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When Customers Don’t Behave As You’d Like

With all the hype about customers these days—service, loyalty, buying habits—it's hard to admit that we don't always love them. Companies invest huge amounts of time and money in identifying and learning about potential and current customers, but sometimes the challenges customers present leave firms wondering whether that's money well spent. With that in mind, let's take a look at some of the techniques firms can use to successfully offset customer challenges.

Reluctant Customers
Some customers don't seem to appreciate the strides that companies have made on their behalf. Not only are they reluctant at times to embrace introduced product changes, some are even downright cold toward innovations. A recent issue of MIT Sloan Management Review described these individuals as "resistant customers" (Garcia, Bardhi, and Friedrich 2007). But companies planning to introduce an innovation that may meet with customers' innate resistance to change might try one of two collaboration approaches to create an effective marketing strategy.

A vertical marketing strategy calls for the active involvement of entities in the supply or distribution chain. Dealers, for example, could also be resistant to the new product if they fear that customers will shun it, according to researchers from Northeastern University and the MIT Sloan School of Management (Garcia et al., 2007). A horizontal marketing strategy calls for the involvement of similarly situated competitors. This kind of "coopetition" is especially effective when product acceptance is good for the industry as a whole. The researchers point to their case study on the introduction of twist-off caps to wine bottles in Australia and New Zealand. In that situation, the collaborative marketing efforts of a coalition of wineries sent "a unified signal to the market about the permanent commitment of wineries to the screw cap innovation."

Fickle Customers
Even when you've won your customer over, however, the challenge of customer retention begins. Enter, customer loyalty programs. A study of loyalty programs by consulting firm e-tailing group, inc and performance marketing firm DoubleClick Performics (2007) found that, of 1,000 frequent online consumers, 70% belonged to a frequent buyer/loyalty program. However, 48% said that they were only "somewhat loyal" to a firm across multiple channels, such as the physical store, Website and catalog. The survey also asked about what worked best in such frequent buyer/customer loyalty programs and found that free shipping, the ability to track orders online, and "discounts or exclusive offers for members" were the features of most importance to customers.

Even such loyalty programs can't guarantee that customers will stay. Competitors are in active pursuit. But according to Monica David, vice president of professional services at research firm CustomerSat (2007a), proactive communication strategies may help prevent customer loss. David suggests getting feedback across numerous touch points, "informing [customers] of action plans and notifying them after actions are taken." When customers are unhappy, don't wait; take corrective action immediately. And if customers do leave, find out why, whom they're buying from now and what their reasons were for choosing that provider, advises David.

Customer loyalty expert Jill Griffin, coauthor of Customer Winback, recommends focusing on accountability in endeavoring to win back lost customers. When a customer leaves, get past the hurt feelings, acknowledge the reasons, and apologize. Ask specific questions about what it would take to win the customer back, and then address those needs. Let customers know when you have done that, and ask them for their business. Make reentry easy for them, and ensure you earn their business when they return, advises Griffin (CustomerSat, 2007b).

Detrimental Customers
Once in a while, however, organizations may come to the uncomfortable conclusion that some customers are just more bother than they're worth. In the summer of 2007, Sprint Nextel Corp. made headlines when it "fired" some 1,000 customers who were among a small but costly group that the wireless provider finally concluded it would never make happy (Lindeman 2007). Customer service reviews showed that these individuals phoned in an average of 50 times more per month than other customers, even after their issues were resolved. Sprint spokesman Jack Pflanz said that the decision was prompted by the desire to focus the company's resources on its other 53 million customers and that the parting customers would incur no further billing or termination fees.

While this may be a drastic step—and certainly one that brings controversy to a firm—it's not that far from some retailers' decisions to begin tracking habitual merchandise returners. Certainly, decisions such as these are not taken lightly, but turning a blind eye to the situation can be detrimental to the company's most valued customers and, in the end, to the firm's bottom line.

One caution, however: Be certain that company policies and practices don't permit, or perhaps even encourage, such situations to develop in the first place. For example, a firm's customer retention bonus plan or sales commission plan may encourage employees to make unwise promises.

The Keepers
While customers are the lifeblood of organizations, not every customer is equally valued. Defining, identifying, reaching, and serving the ideal mix of customers is a continual challenge for today's global organizations.


References:

CustomerSat. "Competitors Push Hard to Get Customers to Switch." Press release [www.customersat.com]. May 22, 2007a.

CustomerSat. "Lost Customers Are Ripe for Win-back." Press release [www.customersat.com]. June 7, 2007b.

DoubleClick Performics. "DoubleClick Performics' Survey Reveals Loyalty Behavior of Online Shoppers." Press release. May 21, 2007.

Garcia, Rosanna, Fleura Bardhi and Colette Friedrich. "Overcoming Consumer Resistance to Innovation." MIT Sloan Management Review (Summer 2007): pp. 82–88.

Lindeman, Teresa F. "As Sprint's Move Shows, Some Customers Aren't Worth the Hassle: Customer Service Line Abusers Get 'Rejections.'" Pittsburgh Post-Gazette [www.post-gazette.com]. July 11, 2007.