#100 - Customer Retention is the holy grail

The status quo is to focus on acquisition as opposed to retention.

Most of the current approach is built on faulty premise that customers are promiscous.

 How can you build customer intimacy in a few clicks

Preview (see attachment or web link for the full transcript):

Speaker 0 (0s): Most of what you consume from so-called experts contains either half-truths outright lies or information that is not useful. They keep telling you how wet water is and you know, it is doing, you know, gut. I am committed to share in nothing but the absolute unfiltered on edited, no euphemism truths.

Every single time you hear my voice.

Speaker 2 (37s): Welcome everyone. I have been having this conversation with my friend, Ana, who is in Australia. We've been talking about human to human relationship in the customer experience on, are you still with me?

Speaker 3 (54s): I am still here. I must. Thanks for having me back.

Speaker 2 (58s): You're welcome. I am. I'm excited to have the second part of this conversation. So, you know, you educated me a lot around how we think about the front end of the funnel today and conversion and, and how that sort of operates. And now I want to turn the conversation and set the stage again into, in today's world. We acquire a customer, right? We deliver some goods and services to them, and then we never talked to them again, most companies.

And to the extent we talked to them, it's when they call in or email or go online and send the chat in and have a problem. And we work really, really, really hard to solve whatever problem it is they have, and then rinse and repeat. And then eventually like some relationships they want to break up with us, right? They say, Hey, I want the cans. I think about the cable companies. For example, the cable companies have a retention departments that if you called and said, Hey, I want to break up with you.

They send you there. But when you get to this place, it's not, let me tell you the value in of, they just simply go, Hey, I'll buy, you know, about, we give you a discount, right? Because you know, clearly I'm not a customer. I am for sale. I am some type of deal and they throw money at the problem and maybe the customer stays and maybe they don't. So as I think about your framework, first off, let's start by you just sort of saying like, why have we accepted this to be the norm?

And do you agree that there could be a better way of retention and loyalty than all the, all the ways we're doing it today?

Speaker 3 (2m 45s): Absolutely. And you know, it's not me saying it, look at the stats if retention and loyalty and all of that was not severely dysfunctional. Then we would have really good retention. And a lot of businesses would have really loyal fans. And that isn't the case right now, the status quo is to put all of the energy and all of the funding into customer acquisition, right? So customer acquisition costs are escalating. I think the latest Shopify figures show that customer acquisition costs are going through the roof.

It's becoming untenable to acquire customers. So unless you've got large pockets of VC funding and you're in the red as sustainable businesses, getting harder and harder. Why is, you know, we look at, and it's not just digital businesses. You look at established institutions like banks, right? And I'm sure it's the same in the states, as it is here in Australia, you're a loyal customer of a bank for years and years, you go in with a complaint and you say, listen, you've got to help me out. I want to stay with you. I want to stay with your institution, but this isn't working and they go, ah, too bad.

So sad. Right? So they're ha they're putting all of their energy into acquiring new customers. It's like we live in a, you know, if you look at e-commerce and digital commerce, we are effectively living in a Tinder world where at any moment in time, there's 2 billion people on your phone and you can keep swiping and going on dates and keeps wiping and going on dates. And then, you know, read the full, hilarious book by Aziz Ansari at the end of the day, all of that access, access to new and new and new dates doesn't make you happy.

And so all of this focus on customer requisition without putting energy at all into the back end into the, what happens next is just escalating costs and making businesses unsustainable.

Speaker 2 (4m 34s): And, and I think that is so obvious when you think about it, right? It's the cliche of, it's easier to keep a customer than to get a new one, but in some ways, one of the many side effects of the localization and Facebook ads, as if you have deep pockets, you don't have to be loyal to any customer anymore, right. You just swipe, right. And it's financial. It's why, you know, many large companies that are doing billions and billions of dollars in revenue are either on profitable or are showing very, very sort of little profits.

So we get that. Is there a, another way, is there another way, or shouldn't meet this, except this is the world we live in. No one can ever figure out loyalty or is there a, is there another way or is, or do you just think we're not trying?

Speaker 3 (5m 34s): Well, I think, I think everyone's putting in a solid effort. I think it's like anything, you know, until you understand that donuts are not good for you every day as a main food source, you'll keep eating the donuts cause they taste good. So, you know, there is a better way. There's a better way. And in the last couple of years, I've had success with over a hundred different brands. So all high growth brands exporting into new markets and we've consistently been able to raise customer loyalty, retention and lower customer acquisition costs for all brands from literally from rice horses to shoes, to engineering companies like right across the board.

