Citation
Rich, M.K. (2002), "Customer Winback", Journal of Business & Industrial Marketing, Vol. 17 No. 1, pp. 89-92. https://doi.org/10.1108/jbim.2002.17.1.89.1
Publisher
:Emerald Group Publishing Limited
Overview
Every year, the average company loses 20 to 40 percent of its customers. For on‐line and e‐commerce companies, defection rates are substantially higher and the commensurate effects more challenging to the survival of the firm. When a customer defects, the negative effect on profit is substantial. As the authors point out, we are in a new era of defection where customer churn is reaching epidemic proportions and is wrecking businesses across all industries in all parts of the world. Jill Griffin and Michael W. Lowenstein explain the economic, psychological and financial effects of lost customers on companies and offer sound advice to regain those former customers and to bolster the loyalty of the customers a company still has. This book will offer readers a tested process for winning back lost customers, saving customers on the brink of defection and making a firm defection‐proof. This work shares techniques of hundreds of leading‐edge companies around the world, from e‐commerce start‐ups to Fortune 500 corporations, which are already working to recapture lost customers and keep them loyal. Griffin and Lowenstein address and answer tough questions like:
- •
Why do lost customers mean big opportunities?
- •
What does research show about companies’ efforts to win back customers?
- •
How can a company evaluate the value of recapturing lost revenues?
- •
Why is it important to get marketing and sales teams to focus on the value of customer loyalty?
- •
What are the warnings signs of defection?
- •
How can a company save a customer on the brink of defection?
- •
What can a company do to save defecting Web customers?
- •
What is the Casanova Complex? Why should a company avoid it?
This work offers unique and innovative concepts, techniques, and ideas for businesses. It addresses the current state of customer loss, the revenue opportunities represented by win‐back, the processes necessary for both customer retention and customer win‐back, and the preventive approaches necessary to help make a company defection‐proof. Issues covered include customer targeting, database development and management, customer‐focused teams, and staff loyalty.
About the authors
Jill Griffin is the author of Customer Loyalty: How to Earn It, How to Keep It (1997). At RJR Nabisco, she served as senior brand manager for the corporation’s largest brand. In the service sector, Jill served as national director of sales and marketing for AmeriSuites Hotels and was responsible for launching and expanding the new chain nationwide. In 1989, she founded the Austin, Texas‐based firm, The Griffin Group, specializing in loyalty and win‐back solutions. From conducting customer and staff loyalty research to delivering a customized keynote presentation for a company’s annual meeting, Jill’s experience enables her to address both the art and science behind successful loyalty and win‐back programs. Her clients include Microsoft, Sun Microsystems, Ford, Hewlett Packard, Arthur Andersen, Sprint, Wells Fargo, Dell, Toyota, IBM, Marriott Hotels, Healthcare America, and the US Navy. She has served on the marketing faculty at the University of Texas.
Michael W. Lowenstein, CPCM, is managing director of Customer Retention Associates, a customer and staff loyalty program development, research, and consulting firm located in Collingswood, New Jersey. With over 30 years’ management and consulting experience in customer and staff loyalty research, CRM, loyalty program development, customer win‐back, service quality, customer‐driven corporate culture, and strategic marketing and planning to draw on, he is an active speaker, workshop facilitator, and trainer, while contributing to customer loyalty newsletters and Web sites. Lowenstein is the author of Customer Retention: Keeping Your Best Customers (1995), and The Customer Loyalty Pyramid (1997). His clients include First Union, Toyota, Prudential, Westvaco, Cigna, Charles Schwab, Borg‐Warner, Sygma, Metropolitan Life, Microsoft, Daimler‐Chrysler, and Georgia‐Pacific. Lowenstein has been a customer loyalty instructor for Pennsylvania State University and the American Management Association.
