see, I told you it wouldn’t work”. The analogy to cybersecurity is, to me, very telling. Security was approached piecemeal – intrusion detection, firewalls, database monitoring, encryption – the patchwork did little to protect against the dangerous of breaches – those from the inside. It wasn’t until the big breaches and thief of consumer data happened that companies realized they had to do something. Oh yeah, let’s not forget to thank the California legislature for passing the law requiring disclosure of breaches. Without that you’d never know if your credit card had been compromised.
Transformations require change management and a proven, achieveable methodology that guides the organization. I do this every day and have stories of how transformation happened without everyone running for the hills.
I’ll get off my soapbox now. I look forward to your posts.