And the reason we've had the success is because we've gone back to first principles. How do people form relationships? There's a pattern to that. We can leverage that. How do people make decisions? There's a pattern to that. We can leverage that, you know, I'm sure your audience has come across. Robert Cialdini's work. He wrote a book principles of influence back in the eighties. It's I dunno, a gazillion copies sold, right? The book is brilliant. It talks about seven leavers that you can use to influence anyone about anything, or we know this stuff.

And then it's like a giant mass amnesia when we step into the digital space and we don't use any of these same tactics, we forget that at the end of every transaction in the digital space is a human and humans are influenced in predictable ways. So it's just a matter of kind of reminding ourselves and not accepting the status quo and saying, yes, there is sensibility and putting energy into Customer Retention. We're going to weather the storm of economic downturns better.

We're going to build a loyal customer base that will stay with us for better. We're going to create at the risk of sounding old, go back to the old fashioned world where businesses made profits Radical, right? So I'm going to, I'm going to just stay on this radical roll and throw something very controversial out there, right? Low conversion rates are helping your competitors grow. And here's the science behind that 97% of the customers that come to your website leave, and these could be customers looking for a new product, or it could be customers coming in to get reassurance or make a complaint or whatever.

But 97%, if your conversion rate is two or 3%, 97% of people leave. And the people that leave because there's now an element of frustration, they didn't get what they wanted when they came looking, they are willing to spend up to 16% more with your competitor. So your failure to engage, your failure to delight is making that customer go to your competitor. Who's in the next tab. They're not over here in Australia. No, no. There's zero energy to go to the next tab and they're willing to spend 16% more.

So your low conversion rates are helping your competitors grow.

Speaker 2 (8m 35s): And, and man, when I, when I, when I think about that, I wonder when most people say that, Hey, we're going to spend energy to keep a customer, right? Whether that's keeping them after they've purchased and keeping them on our sites and do all of that, it seems to be very sort of reactive and almost selfish. And I don't mean selfish in any judgmental way. You know, you know, like that's kind of where, so, so what I mean by that is if you come to my site and I think you want to buy something, I'm going to put this big, buy something so that you get by the thin and you're off, right?

There's all this literature around. Don't let them hang around your site that often, quickly convert them off. You go on the support side. Did you come to my site? Looking for help is also the same deal. It's costing me money. If you want it to have this, let me just give you, here's an FAQ. What have you. So like, there's this push in the other direction and I'm, you know, I'm a recovering technologist. I'm not fashion technology for technology sake.

I'm simply saying there's this energy that's like, I don't want to really interact with you any deeper. Then come in, get the stuff you got. Problem. Here's the answer. And I know what do you, where do you say to that kind of reflexive businesses leaning away? If you will, like, I wanted to be sanitized, come in, buy the stuff, go have a problem, click your off your goal. And then I hear you talk about building a relationship and it seems like the marketplace is going vast in the opposite direction.

Speaker 3 (10m 19s): Yeah. I mean, it's a great, great point. And I actually enjoyed one of your past interviews with Steven, where you talked about this at length. So I think direct your audience. There won't repeat any of that. Goodness. But I think fundamentally let's take an example. Let's look at a business like Qualtrics. So Qualtrics started with doing survey staff and now, you know, I think they, they raised $600 million at the last race. They're enormous. And they're able to effectively formulate how to do the retention part of customer service at scale, by looking at patterns and being predictive.

So as an example, if you're selling shoes and there is a break in a particular line of shoes and people are coming back and complaining about, you know, this particular model of shoe, more than the average they can pro they can capture that and get the customer service departments to proactively reach out to people who bought those shoes and say, look, we know that we've got an issue with these shoes. You might want to keep them, but if you don't, here's a remedy. And so it all comes back. You know, if we come back to first principles, which is often useful to understand the all going forward, if we look at satisfaction, right?

So customer satisfaction, how is that calculated? In essence people, it's a, it's sort of a, it's a product of two things, your expectations and your perceptions. If your expectations are really, really low coming back to our earlier conversation, if your expectations about things are really low and the perception or the delivery of the product was just a little bit above, you're going to be super happy because your expectations were low. If your expectations are high and the delivery is at the same level above average, but lower than your expectations, you're going to be really unhappy.