Content
In reviewing this book, I found the points made were supported with in‐depth and provocative stories that will clearly bring into focus the continuous mistakes made by many organizations with their customers – mistakes that are often justified when examined in isolation, but brought clearly into perspective by the authors as they examine each instance from the customer’s perspective. They further explore win‐back benefits beyond the bottom line and expand on such areas as uncovering improvement opportunities within your operating procedures, developing an at‐risk profile for detecting potential customer defections, and limiting negative word‐of‐mouth from unhappy customers. Knowledge is essential in learning what customers are being lost and why an organization is losing them.
The book is divided into two sections, the first covers five chapters, focusing on how to win back lost customers. The first chapter explores various facts and findings that prove win‐back is critical to a company’s continuing success. Chapter two is a case study of a hotel chain’s efforts to strengthen their retention of key guests that had defected in recent months. A key point made is that the most effective acquisition and retention programs will never eliminate or prevent all customer defection. A company needs to be truly committed to long‐term customer loyalty by pursuing a plan that provides hard‐working strategies for not only acquisition and retention of customers but also win‐back of defectors. The authors also develop a win‐back decision tree that is actually a blueprint for in‐depth planning.
Chapter three examines the specific strategies that can be used to win back lost customers. The authors point out that not all lost customers make good win‐back prospects, nor does an organization necessarily want to win back all lost customers. It is important to segment lost customers by win‐back potential, with lost customers who offer the highest probable return on your efforts given greatest priority.
Chapter four focuses on how a company can save customers about to defect and how to identify those customers. Extensive cellular one examples are used and are incorporated into a three‐step save process that starts with comprehending the customer’s problem (Step 1). Step 2 is purpose and is represented by an effort to make a conciliatory offer that matches the customer’s pain. After listening to the customer’s response, Step 3 is implemented – the response by the company. The author’s approach consists of going along with the customer’s proposed agreement if possible. The company should encourage even tentative agreement while coping with disagreement if it arises.
The last chapter in this section is designed to guide an organization in the process of mobilizing and managing a win‐back team. The people selected have to be those who do not mind hearing “no” to requests made to customers and who have a generally aggressive attitude tempered with sensitivity for the feelings of others. The place for the team should be centralized so that the members can encourage each other throughout the process. Typically, a win‐back team will devote one day per week to the process of contacting the lost elements within the customer base. The process should consist of daily assignments where the team members review the contacts to be made that day and a review of the individual characteristics surrounding each contact. Effort is made to develop effective opening phrases since how the call starts can make or break the results achieved. The book develops the elements involved with an effective win‐back team from the recruiting process, training of the team members, managing and maintaining the resulting database, keeping the operating standards high, fighting burnout, monitoring calls, using rewards, and retaining a good staff.
The second section of this work addresses making a company defection proof. Because customer value requirements are constantly shifting, defection‐proofing a customer base is a continuing challenge. The five chapters in this final section offer five tools for meeting this challenge. Chapter six, the first chapter in this section, examines how managing the customer life cycle can help keep customers loyal. The authors stress the importance in understanding the difference between satisfaction and loyalty. Loyalty determination requires a more probing form of questionnaire design and analysis. This is demonstrated with approaches such as asking your customers how they would rate your performance rather than how satisfied they are. When designing questionnaires, use customer‐defined attributes whenever possible.
In chapter seven, the authors describe the key elements in designing a customer information system and collecting the right information. Chapter eight presents strategies for targeting the right prospects, those most likely to become repeat customers. Chapter nine discusses why companies are using customer‐focused teams and how an organization can put these teams to work for the benefit of the company. The final chapter of the section, and the book, offers the best practices for building a fiercely loyal staff.
Summary
The book is a fairly easy read in a couple of evenings. The chapters average 28 pages in length. The work contains two appendices, the first being a customer loyalty compass that outlines four steps that need to take place to assure customer retention. According to the authors, identifying the values that motivate customers requires a disciplined and repeatable research process carried out by an unbiased third party. The four steps are:
- 1.
(1) prepare for the research process;
- 2.
(2) assemble customer wants and needs;
- 3.
(3) comprehend customer priorities; and
- 4.
(4) employ your findings.
The second appendix outlines how to estimate the second lifetime value investment and profitability of a customer once lost but subsequently retrieved using the approach detailed in this book.