How To Increase Revenue With A Customer Retention Survey
There is a very interesting story on how I came about this topic of customer retention. It happened this past December when I was readying myself for the holidays. Making my list, checking it twice, you know the deal. As I was doing this I received an email from blockbuster.com
Well it was a little before Christmas day, so I figured like so many other retailers that Blockbuster was sending me some sweet coupons or a promotion to entice me to buy some stuff. Well imagine my surprise when it was a notification of a price increase. Ain’t that about a b@#tch? I couldn’t believe two days before Christmas this was Blockbuster’s idea of a gift. Talk about awful timing and coal in your stocking.
Needless to say I was livid. So I did what any other self respecting American would do. I wrote a letter whining and complaining. I basically told them that this increase was not merited considering that they weren’t adding any new value to my membership. Especially when you consider that their competitor Netflix did just the opposite and is now offering movie downloads included in their existing memberships. Needless to say that my email fell on deaf ears. I received the traditional corporate response about their cost rising, blah blah. So at this point I was seeing red and it wasn’t Christmas red!
The Survey That Changed It All!
I took myself right over to blockbuster.com and logged into my account. "Now where the heck is that cancellation link?" So after hunting down the cancellation area, I was brought to a survey with a series of questions and responses.
The survey was basically asking why was I dumping my subscription to blockbuster. My choices were something to this effect:
A. Too expensive
B. You rent less movies.
C. Just don’t watch movies anymore.
D. You’re heading to the competition because they don’t send emails before Christmas stating that they’re planning to screw their customers out of more money for no damn good reason.
Okay the last item wasn’t really a choice. But you get the picture. In any event I selected "A. Too Expensive." I hit the submit button and something magical happened.
The Magic Of Technology!
They redirected me to a tailored page that read something to the effect of: "Hey we noticed you’re leaving because you think our prices are too high! Can we give you another option that is similar to your current package but cheaper?"
Hell yeah you can! Needless to say I kept my membership.
The Moral Of The Story
This story is basically a great example of an effective use of customer retention surveys. Most companies send out a survey all after the fact. But blockbuster.com was proactive and launched the survey before losing me as a customer. But more importantly, they had a solution automatically built in to retain me as a customer. This is important because it didn’t give me much time to think it over. I was just so happy that they were willing to offer me a lower price that I just jumped on the counter offer.
Lessons To Be Learned
There were definitely some flaws with Blockbuster’s customer retention efforts that you should avoid. Remember the first thing I did was email their customer service rep? The idiot, I mean the rep pretty much brushed me off. If blockbuster.com was smart they would’ve also given the rep the power to provide me the discount that the automated survey later offered. I’m not sure what would’ve happened if I decided to call rather than going through their web site. Would the phone rep have been able to provide me the option of a lower price subscription? I don’t know. The point is, this method of retention should have been applied to all points of contact. Lord knows how many more customers they have lost who got that corporate email from that rep.
This is a lesson that you should take away and apply to your own business. It can be used in terms of retaining customers or even subscribers to your newsletter.
How To Implement An Affordable Customer Retention Program
Do you even have an idea of your customer retention rate? If not, there lies the problem. I know what you’re thinking. "Well blockbuster has more green than Kermit the frog." This may be true but there are other low cost ways of achieving the same effect. Most of your website servers come with free survey tools you can use. You can also get them online by doing a search in Google. Survey Monkey is also a great service. Another alternative is to assign one of your employees to go through a list of customers who have recently opted out your services. Have your employee give these folks a call or shoot them an email. Before doing this you have to give your employee the right to make some concessions up to a certain point based on the situation. So you may want to meet with your employee before hand to get that straighten out. Time is of the essence here. If your former customer has to wait to hear back from you on whether or not you’ll offer them some incentive to come back, chances are they’ll stick with the original gut feeling and not want to do business with you.
Using these customer retention tips and advice may increase your bottom line at the fraction of the cost of acquiring new customers. After all, your current customers are more likely to buy from you than new customers. So understand that the cost of customer retention is little compared to the potential earning on the life of that customer. Don’t flush money down the toilet because you failed to see the value of customer retention.
Final Thoughts
My final tip, don’t send your customers bad news like a price increase right before the holidays! As you can tell, it left a very bad taste in my mouth.
Is there anything you can be doing to improve customer retention? Do you already have a successful customer retention rate?
January 26th, 2008 at 12:25 am
What sucky timing on Blockbuster’s part. Maybe if they needed to raise the price they could have sweeten the deal a little by giving you something for being a loyal customer and sticking with them (to take your mind off the one thought of higher cost).
The best customer retention I use is getting involved with my customers and helping them with their problems.
Good post and was fun to read.
January 26th, 2008 at 12:50 am
Hey John,
I totally agree! I was literally in shock when I got the email around that time.
I like your technique, simple and effective! It’s one I should have included because I know I do the same thing with my visitors.
Thanks for your comment. I’m glad you were entertained. lol
Eddy