And so you think, okay, well, all of this is subjective. How do I, as a business influence whether my customers are satisfied or not. And again, it's proven that you can do that through the provision of information. So take, for example, you know, in the olden days, when we used to fly and you'd chop for a flight and American airlines would say, sorry, your flight is delayed by 30 minutes. And so your natural reaction, you were expecting to fly at a certain time, your flight is delayed. They tell you a flight is delayed. You're unhappy. You're like pissed.

I'm unhappy. I'm going to go and complain, right? But if the person on the little megaphone says your flight's delayed by 30 minutes, we've just had an unfortunate situation where a lady is delivering a baby on the plane. And it's going to take us a little bit longer than expected to get that plane turned around for you. All of a sudden you're like warm and fuzzy, right? So the delivery of the delivery of the actual experience didn't change. Your expectations were where they were. But simply by providing information, you're able to completely change a negative into a positive.

You know, if you're a restaurant, you go to a restaurant, your table's not ready and you get offered a little appetizer while you're waiting in line. Your negative is turned into a positive. And so coming back to your point around customer service and putting energy into the front end, rather than the backend at the backend, using information and using the tools that you have to moderate satisfaction levels and customers is huge. And so, yeah, and that doesn't get delivered with a coupon for stay with that cable company for another year.

We'd know you're really unhappy, but we'll make it, you know, we'll give you a little teaser so that you're unhappy with us longer. Something that makes them happy.

Speaker 2 (13m 58s): Yeah. I mean, that is, that is, that is so spot on. And I think one of the lessons I'm taking from this, and for those of you who are listening to, or on the, on the service or contact center, or what have you, is that you've got to separate the, the act of break things from what we're talking about, which is loyalty. Like the break fix is a transactional. And I, this is a completely different than this is the same reason, right?

Why you call your grandma with no, like you're just checking in on her, right? It's, it's a relationship. It's not because you need something or you something no. And oh, by the way, when your grandma also calls at once you to be her tech support, you, you fix it. But then that doesn't mean you, you still don't work on the relationship. And I think it's that mindset. And, and, and, and for too long, we've kind of given up on everything has become, I can acquire a new customer by going out and just paying for it, eating into profits, or I can acquire a customer by giving them one who was unhappy credits, again, eating into profits.

Like we have no other tools in the tool belt. There is a given up on it. And in some ways, you know, when I, when I talk about service about why companies don't invest in do all the MRIs on it, this is part of the reason, like, if you're pouring all of your money into acquisitions, right. And credits and those things, then all of a sudden, you don't have money to pour into this. Then you consider, you know, kind of mundane because we've not done a good job of tying those kinds of service things into retaining a cost.

It's not purposeful. Does that make sense? Like, it's just, you're just answering questions and doing that. It's not a purposeful thing it's designed to create a lot.

Speaker 3 (16m 2s): Absolutely. And you probably would have come across Ellen, the Baton, he wrote a famous book called the week, right. So if you've read his follow or your audience has totally recommended, it's called the course of luck. And the course of life is a book about, you know, everyone wants to know how I met you. Right. How did you guys meet? Oh my God, how romantic, terrific, whatever. But it's what happens after that. That's interesting. Right? It's what happens after the honeymoon that is the make or break in a relationship.

And this is, you know, the parallels between human to human relationships and human to digital and brand relationships are so incredibly high. Right? We get so focused on the acquisition. That's the sexy part. Let's get new customers in. Yay. And it's actually what happens next? That's the important thing it's, you know, do you deal with your customers with empathy when they call you or do you, do you just be rude to them and give them 20% off the next year and entice them to stay in a dysfunctional relationship longer.

Right. And when you lay it out like that, you go, well, why aren't we making these crazy decisions? Why don't we build our businesses on a foundation of providing value and serving customers and forming long-term relationships. It's stuff that works for the longterm. But you know, many people are just in for a quick thing, how fast can we spend the VC funds and, you know, get the evaluation to a place where we can exit out and, you know, there'll be market corrections.

There'll be, you know, this is things find the right level. But I think for your audience, you know, whether you're a young entrepreneur or as a student and you're starting out, or you're looking for a career change, or you work in customer experience in some way, I think staking your career in the future, on your, of your business, on a foundation or building strong relationships and putting in place the mechanisms in digital to facilitate and nurture that it's a long-term strategy that leads to a win it's it's, you know, there's the science, there's a formula to it.

