The Art of the Winback

Last month I wrote a post called How to Lose a Customer for Life for Ten Bucks. I received a lot of feedback, mostly private and positive, but some people didn’t understand my point. I have no interest in punishing a business that lets me down. I simply choose to redirect my business to someone who wants it more. I applaud entrepreneurs at every level, but first and foremost, my mantra of “People, Products, Profits—in that order” is not directed exclusively toward the People who run the business. It extends to the customers who are served by the business, the suppliers and partners who support the business, and even the investors who champion the business. The People part of business is unending, complex, fascinating, and a noble bedrock on which to establish competitive advantage.

Dilbert Customer ServiceNowhere is this more true than in the discipline and practice of customer service. My key point in the tale of enforcing restaurant corkage as specified by company policy despite customer confusion was not that the restaurant owner had upset and lost me as a customer by not showing concern for my concern. It was that he had willingly tossed into the incinerator an opportunity to bond me as a customer forever, future cost of acquisition priced at zero.

This is the takeaway that matters: Any botched moment in a transaction is a moment of truth, a distinct fork in the road that will lead you to one of two places, separated or hitched. Mess-ups are good. Mess-ups are big-ticket fountains of light. A momentary instance of failure is the single best opportunity a business will ever have to connect with a customer’s conviction. Understanding that a boo-boo is not a lethal wound is as simple as knowing that almost anything gone wrong unintentionally and without malice opens the door to a celebrated winback.

When something goes wrong, you have a unique opportunity presented to you on a platter. This is opportunity you can’t create intentionally in good faith; it happens when things go astray in a way you hadn’t planned. When something goes boom, you can lose your customer or you can save your customer. They are likely both forever choices. You get to decide. You just have to make that decision on the spot, quickly and correctly.

The error can be your friend if the winback is always what you keep top of mind. Do it right, reach beyond the customer’s expectations, they’ll be back again and again. It works every time.

You just bought your child an ice cream cone from a local vendor in the park. Your child takes a bite and drops the cone on the ground, eyes already beginning to tear. The vendor can offer up a free replacement before you ask, or else charge you for another one. Of course the free one hurts his pocketbook. Which choice makes him the hero you always come back to find?

You arrive at your hotel room late at night and discover the bed is not made. You’re tired, perturbed, and frankly a bit shocked. You call down to the front desk, not exactly joyful. The attendant at the front desk sees no other rooms available on par with yours, leaving the options of sending up a housekeeper or upgrading you to a suite. It’s a busy time of year and the attendant is pretty sure he can sell the suite in the next hour at triple the discount price you paid. What’s the attendant’s best move?

You pick up a half-dozen shirts from the dry cleaner. Your favorite one has been returned with frayed cuffs. The owner has seen this shirt come through more than a few times, and everyone knows that laundering can be harsh on pressed cotton. You complain that this was your favorite shirt and you really hadn’t sent it to the cleaner that many times, although maybe you had. The owner can delete the cost of cleaning that shirt, offer not to charge you for that order, or offer you the replacement cost of the shirt. What will serve you and the owner best?

What is at stake here is nothing less than the lifetime value of your customer. In any one of these cases, the customer might refuse the act of good will and make due, but your kind offer is unlikely to be forgotten or undervalued. If the customer does take you up on your generosity, you might have invested in ten times or a hundred times the business. All three of these examples are real for me, not the exact circumstances, but close enough. As a result, I make a point of where I buy ice cream, which hotel chain I favor, and which dry cleaner gets my laundry bag every single week. Honestly, I can’t remember whether I took their offer or not, but I remember the point of failure, I remember the response attitude, and I now am as loyal a customer as I could ever be, way more so than if the failure had never occurred. The winback is that powerful. It makes bad into good, good into great, temporal into forever. No advertising can do that, no coupon can do that, no promotion can do that. Only a person can do that by making a smart choice that is authentic and heartfelt.

