Losing Your Current Customers

wrong way sign

We just wrote about the importance of understanding your non-customers.  That doesn’t mean you should neglect your current customers.  If you do, you’re in world of trouble.  Even if you don’t abuse your customers, maybe you’re taking them for granted.  You’re losing some of them every year.

Them Behaving Badly

Never anger a man with a megaphone*.  Saeed has a megaphone, thanks to his consistent writing, his audience, and the dynamics of word-of-mouth.  Let’s look at how a public discussion spiraled into disaster for them, the company who sells a product that Saeed critiqued.

The first post (yes, there are more than one) presented a critique of a design characteristic, and a suggestion for future products.

Hey boys and girls at APC, here’s a rather undelighted customer and a real customer problem. Curious toddlers can turn off your devices in the blink of an eye! Your home/office solutions team needs to take that into account in their next generation product.

Turns out, someone posted an excerpt from the blog post onto the APC forums.  And that’s where the trouble begins.  The response from APC was defensive and critical of the complainant.

I had a discussion with a couple of APC Escalation folks yesterday, and in no way shape or form can this be defined as a “fatal design flaw.” If it were, obviously OTHER UPS companies wouldn’t use this design and try something different to give them an upper hand. But since they do – that becomes negated.

And it gets worse from there.  Time to slow down, crane your neck, and try not to swerve into opposing traffic as we watch this one unfold.  Saeed’s follow-up, How NOT to communicate with customers, includes a critique of the response.  After the detailed critique, Saeed puts it in a product management perspective.

As a Product Manager, I can’t help but look at this response and think, “What a missed opportunity!”

Instead of responding the way he did, Kevin should have either escalated this to a Product Manager or Product Marketing manager, or had the insight to understand that for a customer, the most important letter in UPS is U for UNINTERRUPTIBLE.

And the parallel thread on the APC forum continues (as someone else links to Saeed’s response).  Here’s where The Notorious K.M.P., and yes, that’s the ID he chooses to use on the forum, puts the nail in the coffin.

I suggest he take it up with other UPS manufacturers as well, who’re going to tell him almost the exact same thing.

At this point, Saeed pushes-to-talk yet again in How to LOSE customers!.

I will absolutely take this up with other UPS manufacturers. I doubt they’ll tell me to address the problem using “duct tape”. I doubt they’ll insult my child as Kevin did. I doubt they’ll use faulty logic and irrelevant examples.

Thanks for the advice Kevin. Tell your bosses you’ve not only lost a customer, but also that hundreds of people now know why.

Wow.  I guess we’re helping hundreds more people hear about it.  There is value in this – we, as creators of products, and people with customers, can learn from this.

Lack Of Criticism Is Bad

Carnegie Mellon Professor Randy Pausch recently passed away, which you’ve probably all heard already.  And you’ve all seen the link to the inspiring 104 minute video of his last lecture.  If you haven’t watched it, you should.  You should also watch his commencement charge (speech), for an inspiring 6 minutes.  Btw, Professor Pausch’s legacy, alice.org, shows the power of focusing on problems, not implementing features or applying technology.  But that’s a topic for another article.  I think we should add product manager to his list of titles.

In his last lecture, Randy points out one of the lessons he learned about receiving criticism.  When you’re making mistakes and people are critical, you should embrace the feedback.  It is a sign that those people haven’t given up on you yet.  When you’re making mistakes and no one is telling you, that’s when you should worry.  That is when people have given up on you.  That is the last place you want to be.

And that’s where APC has ended up, at least with Saeed, thanks to Notorious’ comments.

Don’t let that be your company, when you are getting negative feedback from customers.

A Bucket With A Hole In It

bucket

When I took differential equations in college, we were given a problem that made the power of differential equations very obvious.  We were presented with a bucket, which we were filling with water.

  • The bucket had a hole in the bottom, through which the water was constantly draining.
  • We were constantly adding water at a fixed rate.
  • The water drains out the hole faster when the water (in the bucket) is deeper – because the water pressure is higher.

The problem we had to solve: determine how full the bucket would be.  As it turns out (and no we won’t do the math here), the bucket maintains a fixed level of water in it.  The faster you pour water in, the higher the water level, but (within reason), you never overflow the bucket.  Because the higher the level of water in the bucket, the faster the water gushes out the hole in the bottom.  So it reaches an equilibrium point where the water is gushing out just as fast as we’re pouring it in.

I remember this problem mostly because my intuition was always to make the hole smaller, not to pour more water in the bucket, if I wanted to raise the level of water.  I felt like I was wasting a lot of water with “pour it in faster” and it would be better to make the bucket leak more slowly.

It turns out that if you have an established customer base, you’re losing customers just like that bucket is losing water.  And my intuition again says that you’ll reap more rewards by making that hole in the bucket smaller.

Customer Defections

Kristin Zhivago, author of the book, Rivers of Revenue and the Revenue Journal, recently posted an article, Gone!  The Reasons Customers Leave.  [ Thanks Gopal for the link, and your comments about the importance of “courtesy, professionalism, and respect” to keeping customers].  Even when you think your customers are happy, some of them are still flowing out through the hole in your bucket.

About 5% of all customers I call – who were believed to be satisfied – reveal to me during the interview that they are looking for a better vendor and are talking to competitors. This is the typical ratio for the companies that try to take care of their customers, companies run by the types of CEOs I work for. In companies where the CEO is not so nice, the ratio is higher.

Kristin Zhivago

Kristin has some great thoughts about how to make the hole smaller.

The best thing you can do when money gets tight is to look at your own customer base, and examine how your own customers are being treated. Find out – by interviewing customers and employees – who treats customers the worst, and fire them. Let everyone know that that kind of behavior will simply not be tolerated.

That will definitely make the hole smaller.  There’s more stuff in Kristin’s writings, including her latest article on proactive customer service, so go check it out.  While it is important to keep finding new customers, you should also prevent defections.  So an approach that involves both stopping destructive behavior, and introducing constructive behaviors makes the most sense.

Conclusion

Creating the right products (and creating them right) is not enough.  You also need to find new customers and keep current customers happy.  The services you provide (including stuff like call centers and customer service, not just “services” products) are also products.  They affect the success and satisfaction of your customers, and will impact your word of mouth.

*[I’m sure I have mangled somebody’s great quote at the start of this article, but I can’t find the source to attribute the quote.  If anyone knows, please comment below.  Might be bull horn, pulpit, or microphone instead of megaphone.  And I think it is a reference to journalism, maybe in Hearst’s day?  If those clues help…]

5 thoughts on “Losing Your Current Customers

  1. The original quote was from Mark Twain “never argue with someone who buys ink by the barrel”. In this modern age of blogging, I quote that and then say, “today, it should be “Never argue with someone who buys electrons by the megacoulomb”

    “No trees were dammaged by this post, but a large number of electrons were disturbed”

  2. Scott,

    Thanks for the visibility. A lot of companies talk about listening to customers, but it doesn’t really reach into the DNA of company. Public companies are beholden to shareholders. Smaller companies want to target new customers.

    In the end, listening to people who have paid for your product and who actually use it everyday sounds like a pretty good idea…at least to me.

    Saeed

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