Speaker 2 (18m 10s): I want to, I want to ask you one last question. I'll let you go. And it's, I suspect you have to be going crazy. I know we talked on the last conversation about the front end, how people trying to convert then all that I got to imagine, if you have, I'd love to hear your perspective that you you're driven just as crazy on the backend, meaning on the digital, on the websites, on their support pages as well. In the same way. As we jumped straight into that, an add-on on the front end, a buy this, then sign up for my demo.

Have you on the backend. W and when someone's, they're just looking for information, I got, I'm curious to hear your perspective around what have you seen there? That just makes you go, oh my gosh, just here,

Speaker 3 (18m 59s): You have hit a big red button. Let me spend with your audience. So literally yesterday, you know, right now, COVID you try and book flights and all your plans change, and you have to cancel flights on the airlines are terrific. They give you a credit voucher, and then you come around and you go, well, I've got another fantasy. I remain optimistic. I want to rebook that trip to wherever I want to use my credit voucher. And this is where everything just falls off. And you really get a taste for how much they don't care about you as a customer at all right.

Try and use a credit voucher. Oh, ladies, sorry. You can't combine two credit vouchers to buy a ticket. Sorry. Can't do that. Oh, lady, you can't use that credit voucher online to buy a ticket. You can use this other one, but not this one. Why not? This one? I don't know. Call our call center, call centers busy. Three hours later, you get a call back. Sorry. I can't help you out with that. I mean, it's just atrocious. It's like, literally you, you finish a day of trying to rebook a ticket with the money that was used in the first place that the airline has held for the last year and a half.

Right. And you feel battered from the experience and there is, you know, you, you go again from being, I don't think anyone has very high expectations in these, in these situations and you just, you just don't want to be really, really mistreated, be happy if you would treat it. Okay. You know, so yeah. There's, you know, there's lots of examples and I'm sure your audience will have tons of their own experiences where you just feel like, hang on.

Why am I being penalized for being a loyal customer or brand?

Speaker 2 (20m 42s): And this, the psychology of that, right. I suspect in that same moment, if you want it to buy a new tickets, right. Click on Google, there's an ad. And meanwhile, like I've already paid, I'm already a customer like I already, right. Versus the person who was comparing you to all the other airlines I'm here. Like you've got me

Speaker 3 (21m 11s): Decision to be paid your mind. You're my choice already. I don't need to go and compare you against other airlines. I don't need to do an evaluation. I don't need to compare and contrast 60% of the process for me to choose a brand is done. So you've literally been handed a gift. It's like someone who comes recommended to your brand is such a gift, you know, grab that. It's really atrocious to let that fall through the cracks and not have the mechanisms in place to engage those customers and see them through to a really good conclusion.

Speaker 2 (21m 47s): You know, it reminds me of some of the legendary businesses. That's, you know, some are world famous, some are known locally. And what have you, who don't do any marketing? Not that there's anything wrong with marketing, who says their entire business is word of mouth. And when you go study each and every one of them, and probably one that comes to mind at scale is Zappo is, I don't know if you,

Speaker 3 (22m 10s): Yeah. I lived in Vegas. I know. Is that post?

Speaker 2 (22m 13s): Yeah. So at least when the late Tony Shay was w was there, it was kind of this oddity of a place that focuses, you know, all about keeping the existing customers they had into this rabid fans and the economics would just bore that out. Right? Like they did sort of these radical things. So if you think about business after business, if you put it on a spreadsheet, right. For the quants out there to say, what's the economics of keeping customers and treating them, building it versus going in and doing more paid search and clicks and all of that, it's sort of a no brainer.

I guess I'll leave you with a very difficult question, which is what is it about this, right? That most companies just decide not to do? Is it because there's so much free money? Is it because it's like doing the dishes and it's not as sexy? What is the thing that drives people, right. To the, the loving arms of Google and Facebook or whatever, and spend all their money's there and drain profitability versus doing the best, which it's, it's, it's the economics of better.

The everything is better, but we keep going there. Is it like, I just like the taste of donuts and I'm going to just eat it regardless of what happens, no matter what I read.

