I have been a satellite radio customer for almost 8 years. Having upwards of a 90-minute commute for many years caused distaste for commercials and station surfing that satellite radio felt like a good investment. They hooked me with a very attractive offer and a new customer was born. Shortly after my year introductory offer was over, I was met with a bill equal to double my introductory offer. I call the provider asking what the deal was, and when they told me that this is the ‘going rate,’ my excitement for the convenience of satellite radio quickly wore off. I was ready to cancel. Shortly after I muttered those powerful 6 letters, the customer service agent on the phone sent me to another department. Forced to reiterate the exact same story I told the previous agent, this customer service person wooed me with yearly rate, equal to my introductory offer. Feeling like I had won, I accepted and another year was born. Each subsequent year following this incident, I have made the same fateful phone call, each time met with the same offer and same commitment. It feels so rehearsed that most of the time, I don’t even make small talk with the initial agent, the other 4 words I expend effort to say are “I want to cancel.” Then I am met with the 2 level agent, who extends my almost laughable rate. This charade has turned into a sport.
A fiery lust, a conquest awaits
The quest for customer acquisition reigns supreme above all else. No matter where you look, brands are throwing everything and a box of candy at winning a new customer. Whether it is a cell phone carrier buying out a contract with another carrier, incredibly huge price cuts to win that first time purchase, or incentivizing your customers to be referral engines, a new customer instills a bloodthirsty lust among brand marketers everywhere. Brands look to woo prospective customers by showing up with roses, opening up the car door, paying for dinner, giving a back rub, and doing the dishes, all at once. The days of building a brand with such a unique and attractive lifestyle, seen to be superior enough to organically acquire your business, is sadly gone. Here are the days of FREE everything, introductory offers, and the abolishment of brand loyalty.
They are just not that into you anymore
But once the honeymoon is over and the brand has moved onto the new flavor of the week, their dedication to ensuring your happiness flames out like a summer crush in September. As long as you are paying your bill, continuing to buy their wares, and not causing a ruckus on social media, a brand could careless about your happiness.
The quest for acquisition is much more valuable then the quest for retention. Unless, your customer base is leaving at such a feverous pace, that your only method of customer acquisition, is through retention.
Enter Incentivizing Customer Service
By now, you have all heard about the now infamous Comcast call with AOL Executive Ryan Block. If you haven’t, here is a great piece from Slate that covers all of the juicy details. While most of the population gasped in awe of this one employee’s desperate attempt to hang onto a customer, continued details show that this employee (and thousands of others) is being so reluctant to cut the cord, because it takes money out of their pocket.
Yes, Comcast incentivizes customer service.
Their employee’s pay is based upon how many customers they can keep. Their retention specialists are trained in the art of persuasion, given detailed scripts and rebuttals, and regularly sell their soul to continue to receive their bonus. Most people, including Comcast themselves, blamed the employee as being a rogue and overly aggressive money grubber. However, the problem lies significantly deeper (or should I say, higher) than that.
The Problem with Buying Customer Service – The Employee
When employees fear financial hardship is at the precipice, they often react in a defensive manner. Clinging to the last bit of hope that the sale will turn around, that you will change their mind, and their money will magically reappear. Like it or not, money changes emotions, and money causes you to act in a manner in which you might not enjoy, if your paycheck was not on the line.
Incentivizing customer service does little to further entrench of the reputation of the brand, even amongst employees. Employees required to perform all tactics necessary to save that one customer, have very little loyalty to their organization. Customer service agents incentivized on retention are nothing more than mercenaries. Hired to pillage as much as they can out of the land, and then move on to the next patch of fertile soil, through no fault of their own. Organizations that incentivize their customer service agents choose short-term profitability over long term customer value.
In a day in age of transparency in customer service, those brands whose employees exude the confidence of knowing their organization values customers over profits, or even employees over profits, bleed through to the customer base. More often than not, customers value a positive experience before, during, and after the sale more than they do the best available price. If you do not agree, just look at Zappos, USAA, Amazon, Chick-Fil-A and many others who put the happiness of their customers first.
The Problem with Buying Customer Service – The Customer
Incentivized customer service has spawned a new breed of consumer, the brand hopper. A few short decades ago, our parents would be the epitome of brand loyalists. If your parents drove a Chevy, you drove a Chevy, and your children drove a Chevy. Not because you were giving some referral bonus for being a loyalist, but because you knew the brand cared about your business and you felt appreciated. Today, customers are forced to jump around, play the introductory offer game, and mostly forget all affiliation to a brand. The perils of being a brand loyalist typically leaves you spending more and getting less and less attention from the brand you are loyal to. An uncomfortable recipe that explains the Nielsen report that 78% of consumers are not loyal to a brand. Couple this with the Ernst & Young study that states just 25% of customers consider brand loyalty something that impacts their buying behavior, and you have the death of brand loyalty.
This Comcast experience is not unique, and all it takes is about 5 minutes on Twitter Search to see that this public display of customer dissatisfaction happens regularly. This particular incident just happened to be prominent news, due to the high profile victim.
The Finances of Good Customer Service
For many customers, a direct interaction with a brand is a make or break moment. These moments can result in anger or outright rage towards the brand, or conversely a euphoric moment of bliss that comes from a positive experience. But it means just as much for the brand. According to McKinsey, 70% of customers cite poor customer service as a reason not to buy from a particular brand. Couple this with the research out of InfoQuest that states a Totally Satisfied Customer contributes 2.6 times more revenue than a Somewhat Satisfied Customer, and you have a financial case for customer service, not just customer retention.
Every marketer will agree that the courting, qualifying and convincing of a customer to choose your brand over a myriad of other options is one of the biggest struggles they face. However, most marketers miss the gold mine that is their existing customer base. If you have ensured a positive consumer experience, you will surely stand a better chance of getting more money out of those customers. Data fromBIA/Kelsey states that a repeat customer will spend 61% more than a new customer. Treat your existing customers well, and they will continue to spend.
Lifetime Customer Value is something that is undervalued by marketers, left on the side of the road while they join the countless others chasing the new potential customer. Incentivizing customer service does nothing for the consumer and for the brand. It gives the customer yet another reason to shop other selections, puts a negative sentiment in their head, and forces you to continuously be on the hunt for the new unsuspecting prey. The churn rate alone, as it pertains to the perils of incentivized customer service, is exhausting and one that has no real obtainable growth in sight.
Reviews: The Green-Faced Cure to Incentivized Customer Service
The build up of continued negative sentiment only causes one thing, which can be more negatively impactful then one lost sale; a litter of negative reviews. With reviews equaling social currency, many brands go out of their way to ensure a positive experience for the customer, in hopes the customer leaves a positive review. According to eMarketer, 88% of customers leave a negative review to warn other people about a product or service. Additionally, according to Dimensional Research, 90% of respondents who recalled reading an online review claimed positive reviews influenced their purchase decision, and 86% said their purchase was influenced by a negative review.
A positive customer service experience can mean so much more than a won phone call, it could mean a loyal customer, in the age of choice. Brands cut corners, force retention, and degrade customer experience, all in hopes of maintaining profitability and low prices. But somehow, these brands do not understand that customer service elements (such as return policy, reviews, and support) are the primary purchase vehicles. So instead of focusing on your ‘deepest discount ever,’ try focusing on providing a joyful customer experience, one in which the customer feels like they matter, and watch your customers become your biggest advocates. They will fight your battles in the wild wild west of the web, and act as your unpaid customer service agents; ones that do not require continuous incentivizing and persuasion training.