Are there awful customers who will take advantage of merchants and service providers? Of course there are. As I said in my prior article, the customer is not always right. Sometimes a truly miserable customer will force the point of failure to see what goodies will come, even lie about the unmade bed to sneak a free upgrade. Yes, there are good customers and there are bad customers. Decide which one you’re dealing with and act accordingly. My experience is that if you worry less about whether there is a charade before you and more about the immeasurable value of the winback opportunity, the bucket of winback business will fully offset the times you get beat for your graciousness.

Good business starts at the front lines, where those who interact with customers are meeting their true boss. All the small things we can do to make businesses better at any touchpoint can add longevity and prosperity to the enterprise. It’s that kind of creativity I most encourage when a winback is at hand.

Go on, get out there, and start winning ’em back! Reach way out. It’s worth the stretch.

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Image: Dilbert.com ©Scott Adams

How to Lose a Customer for Life for Ten Bucks

Steve Martin in his heyday had a funny routine called Let’s Get Small. Today I am going to ask you to do the opposite. I am going to ask you not to be small.

A while back I wrote an article called the The $20 Brand Bond, noting how Amazon locked in my loyalty by facilitating a modest refund in record time without asking me a single question. Now I am going to tell you the story from the other end, how a local brick-and-mortar company lost me forever for half that much.

wine corksThis was the very definition of a no-brainer. My wife and I recently went to dinner at a neighborhood restaurant, which since it opened offered a no-corkage policy if you bought a bottle of wine at a shop a few doors down. We had done this several times and enjoyed the restaurant as well as spent a little more on wine, since there was no mark-up after retail. All was well with the village—until we walked in one Friday with a store-bought bottle stickered with the retail shop’s brand, only to be told while the waiter was uncorking it that the no-corkage fee no longer applied weekends but was now good weeknights only. I asked why the fellow at the wine shop hadn’t told me that since we had just been there and mentioned we needed the sticker for the restaurant to waive the corkage. The waiter said he had no idea why, but it was “out of his authority” and he would send over the owner.

This restaurant is about 1500 square feet, maybe 20 tables. The owner arrived a half-hour later. I told him the situation bothered me, that we had followed the routine only to be told after our bottle was open that corkage would apply because it was Friday. He responded, “Well, they should have told you at the wine shop. I’ll have to follow up with the owner there. He should tell his people that we changed this policy. I have to charge you $10 tonight.”

“You’re the owner,” I said. “You have to charge me $10? You have no leeway to make this one-time exception since we didn’t know you changed the rules?”

“We changed the policy so I am going to charge you,” said the owner, and he walked away.

We will never go back to that restaurant. I have told this story to perhaps 50 people around town. I am not naming the restaurant here out of loyalty to our community to prevent harm to our local businesses. Yet here you observe the destruction brought on a business by making the single most important mistake a business can make: not loving customers.

What’s interesting about this particular scenario is that we almost always order extra food when we don’t pay the restaurant for a bottle of wine, and we take home increased leftovers. We also tend to tip heavily and supplement the night’s bill so the restaurant doesn’t get beat on its own promotion. We understand the cost of customer acquisition and operating in a competitive environment. We understand you can change your policies anytime you like and rules are rules, no doubt to be fair and ensure continuity in the enterprise. We also understand that we have choices, we like great value more than we like a reduced bill, and we like to be treated kindly when we are guests in your house. You don’t have to do any of those things. Feel free to advertise, run Groupons, buy ads on Google, whatever you think gets us in the door. What gets us in the door fastest is getting us back in the door after we just had a swell experience. It doesn’t get any cheaper or easier than that.