Speaker 3 (23m 39s): Yeah. You know, it's a great question. And for, you know, for the listeners, it actually brings us back to where we started the conversation and the very first part, right. At the inception point. And I think the reason why the status quo perpetuates is that in most businesses you have three really different teams who are driven by really different KPIs, right? So sales is transactional. Make the quarterly, you know, you make your monthly goals, you make your quarterly goals, you get a bonus that is literally your fixation.

And the only thing you care about marketing, you're looking at numbers and the numbers that we follow, all the vanity numbers, how many site visitors did we get? We're not looking at what's the proportion of buyers. We're looking at how many impressions, how many site visitors, because those numbers are big. And they're great when we present them to the board. So we hooked on vanity metrics and that's how we get evaluated our KPIs. And then you look at engineering teams and product design teams, engineering teams get evaluated on how fast they cut code.

You know, they have it last year and they look at the velocity graphs and they're like, we're doing well because we're cutting code fast. And then designers, for the most part, don't have metrics for evaluation. Right? Design is just the number of times I've been brought into a business, which is engineering led and being asked to add design we're shipping next week. Could you add design? It's like, no, we need to build it into the cake, right? From the beginning, we can't ice it on the top. So the reason why I think some of this is hard is that we have teams who are working together on the same, you know, on the same brand, on the same business, but the KPIs by which they are evaluated often conflict with each other.

And so until there's alignment and until there's a common framework and a way to measure success across the board, using the same measurements, it's really, really challenging for our business. And so it's not that we don't know the stuff. It's just that whenever there is a complexity in life and you come back to first principles and then you follow the money flows, the answers are usually there.

Speaker 2 (25m 49s): Yeah. You're, you're, you're a spot and I'll add a fourth team to this. Then you've got the support guys also care about, like, in that sort of way, I came up, right? I'll take care of this customer. And, and your, your corrected usually takes a powerful leader or founder, which it, which is probably explains why some of the best examples we have doing it right, are tends to be led by these, right?

Despite someone at the top was visionary. Well, the, the thing that gives me hope is the work you're doing now. This is in theoretical. There's a video listening. She is done this with, you know, in, in, in the triple digits of companies and brands and various industries where the conversation is, how can we kind of shift mindset and then, but it's a work and she is showing great results there.

So we're going to post your info. I think you said, LinkedIn is your preferred way to, to engage, but please feel free to shoot us, shoot us a message. Contact us. What was that website again? Where folks can get the magic pills that would make all of their conversion and all their things, right? What was that website?

Speaker 3 (27m 12s): [email protected]. And from there, you'll be able to either read the book which describes the process. And you can apply that in your own business. No secrets. It's patented. It's out there for anyone who wants to take the time to read. There's also a series of courses. If you just want snippets of three and four minute videos, or there's a button, you know, for the folks that don't want to read the books and up and do the rest. So Yeah. Are a double M P breath like ramping up.

Speaker 2 (27m 47s): Yeah.

Speaker 3 (27m 48s): I'm not suffering question for you. What is your favorite meal to cook? I think that's the questions you've asked me. So I know you're a bit of a chef. What is the go to for

Speaker 2 (28m 2s): Yes. If I am, if I am put on the spot and say, gosh, this is make, make something. I make a slightly spicy spaghetti and meatballs. The CRA Fresh tomatoes are a must. So there's a labor of love. You've got to get the blender. There's no, I don't have any. She has a magic button. There's not for you here. You got to take the tomatoes. You've got to blend them.

If you want to cheat, I would blend more than I need and freeze some of my fresh tomatoes so I can cheat next time. But yeah, a spaghetti and meatballs, it's, it's a labor of love, but it takes a few hours, but that is, I cook all kinds of things, Asian cuisine. I used to Southeast Asia for some time. So I that too, but spaghetti and meatballs that's

Speaker 3 (28m 60s): Wow. Well, I'm starving right this time.

Speaker 2 (29m 4s): Well, this has been terrific. I cannot thank you enough. I cannot, I cannot wait for the audience to, to learn from your insights. It's it's, it's, it's an honor to have you on because you are given me something new for that I have not encountered before. So thanks. Thanks for coming on the show.

Speaker 3 (29m 25s): Thanks amass really appreciated and look forward to any questions or, you know, follow up comments that your audience has set up through.

Speaker 2 (29m 35s): Sounds good. Thank you for listening, please subscribe and follow me online at a mosque. Tenumah look forward to chatting with you next time.

Connect with Anna - https://rammp.thinkific.com

https://www.linkedin.com/in/annaharrison/