Customer Retention & the Bank of Good Will
Regardless of what business you’re in, you probably have customers. Of the millions of words written over the years about how to take care of your customers, many writings on customer experience revolve around making customers happy. Of course, we want to make our customers happy. I question, though, if it’s really possible to make customers happy in every interaction?
Might we botch a shipment every now and then? Might we slip in responding to an email in a timely manner? Might we overcharge or underdeliver on occasion? Of course we might! But much of the literature on customer experience doesn’t acknowledge this. There seems to be a belief that we operate in a world where we try to be perfect all the time. Or, if we mess up we’re told how to address the mistake. While there’s no question this can be helpful, I don’t believe it’s the most important thing.
Think about those who have been your customers the longest. Why have you had them so long? Have you been perfect with them for the entire time? Have you made mistakes with them? I’m guessing that yes, you’ve made a few mistakes. Yet, they’re still your customer.
Have you made those same mistakes with other customers who are no longer customers? Probably so. Why do some customers stay with you after you make a mistake, and why do others leave?
I propose that customers stay and customers leave based primarily on one thing that I call Good Will. If you have it, they stay and they will stay with you through a lot. And, if you don’t have it, they’ll leave over the smallest little thing.
What is Good Will? Per Webster, “goodwill” is an attitude of kindness or friendliness—a good relationship, as of a business with its customers or a nation with other nations.
For a long time, a hot metric for customer retention was a “net promoter” score, which is the likelihood that your customer would refer you to another customer. But I prefer a metric that measures the likelihood that the customer will stay with you and continue to stay with you.
So, how do you measure or influence Good Will? Every action and interaction you have with a customer impacts your Good Will with that customer. Return a call quickly? Your Good Will (GW) goes up. Forget to return a call? It goes down. If you forget to return one call, are you going to lose your customer? Probably not. But forget to return 10 calls in a row? Yeah, you will likely lose that customer.
Relationships with customers are like an account at the bank. When times are good, you’re making deposits into the account. When times are bad, your customers are making withdrawals from the account. You lose a customer when the account becomes overdrawn. I call this concept the Bank of Good Will.
When you do what you’re supposed to do—ship an order on time, complete a project within the budget, respond in a timely fashion to a request, answer the phone—a small deposit is made into the Bank of Good Will. When you get a new customer, these sorts of things are just small deposits. If you do a lot of these basic things well over five, 10, or 15 years, you end up with a big balance in the account.
The trick is to make a big deposit at some point—and the sooner the better. Big deposits come from doing extraordinary things that the customer can tell stories about: personally driving a product to a customer’s store to make sure it gets there in time for a big sale, working until 2 AM to complete a project that’s critical for the customer, taking a call after working hours to solve an important problem for the customer, etc. These things put a big deposit in the account.
As with deposits, there are small withdrawals and big withdrawals. Missing a ship date by a day might be a small withdrawal. Missing a ship date by a month could be a big one. Not returning one call might be a small withdrawal. Not returning call after call after call would be a bigger withdrawal.
In my experience, instances of big withdrawals are rare. What tends to happen is that there are many, many instances of small withdrawals that eventually overshadow all the deposits that have been made.
When withdrawals exceed deposits, we lose our customers. When deposits dramatically exceed withdrawals, not only do we have a customer for life but we also have a raving fan and someone who will refer other customers to us.
On a day-to-day basis, it’s great to minimize withdrawals and maximize deposits. However, the key in this exercise is to be on the lookout for the big deposit opportunities:
- Jumping on a crisis and solving it right away for a customer
- Staying after hours to solve a problem
- Responding to emails or calls over the weekend
- Solving a problem for a client that they cannot solve themselves
- Going above and beyond the normal delivery of services
- Getting something done right away to solve a critical issue for a customer
It’s these sorts of things and more that make a difference and add bigger deposits to the Bank of Good Will. And, the bigger the deposit, the bigger the balance. The bigger the balance, the more likely you are to retain your customer forever.