When it comes to your customers, never think small. Your customers are your lifeblood. Without them your business is nothing. It takes years to acquire a customer base, and marketing is often your biggest intangible risk investment in a new business. You can lose a customer in an instant, and the potential damage to your reputation is unquantifiable. Yelp and OpenTable are only the beginning of your problem when you do a customer wrong. While bad reviews there are almost impossible to shed, they pale in comparison to the power of WOM: Word of Mouth. Casual conversation now travels at internet speed. Word of mouth escalates and compounds exponentially, but we are more predisposed to hear the bad over the good. It might take a dozen people telling you a place is good to try it. It might take only one to get you to avoid it all costs.

Is this just about small local businesses? I think not. Listen to the people around you talk about their cable companies, their phone carriers, their insurance companies. What’s their #1 complaint? Well, cost of course, getting gouged for mediocre products. And then? Customer service. They can’t get anyone on the line to help them. When they do get someone on the line they have little discretion to help them. These customers are held in place by a lack of choice—a situation that won’t last forever. When these neglected customers do have a choice—and they will—they will be gone, gone, gone!

Last week I attended a talk called The Rise of the Chief Customer Officer. I agreed with everything the speaker had to say about making customer service strategic and giving the Chief Customer Officer a seat at the table, except for one thing: I don’t think a CEO or an owner can afford to delegate this title; I think the CEO or owner has to be the Chief Customer Officer. If you want to show your employees what matters to you most, lead by example. Customers matter most. They pay for you to have a business. Contrary to an old cliché, they aren’t always right, but they do always matter. If you don’t woo them at every turn, they will vote with their feet. Or their mouths. Or their smartphone.

Thinking big means thinking long term. You don’t want one-off transactions; they are much too expensive. You want ongoing relationships, where customers return to you because you treat them like gold. Invest in relationships and the transactions will follow. Leave a few bucks on the table today for lifetime value that is unlimited.

Our local restaurateur got his ten bucks for the bottle of wine per his policy. Good for him. The next ten times we don’t walk into his cafe at $100 per seating costs him gross sales of $1000. The ten people who don’t come in because of word of mouth cost another $1000. Multiply by ten years of lost loyalty, that’s $20,000 of topline vaporized. You won’t need an MBA to calculate the negative ROI on that cold hard ten-spot in his pocket.

Still want that extra margin on a bottle of wine on tonight’s tab?

Dear RadioShack

RadioShackGreetings, my fellow nerdy friends. I read with concern last week in the business press that you are closing as many as 1100 stores, following your well-received Super Bowl commercial earlier this year. You are not alone. Sears is closing stores. Staples is closing stores. Quiznos is closing stores. There seems to be plenty of commercial real estate coming on the market in all shapes and footprints. I wanted to write to you because I used to love the RadioShack brand, and I would hate to see it join the other tombstones in the Dead Brand Graveyard. You see, I was a bit of a geek as a kid, still sort of am, mowed a lot of lawns and bought my first CB Radio at RadioShack way back when, then used to love to hang out with the other geeks in the store.

So I wonder if the big-salary strategy teams sitting around the table in your headquarters this modern moment have asked themselves the following ten very personal questions:

1) When was the last time they shopped unprompted as a customer in a RadioShack?

2) What did they love about walking into the store?

3) What did they love about the shelf displays in the store?

4) What did they love about the merchandise on sale in the store?

5) What did they love about the staff in the store?

6) What was in the store that was unique, perfectly priced, or presented so well they couldn’t say no to it?

7) How much did they spend of their own money in the store?

8) Did they tell a friend about the experience and urge that friend to also visit the store?

9) When they got home, did they think, oh wow, I should have bought something else while I was there?

10) Are they actually excited about visiting that store again as soon as they can?

The reason I ask is, I never worked at a RadioShack, but I used to be able to answer every single one of these questions in the affirmative. I was a brand evangelist for RadioShack. I actually loved your brand.

