A while back, my wife had had enough with how much we were paying for our satellite TV service. We discussed the situation, and decided that we could be satisfied with the content we could get through streaming services like Netflix, and were willing to let the satellite go. So, my wife called up the company to cancel our service. Naturally, the customer service rep didn't want to let her go without a fight, and so offered her various incentives to stay - but all of these involved extra services at the same price, not a reduction in price. After much haggling, my wife got transferred to a special customer retention rep, who ultimately asked her "What would it take to make you stay?" My wife responded, "Get my bill to 60% of what it is right now." The rep gave her that rate for a 6 month period, and my wife didn't cancel.
Over time I've heard many stories like this one. As a researcher, I became curious how widespread this experience is, and, more importantly, what customers take away from it. So, I did a survey to find out. I described a scenario like the one my wife experienced, and asked 100 consumers three questions.
The first question was whether they'd had an experience like this themselves. 59% of respondents said yes, so clearly this is a common tactic used by companies to retain customers.
The second question was how satisfied they would be with the outcome described in the scenario (getting the special rate, but for a limited time). The results are shown in the graph below. Clearly, most customers are happy with the outcome of their call.
The third question is how the experience affected their opinion of the company's honesty and trustworthiness. Again, the results are shown in the graph below. Now we see a much different picture. Despite a satisfying outcome of the call, most consumers did not end up with a higher opinion of the company, and about a quarter ended up with a lower opinion. What's going on?
We asked respondents to explain their answer to this question. Here are some of the responses from people who ended up with a lower opinion:
- The fact that I have to threaten a cancellation to get a lower price is telling of the honesty and transparency of the cable company.
- I felt that I was overpaying the whole time.
- If they can offer that price to me now, why couldn't they do it in the first place? Makes it feel like they're squeezing everything they can out of me until I get upset.
- I never understand why people are punished with higher rates when they show only loyalty and don't complain. It's like they want you to be a pain in the ass.
The last quote sums up the situation nicely: The company is punishing loyal customers who don't complain, and rewarding difficult customers. Of course, only a quarter of the respondents said their opinion got worse. What about the people who said there was no change? Their explanations varied, but here's one type of explanation that was fairly common:
- I generally don't trust cable companies and I feel like even with a 60% discount they're still making a ton of money.
- My opinion would not change, because I know they offer limited deals like this in order to keep customers around. It's a bit shady but I know it takes place so I wouldn't think differently based on this scenario.
- I generally don't trust cable companies to begin with, so this didn't really change how I think about them.
- I think the cable company is always trying to scam customers one way or another.
These folks already had a negative view of cable companies, and this experience just fit with that pre-existing negative view. Or to put it another way, it's hard for a customer's opinion of a company to get worse if it's already at rock bottom.
In an era where lots of companies are obsessed with their Net Promoter Score, why would a company systematically behave in a way that alienates customers? Although the answer may be different for different companies, one way this can happen is when companies just focus on specific metrics, rather than the overall customer experience. In this case, I'm betting the company has made a priority of customer retention, and might be evaluating their customer service reps based on that metric. Naturally, their reps are going to bend over backward to keep the retention numbers up. But in the process, they may end up damaging the company's brand, and create cynical, disillusioned customers. In other words, they may win the battle, but lose the war.
What does it mean to lose the war? A few days ago, the lower rate my wife had negotiated ended, and my wife called up to cancel again. This time the satellite provider held firm, and we cancelled our service. We felt no loyalty to the provider, and had no qualms about doing it.
The take home message is that if you are going to be a customer-centric company, you have to actually care about the customer. And not just as a way to boost your bottom line - that makes customers feel manipulated and used. You have to set the money and the metrics aside, and truly care about them as human beings. If you get this right, success will come on its own.