The following column, which appears each issue, looks at new and emerging trends in direct response marketing. Alternating columnists are David Foley, a specialist in database marketing programs, and Fransi Weinstein, an award-winning creative director.
Six weeks ago, I sold a car to my younger brother.
Along with the car went the car phone because it was simply not worth the cost of removing and re-installing a 10-plus-year-old phone which, even though it still works fine, is old technology.
But the story really begins when I went to cancel my cellular phone account. A quick call to the provider and it would be a fait accompli, I thought. Wrong!
A maze of options greets callers. Eventually, Silicone Sally passes on this little secret – press ‘0’ to get into the call queue to speak to a real person.
I finally get to explain my situation to a pleasant-enough young man who absorbs my story, who could be heard rapidly keying information into my computer file, and who, it turns out, cannot actually help.
‘I’ll have to transfer you to the disconnection department,’ he said. The ‘disconnection department.’ Hmmm.
Click, click, click and I find myself explaining the story in its entirety a second time. Even though I’ve had this account for years, it seems that one just can’t walk away. Apparently, my contract had been ‘automatically renewed on an annual basis over the past several years,’ not by me but by the service provider.
To my recollection, the company never bothered to advise me of these renewals or of the conditions attached to them. Rather than pay an outrageous disconnection fee, I opted to have the number placed on ‘temporary suspension’ (at a lower monthly fee than my airtime usage package) until the anniversary date. Should I opt to stay with this service provider, I get to keep my old number while the company gets to keep a customer.
Today, during a second call, I advised the provider that I did not want my account renewed following the expiration date of the current contract, on Sept. 6.
Now, here’s the absolutely unbelievable part. In two calls, in conversations with a total of four people, including one person in the ‘loyalty department,’ nobody asked the most obvious question: ‘Now that you’ve sold the car with the phone, won’t you need a new mobile phone?’
The answer is yes! Can’t see the forest for the trees!
Nor did the company’s database identify me as a prospect despite more than 10 years of history (which includes a record of prompt payment).
One would think that in a competitive business like this, the database would scour account cancellations for opportunity. Imagine a letter that begins, ‘Since you’ve sold your car with your old phone in it, let us show you compact new-technology phones that come with this special customers-only offer….’ Or the dumbed-down version, ‘If you’re looking for a new mobile phone, don’t miss these special customers-only offers….’
The story illustrates this time-proven truism: Customers don’t quit a company, they merely fade away. Unlike The Rolling Stones.
It is a well-known fact that it costs more to acquire a new customer than it does to keep an existing one. It’s also true that a small percentage increase in customer retention has a significant and positive effect on profits. Anyone who doubts either of these claims should read The Loyalty Effect by Frederick Reichheld (Harvard Business Press).
Yet it’s also true that many companies (including the traditional phone companies) spend on rich ‘win back’ programs when it would be prudent to divert some of these funds into retention-building activities, thus reducing the number of customers that the company might need to attempt to win back.
Or, in the situation cited above, the company might consider spending some money on training, as in Learning to Ask the Right Questions!
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Frequent Flyers Alert
I am initiating a research project among frequent flyers, the results of which will be published in a future Speaking Directly column.
If you are an active member of Aeroplan or Canadian Plus or both and you would like to participate in this study, please contact me by fax, phone or e-mail at the numbers below.
All participants who register by Sept. 30, 1997, will receive an advance copy of the study results and a complimentary one-year subscription to my newsletter, Management Report on Database Marketing.
David Foley is a marketing consultant and an instructor in database marketing at York University in Toronto. He can be reached by fax at (416) 869-3700, by phone at (416) 869-9736 (1-800-815-1135 outside the 416 calling area), or by e-mail at davidf@promanad.com