At the moment I have no clue what it stands for, except every once in a while I need an obscure electronics plug or unusually shaped battery, and I drop by because you’re paying top dollar for a great location right between my bank and a sushi place I enjoy. If it pops in my head, sometimes I drop off a bucket of old batteries for you to recycle, and if you have the gizmo I need, I gladly fork over about $3 to $8. The guys at checkout always ask for my zip code for some reason, even though I know you know it, because you used to mail me a catalogue several times a year with cool stuff to come see and at least one great coupon offer, but no one there seems to know me after 40-plus years of stopping by. I’m glad you still have the little wired metal gizmos when I need them, and I wish I could spend more money while I was in the store, but there’s really nothing I need or can’t get online cheaper, and the guy behind the counter doesn’t seem to want to swap stories about weird-shaped neon mini bulbs anymore. I miss that guy, he was a geek like me.

You were once the Tandy Corporation, remember? You sold leather goods. Then you reinvented and became RadioShack, and we geeks thought it was a cool place to gather, kind of like Egghead, before they became rent-free NewEgg. You had the TRS-80 and knew how to load software on it! Are some of those geeks at your conference table? Do they love your brand the way we did–not like, but actually love? If they don’t, are they able to articulate what happened to the magic?  Because if they can’t, and they don’t want to go to RadioShack like a real customer, then why should I? I mean, sure, anyone can hire an agency to do a killer commercial, and you can love a commercial, but that’s not the same as loving a brand. It’s also not the same as a reason to go into your store.

I do believe you have to eat your own dogfood if you want someone else to give it a taste. That’s just me. Call me a simpleton without an MBA, but when I love a brand, and I have reason to recommit my loyalty to that brand time and again, price is only one part of my decision funnel. I want a brand that comes with a promise. What’s yours?

I won’t be writing this letter to Sears or Staples or Quiznos, although I do occasionally frequent those stores, but I did want to share my thoughts with you, because there was a time not long ago when you meant something to me. Like Borders. Like Tower Records. Like Blockbuster. Those old friends are no longer to be found. I wonder if the people sitting around the table in their final year loved their brands as much as their customers once did, or if they just ran spreadsheets and focus tests.

There’s a lot going on in a store; it’s a great laboratory for learning. When there’s nothing going on there at all, you can learn even more.

It all begins with a promise.

Signing off now, that’s a big 10-4.

Whose Ad Is It Anyway?

Investors and company executives are cheering of late for the resurgence of Facebook above its IPO price from about a year ago.  Mobile growth is the story at Facebook, and many are pleased with the associated revenue progress.  I wish everyone well tallying their riches.  I am still not sure how much significant value is being created, particularly as it applies to the company’s core advertising business.  And hey, I was a very early believer in this business model and all the promise it held as the definitive interactive media platform of a generation — kind of like the first time as I kid when I saw a movie on HBO, a complete movie on television with no commercials, I just  knew something good had happened and someone was going to get rich as a result.  Uh, that was for taking the ads away.

If you are active on Facebook, particularly mobile, you probably weren’t surprised by the earnings improvement.  You’ve seen the ads — oh, have you seen the ads — you can’t miss them, right there in your news feed, as intrusive as the interface mandates.  Recently an ad for a salacious French maid’s costume was offered to me with the following copy — pretty much full screen — and I was kindly given the opportunity to Like the page:

“This five-piece At Your Service set from Dreamgirl comes with a sexy babydoll with apron, maid’s hat, ruffle back thong, and feather duster.”

Curiously this clever bit of sponsored media appeared above a friend’s timely post on racism and below a post from a financial journal I follow on how to avoid manipulated options.  I suppose under certain circumstances this might be considered targeting, but I can honestly assert I was not in the market for such an outfit, either for myself or as a gift, nor had any click stream I created left a trail for the behavioral targeters.  Perhaps they could have offered me a nice bottle of Bordeaux, which would have made sense since I am a wine enthusiast and often post articles about my favorite varietals on Facebook, and I’m guessing their database knows I have a Pinterest board on the subject of value excellence (“Good Wine, Good Price“), but no such luck.  I am a middle-aged male, heterosexual, and married, so maybe that’s the profile they sold to the advertiser.  I would guess that the CPM (in ad-speak, that’s “cost per thousand” impressions, where the M is the Latin numeral) was very, very low, offset by volume that was very, very high.  Again in ad-speak, we sometimes call that “dollar-a-holler.”  In these cases, maybe a nickel.

