Goodbye Customer: Loyalty, Costs, Complexity, and Recovery

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Goodbye Customer.

That is sometimes what we say, without knowing the full costs and burden that proposition means on the business.  Ironically, businesses are often unaware that their actions are pushing the customer away while at the same time trying to recover and retain them through expensive customer retention programs.  Metaphorically, this is like pushing the customer away and pulling the customer back — at the same time.  It is no wonder that customers have had enough.

Businesses push the customer away and pull the customer back — at the same time!

Awareness is the missing piece.  Shmula.com has developed a simple framework that can serve as a helpful model for the true costs to the business and the burden on the customer — because of our push/pull activities.

The function above attempts to highlight the relationship between costs, complexity, loyalty, customer touches or interactions, and recovery.

Our example shows an interaction between a customer and a website, but it could be an interaction between customer and anything: a device, a brick-and-mortar store, or any other business.

1. Customer interacts with a company website for commerce
2. Customer has a a question or problem, she searched the Help Pages or engages in some site self-help
3. Customer has not resolved her concern, so she engages the live chat service
4. Customer orders item, maybe.  At some point, Customer has another concern, causing her to call the company
5. Customer interacts with Intravoice Response System (IVR), a form of automated self-help
6. Customer maybe interacts with a human
7. More Customer Interaction. . .

At each point above, there is an opportunity for Customer retention and recovery, but there is a cost.  Indeed, the Recovery Curve is such that the costs of recovery increases as there are more interactions, while at the same time decreasing customer loyalty.

The Goal is to Reduce Interaction

Aza Raskin, the Head of User Experience at Mozilla Labs¹, and a good friend of shmula.com, has said:

the fundamental goal of interaction designers is to reduce interaction

From a customer’s perspective, they want to find something to buy, buy it, and move on.  Indeed, proponents of Lean Thinking would clearly agree and so would the customer.

From the perspective of Lean Thinking, we think of Reducing Interaction as the reducing “non-value added activities” — activities that the customer would consider waste.

When There is Added Interaction

If there has to be a recovery activity, then the quality of that recovery activity must have the goal of increasing Loyalty.  Doing this has a three-fold purpose:

1. The sooner the business can resolve a customer concern, the better
2. If (1) is satisfied, it prevents further unnecessary interactions, prevents further costs, and preserves or increases loyalty
3. If (2) is satisfied, then this could potentially mean incremental revenue in the future from a repeat customer

A Case Study

Amazon.com clearly subscribes to the “Reduce Interaction” mantra.  I can share many stories, but I won’t to preserve confidentiality.  Zappos.com, on the other hand, has taken a stance on the “When there is Added Interaction” front by making Service a key differentiator and it has clearly helped them win market share.  Now, both Amazon.com and Zappos.com are one big family.

Another Case Study

My experience at Home Depot has gained some popularity and will now be part of an upcoming book — details later.  In that experience, I sent a tweet explaining my recent experience at Home Depot.  That tweet quickly made its way to Facebook and the rest of Twitter.  Home Depot communicated with me via their resident Twitter-er and then things ended there, without resolution.  Clearly not a closed-loop feedback.

Home Depot has a call center, thousands of customer service representatives, and now a team of Twitter agents that monitor social media channels.  When things don’t go well, costs grows and loyalty decreases.  The framework above clearly describes my experience and the experience of most customers.

Reminder

Companies often speak in terms of Features, Shiny Objects, and the like.  Companies often call this “Innovation” or some other buzz word.  From a customer’s perspective, their mental model is this:

I won’t really remember your features or their details, but I’ll remember how I felt; I’ll remember my experience — both the good and the bad.

So, let’s design our products, services, and our business on behalf of the customer.  Many people and businesses forget this simple fact; let’s get grounded in the customer — that is good for the customer and good for business.

Photo Credit ²

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