This week:
NEW DATA: The Myth of the Customer "Rescue"
UPCOMING WEBINAR: Is your customer onboarding helping or hurting?
WHAT DOES THE DATA SAY: The myth of the customer "rescue."
Bringing a customer back from the brink of cancellation can be a gratifying experience. You've saved a customer and have proven your value to the company. You’re officially a hero! 🦸
→ NOT SO FAST...
I've been there many times, but while everyone was celebrating the victory, I always felt uneasy, like maybe the story wasn't over.
What if the customer wasn't really saved? What if all we did was DELAY THE INEVITABLE?
Well, this is exactly the kind of question we need DATA to answer because we always have stories of rescued customers who stay forever.
But those are just stories. Is that what happens most of the time? Are "rescued" customers usually saved?
📊 What does the data say?
We tested this question on a set of customers at one of our clients, and the answer confirmed my worst fears...
📈 The data reveal that rescued customers subsequently churn at vastly higher rates than other customers.
By the next renewal, rescued customers are already churning at more than TWICE THE RATE of non-rescued customers.
And the hemorrhaging continues from there, with the majority of these customers ultimately churning.
And this result confirms my experience of over 25 years with thousands of customers.
The answer is clear:
👉 RESCUING CUSTOMERS IS NOT A VIABLE CUSTOMER RETENTION STRATEGY! 👈
But it's actually much worse than that because we also know that the majority of rescue attempts fail to begin with.
So, not only do we lose most of the customers who get into trouble, but we will ultimately lose most of those we think we've saved!
The only solution is to understand why customers really stay. The first law of customer retention says: CUSTOMERS STAY TO GET RESULTS.
This law not only explains why customers leave but also why we are able to cajole some into not leaving.
The reality is that we are rarely able at that point to fundamentally turn around their RESULTS.
Usually, it's too late. They don't understand why they are failing, and they've run out of energy to try again.
⦿ THE ONLY EFFECTIVE SOLUTION IS TO PREVENT CUSTOMERS FROM FAILING IN THE FIRST PLACE. ⦿
The best way to do that is to operate a Customer Results Strategy:
① get customers to identify their key business results,
② agree with them on how they will be measured,
③ get them to change the behaviors necessary to achieve results, and
④ measure and materialize their results to them.
SHOULD WE TRY TO RESCUE FAILING CUSTOMERS?
Above I argued that "rescuing" customers is NOT a viable retention strategy.
A particularly astute reader asked this key question:
❓"So are you saying we should not even try to rescue failing customers?"
The answer is that we should try in *some* but not all cases.
► I use the following two key tests when deciding:
① WILL WE REALLY BE ABLE TO SUCCEED THIS TIME?
The first test is whether our efforts have any serious chance of succeeding in turning the customer's results around.
Too often, we jump into rescue mode without any substantive change in the key factors. If nothing is significantly different, the result will be the same.
• Is the customer willing to commit to making key changes?
• Have any of the important obstacles been removed?
• Why do we think it will lead to customer results this time?
My extensive (and sad) experience is that if nothing significant has changed, then the rescue is destined to fail.
② IS IT WORTH THE TRUE COST?
Rescues take HUGE amounts of resources in time and attention, frequently absorbing energy high up the leadership chain in the company.
👉 In Customer Success, we NEVER have enough resources to do everything that is worth doing. 👈
So we should consider whether the rescue - with its low chance of ultimate success - is really worth the cost.
• Is there anything we could be doing that would pay off much better?
The answer is frequently yes.
But crisis mode can actually be ADDICTIVE! And executives tend to demand action even if only for the "optics."
But I’ve seen the “hero” mentality turn into a toxic and perpetual distraction machine that undermines our methodical efforts to prevent these crises in the first place.
I call it THE ENDLESS FIREFIGHTING SYNDROME.
While we are cleaning up the mess at the bottom of the cliff, we could be building the fence at the top that prevents it from happening.
This is the case that must be made to leaders who often don't understand the real reasons it keeps happening.
► The true causes of customer churn are EARLY, which means that the only solution is to build processes that ensure customers get and stay on track right from the beginning.
WEBINAR: Is your customer onboarding helping or hurting your retention?
April 19th @ 12 pm MST
Want to learn if your current onboarding process is helping or even hurting your customer retention?
Come and learn from 👋Peter Ord (Founder and CEO of GUIDEcx) and Greg Daines (Founder and CEO of ChurnRX) as they discuss why customer onboarding is important, what its purpose is in retaining customers, and best practices when it comes to building your onboarding machine.
This session will be available on-demand for all who register. https://us02web.zoom.us/webinar/register/4216807194736/WN_YnVyDPW8QCanML8LpAaFSQ#/registration
