“Cancel my AOL please!” | 02/03/2010

Most companies don’t realize they are putting a significant amount of revenue at risk by letting customers leave without trying to save them.

A recent study by Marketing Metrics has shown that companies have a much better chance of winning business from their lost customers than from new prospects. On average, companies have a 20% to 40% chance of selling to lost customers, and only a 5% to 20% probability of selling to new prospects.

Clearly, the executives at AOL have read the research and they know it’s smart to work to try to save customers who call requesting a cancellation of service. But, there is a right way and a wrong way to try to save a customer. The short video below illustrates the WRONG way to try to save a customer. Take a few minutes to watch this video to see what I mean.

This employee’s attempt at saving a customer is shocking and appalling. You will NEVER win back a customer by ignoring their requests, using sarcasm, or being rude. Never. This 21 minute phone call just affirmed in the customer’s mind that he had indeed made the right decision to cancel his account.

Here’s the right way to try to save customer…

I WILL NEVER FLY “You Know Who” AIRLINES AGAIN!

 By most people’s definition, I am a frequent flyer. Being a frequent flyer, one becomes accustomed to the many delays: weather, mechanical problems, last-minute refueling, announcements stating that the flight crew is en route from the East coast while you’re sitting at an airport in the Midwest—you name it and it has happened. Several thousand miles ago, getting upset about delays disappeared and an attitude (see Chapter One) of just “deal with it” to be proactive and productive developed. That was until I was forced to spend 12 hours in an airport.

I was in route to D.C. for a big event, in which an electrical lighting storm erupted while coming into the airport. Consequently, the airport shut down for about 35 minutes. This short shut down threw everything into total chaos. An hour and a half later, the eight letters no traveler ever wants to see illuminated in red next to my flight number— 

          C A N C E L E D.

I got booked on the next flight out which didn’t leave for another two hours. Two and a half hours after that flight was scheduled to leave, it was canceled!

The next flight I got booked on also canceled. It was a full 12 hours and nine minutes after the initial arrival that the departure for D.C. occurred. Livid, I vowed never to fly this airline again. That is until eight days later when I got a letter in the mail from an executive with that airline. The letter read:

Our manager in Dallas/Ft. Worth was concerned and asked us to follow up with you regarding your flight with us on March 11. We can understand how frustrating this trip must have been. Simply, we are very sorry for the inconvenience as a result of the delayed departure of flight 1808.  

As a frequent traveler, you know that good customer service sets us apart from the other airlines. So, when we don’t provide it, no excuse will do. Although we will never compromise safety for the sake of on-time performance, we sincerely apologize that your travel plans were disrupted while traveling to Washington , D.C.

We don’t want to lose your confidence in us and hope you won’t let this trip do so. Therefore, as an indication of how important your patronage is to us, I have added 7,000 Customer Service Bonus miles to your AADVANTAGE account. You should see this adjustment on one of your next two summaries.

Please continue to travel with us often. It is always a privilege to welcome you aboard.  

WOW! Four things absolutely WOWed me in this letter!

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  1. First, the airline actually monitored my flight and knew that I had experienced a mind-boggling delay. Sure, they knew the entire airport was shut down, but this was personal. They acknowledged my inconvenience.

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  1. Secondly, the airline apologized for an initial event that was completely out of their initial control.

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  1. Next, they asked me to continue to be their customer. The letter ends with: “Please continue to travel with us often.”

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  1. And finally, to ensure my loyalty, they gave me something—7,000 miles. And that’s something to talk about. Seven thousand miles is one-third of the miles required to earn a round-trip frequent flyer ticket!

Do you think American won back this temporarily disgruntled customer with a letter like that? Oh yeah! In fact, I fly American almost exclusively now, rarely even rate shopping for competitive airline service. And my loyalty is based entirely on this highly effective save.

In business, it’s not how many customers you win,

it is how many customers you keep!

The average company in the U.S. loses half of its customers every five years (Frederick Richheld, The Loyalty Effect, 1996). Considering it costs four to six times more to acquire a new customer than to retain or win back an old one—and given the significantly higher probability of successfully selling again to lost customers than to prospects—it only makes sense to develop a customer win back plan.

 Here are Six Easy Steps to Win Back Customers: (the right way!)

1. 1.     Track customers who leave. The first step of a win back program is to know exactly which customers are leaving and how many. Tracking defection is not just counting the lost, but it’s what those numbers are telling you. It’s about identifying the defected customer’s buying patterns, tenure and net worth to the company. This tracking prepares you for step two.
2. 2.     Develop an at-risk profile. Analyze lost customers and look for common denominators, patterns and trends among the defected group. For example, the bank in our earlier example found that more than 20% of its lost customers were over 55, had been with the bank for more than ten years and had held multiple accounts. This valuable information must then be disseminated to the group responsible for customer retention so loyalty marketing efforts can focus on communicating with current customers who match the profile of high defectors. Those (at-risk) customers can then be protected from defection.
3. 3.     Identify early warning signs of defection. In many industries, customers on the brink of defection can be detected by one or more factors. For example, a banking customer who has stopped her automatic drafts and direct deposits and whose average monthly balance drops significantly might be tying up loose ends and heading to a competitor. Discover what factors suggest your customers are on their way out, so you can proactively communicate with them and entice them to stay.

American Airline’s WinBAAck intelligence told them that frequent flyers that experience serious delays might be on the brink of defection. Therefore, the company quickly initiated communication with me and offered a goodwill token (7,000 bonus miles) to entice me to stay.

NOW, I ALWAYS FLY AMERICAN AIRLINES!

1. 4.     Choose win back candidates. Determine which defected (or on the brink of defection) customers the company wants to win back. Not all defected customers will be a love loss. There are some customers you’re not positioned to create superior value for, and let’s be honest, some customers you just don’t want back. By selectively choosing win back targets, you can focus and maximize your efforts by going after only your best-fit customers.
2. 5.     Go get ‘em! Develop and hold regular customer win back campaigns in order to win back customers, and learn why customers are leaving. Put together a team to personally call your best customers who have left and survey. (What’s prompted you to leave us? Where are you going? What attracts you to___?) Next, invite the customers to come back. Overcome objections they give you and assure them that you can and will deliver the level of service they expect and deserve.
3. 6.     Follow-up with all win back candidates. When you win customers back, follow-up 30, 60, and 90 days after reuniting to ensure you are delivering the level of service they expect—service that will keep them for life. For the customers you don’t win back, follow-up with a hand-written note thanking them for their past business and for the information they provided you after leaving.

Don’t do what AOL did, but don’t just let customers leave. Get proactive, set up processes to analyze lost customers and look for common denominators, patterns and trends among the defected group. Then, strategically use this new information for loyalty marketing efforts that will focus on communicating with current customers who match the profile of high defectors so those (at-risk) customers can be protected from defection.

When “Service Leaders” combine acquisition efforts with a strong win-back program, they can create a competitive advantage based on the strength of their service strategy.