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Giving Away Customers Is Bad Business |
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Written by David Batstone
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Giving away your customers is not a good business strategy. Oh, and try to bring in more money than you spend. You would think the first business maxim is as obvious as the second. So why then do so many companies fail to embrace the customers that come their way?
With troubling frequency I find myself falling into a state that I call the "customer shuffle." The first incident occurred several years ago when I signed up for cable television service from Comcast. I signed up at a local distributor that represents Comcast in my area. But when I tried to change my service several months later, neither the local distributor nor the national provider would "own" me as a customer. The customer service agents at both companies shuffled me back and forth like I had leprosy. I bid them both adieu.
This past week I experienced yet another amazing case of customer shuffle when I made an effort to connect with my home insurance provider, Balboa. The fact that I even have a policy with Balboa is a bit of a mystery to me in the first place.
You see, I have a home insurance policy with the California State Automobile Association, or AAA. When I bought a second property five years ago, I called AAA to insure this property as well. But the AAA agent told me that his company could not insure a non-owner-occupied home, but could link me up with another insurance company, Balboa, that could. Ok, so property insurance is so complicated that a firm can provide it for a home occupied by the owner, but cannot do so for one not occupied by the owner? Perhaps greater minds than I can make sense of that fine distinction.
Anyway, I received a surprising notice from Balboa this past week informing me that it was canceling my insurance policy because I had "failed to pay the premium." Well, I never received a bill for the premium. I also took note that the cancellation letter had located my non-owner-occupied home in the wrong zip code and town.
So I called Balboa's customer service line. The agent asked me why the bank that carries my mortgage was getting billed for my premium, yet was not paying it. I told him that I had received direct billing for five years, and asked why they were now billing my mortgage carrier. He had no explanation for that switch, but assured me that he would now switch it back to direct customer billing.
Having solved what I thought would be the thorny issue, I casually asked the Balboa agent to fix the erroneous property address on my property. I couldn't believe my ears when the agent told me that he couldn't make that change. "You have to call AAA," he explained, "because we are simply an underwriter for your policy." Though I protested that Balboa insures the property and therefore should have the proper location, he did not move. So I called AAA customer service, and its agent told me that only Balboa could change the address because it was a Balboa policy. Not surprising. I then called back Balboa, and got a new agent who told me to call AAA. When I protested that I was tired of being the ping-pong ball sailing over the net, the agent offered to make a request to change the erroneous address, but I would need to call back in two weeks to see if the change was approved.
I know you think I am making this stuff up! It is beyond absurd. In the midst of shuffle I did find out that AAA now insures non-owner-occupied homes (a genius must have come on board!), so I switched the property over. Balboa lost a customer even though it would have been so easy to keep me.
Too many firms focus obsessively on customer acquisition and give only cursory attention to strategies of customer retention. In many cases that is so because the company has determined that retaining customers is too costly. It's a bone-headed approach: Bring in revenue with new transactions and hope that some customers stick around simply out of inertia. Existing customers get the shuffle treatment, and just have to deal with it.
A business that plans to be successful over the long haul will think long and hard about how to best embrace the customers they do win over. After all, there must have been some reason that they fell in love with you in the first place. Even if they stumbled in your door by referral or chance, make them feel like a long-awaited visitor who now has a home. |
