Customer Retention and The Bank of Good Will
I don’t care what business you’re in, you probably have customers. And there have been millions and millions of words written over the years about how to take care of your customers. Most of the writings on customers and customer experience revolve around what you should do to make customers happy. This is not a bad concept. Of course we want to make our customers happy. Happy customers are great. But we all have tons of interactions with customers, and is it really possible to make customers happy in every interaction? Might we botch a shipment every now and then? Might we slip in responding to an email timely? Might we overcharge or under deliver on occasion? Of course we might. Much of the existing literature on customer interaction doesn’t accept these facts. They seem to believe we operate in a world where we try to be perfect all the time, or if we mess up, we’re told how to address the mistake.
I recently read a blog that talked about the Top 5 Keys to Customer Retention. Here’s what it said:
- Shared vision and strategy
- A focus on adoption
- Manager and End User Value
- Training and communication
- Providing support & change management
There’s no doubt that doing these things are good for customer relationships, but I think they miss the point.
Think about the customers you’ve had for the longest time. Why have you had them so long? Have you been perfect with them for the entire time? Have you made mistakes with them? I’m guessing yes, you’ve made mistakes. But they’re still your customer. Have you made those same mistakes with other customers who are no longer customers? Probably yes.
So…why do some customers stay with you after you make a mistake, and why do others leave?
What I’d suggest is that customers stay and customers leave based primarily on one thing and one thing only, and I call that that one thing “Good Will”. If you have it…they stay and they will stay with you through a lot. And, if you don’t have it, they’ll leave over the smallest little thing.
What is “Good Will”? Well, the dictionary describes it like this:
I think those are close. I think it’s a measurement of the likelihood of a customer staying with you.
The Good Will you have with customers is an indicator of this likelihood.
For a long time, a hot metric for customer retention was a “net promoter” score which was the likelihood that your customer would refer you to another customer. That’s pretty good. But what about a metric that measures the likelihood that the customer will stay with you? So…how do you measure Good Will? Here’s what I think:
Every action and interaction you have with a customer impacts your Good Will with that customer. Return a call fast? Your Good Will (GW) goes up. Forget to return a call? It goes down. If you forget to return one call, are you going to lose your customer? Probably not. Forget to return 10 calls in a row? You probably will lose that customer.
To take this one step further, I’d like to propose that our relationships with customers is like an account at the bank. When times are good, you’re making “deposits into the account. When times are bad, your customers are making “withdrawals” from the account. You lose a customer when the account becomes “overdrawn”. I call this concept the “Bank of Good Will”.
All deposits and withdrawals are not equal.
When you do what you’re supposed to do – ship an order on time, complete a project within the budget, respond in a timely fashion to a request, answer the phone, etc., it’s a small deposit. Now…if you do a lot of these basic things well over five, 10, or 15 years…you end up with a big balance in the account. But when you get a new customer, these sorts of things are just small deposits. The trick is to make a big deposit at some point, and the sooner the better. Big deposits come from doing extraordinary things, things that the customer can tell stories about: driving a product personally to a customer’s store to make sure it gets there in time for a big sale, working until 2am to complete a project that’s critical for the customer, taking a call after working hours to solve an important problem for the customer, etc. These things put a big deposit in the account.
As with deposits, there are small withdrawals and big withdrawals. Missing a ship date by a day might be a small withdrawal. Missing a ship date by a month could be a big one. Not returning one call might be a small withdrawal. Not returning call after call after call would be a bigger withdrawal. In my experience, there are rarely instances of big withdrawals. What tends to happen is that there are many, many instances of small withdrawals that eventually overshadow all the deposits that have been made.
When withdrawals exceed deposits, we lose our customer.
When deposits dramatically exceed withdrawals, not only do we have a customer for life but we also have a raving fan and someone that will refer other customers to us.
So, on a day to day basis, it’s great to minimize withdrawals and maximize deposits. However, the holy grail in this exercise is to be on the lookout for what I’ll call “Big Deposit Opportunities”. These are few and far between. Frankly, we don’t get the chance to do something that results in a big deposit all that often. The trick is to be on the lookout for these opportunities:
- Jumping on a crisis and solving it right away for a customer
- Staying after hours to solve a problem
- Responding to emails or calls over the weekend
- Solving a problem for a client that they cannot solve themselves
- Going above and beyond the normal delivery of services
- Getting something done right away to solve a critical issue for a customer
It’s these sorts of things and more that make a difference and add bigger deposits to the Bank of Good Will. And, the bigger the deposit, the bigger the balance. And the bigger the balance, the more likely you are to retain your customer forever. And, that’s the point.
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