Just so it’s clear that I am not picking on Facebook, my friends at AOL Mail where I have maintained the same email account for about a quarter century, now offer a curious feature: After I send an email, the confirmation screen is filled with singles looking for a date.  It’s nice to see that the advertiser is not presumptuous; sometimes they offer me women and sometimes men.  The fact that the advertising delivery system is ambivalent toward my preference is unusually progressive.  It also is quite genially unconcerned that my wife continues to see my email send pages resolve to these artifacts on our shared monitor.

Note to New Media Companies, with love, from Old Media Companies: Some things have not changed, including that there are still four key constituents in the advertising equation:

1) The manufacturer or seller of products and services.

2) The ad network or agency.

3) The media delivery vehicle or platform.

4) The viewer of the ad.

For full value to be created, all four have to be satisfied by the results of the supply chain.  For real ongoing business, it is most essential that #1 and #4 are happy, so that #2 and #3 can speak to a job well done.

Let’s look at all four in the French maid and available-singles ad examples and see who is happy working backward:

4) Me: Not happy, except that it gave me an idea for this story.

3) Facebook and AOL; Happy (except if they read this post); they got paid by #1.

2) Agency or network: Happy; they found plentiful inventory in the form of my news feed and mail page, and they also got paid by #1.

1) Advertisers: Should not be too happy; they paid the bill, and I am making fun of them for it.

So the owner of the bill and the receiver of the message are not happy (#1 and #4), but the middle-folks are just fine with it (#2 and #3).  Oh, they’ll tell you they are working on it, improving their targeting technology and all that, but they aren’t losing sleep, because they got paid.  They should be losing sleep, lots of it.

There is also an implicit fifth constituent, the expanded community surrounding the nucleus of the supply chain, particularly of significance in our interconnected world of social media.  When an offer is useful and enticing, like many of the tested e-coupons on RetailMeNot, pleased customers will gleefully pass them along.  That’s free evangelism from existing fans to unlimited prospects, making ad dollars work even harder through leverage.  When ads are garbage, they are terminal, mercifully so.  In fact, bad-vertising can hurt a brand through negative association — poor word of mouth is difficult if not impossible to combat.  Wonder if your would-be customers are laughing at you?  You may not know until the community turns on you, then it’s costly to recover, or perhaps too late.

When advertising works — the right, relevant message in front of the right, engaged human being — it can be an excellent experience.  Absent concerns about privacy, you might embrace the very respect involved in not having to see ads you don’t care about.  But all this posturing about collecting intelligence on customers to deliver better leads — how come I’m still getting ads for reverse mortgages on My Yahoo homepage, which has every financial feed coming through loud and clear to tell them I’m a reasonably well heeled owner?  That page is still sold as remnant inventory (in ad-speak, leftovers) at bargain-basement prices, maybe less than the French maid costume or the singles ads.  Some money being left on the table there?  They’ll probably tell you no.  They would be wrong.

As the national dialogue on privacy invasion is reaching fever pitch, even POTUS has been dragged into the ruckus with a defensive “Don’t worry, we respect you while we protect you” mantra.  That dialogue is likely to resolve itself in the dialectic, because it is a civil rights discussion grounded in our cherished democracy.  I actually think that problem is going to get solved before the ad targeting starts to get it right, because there is too much money at stake for annoying and disrupting us that no one really wants to give back.  Like the story goes, always follow the money — the real today-money, not the theoretical long-term-value, someday-we’ll-get-this-right money.  Why would you want to do that?

Maybe I’ll just watch HBO.  The price has skyrocketed, but the shows are pretty good, and it is still ad free.  I am always willing to pay for that.

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