Learning from Lost Customers

By Chip R. Bell and Ron Zemke

What do a crime scene and a lost customer have in common? Both require considerable sleuthing to determine the cause—and to make sure it doesn’t happen again. The authors of the best-seller Managing Knock Your Socks Off Service use Customer Forensics™ to uncover a lost customer’s motive, opportunity, and alibi.

“Honest criticism is hard to take, particularly from a relative, a friend, an acquaintance, or a stranger.” —Franklin P. Jones

At first glance, putting the words “customer” and “forensics” in the same sentence might seem like a morbid oxymoron. But, lost customers can be somewhat like murdered victims—their cause of departure requires thoughtful investigation!

Forensics is the examination of evidence using a broad spectrum of disciplines to arrive at a conclusion or insight. Customer Forensics™ is typically used as a postmortem examination of hidden customer information to determine the real cause for the loss of the customer. Customer forensics also entails a timely investigation before facts and perceptions are “contaminated” by customer memory loss. The understanding gained can point the way to improvements useful in curbing future customer turnover.

A shotgun approach to customer intelligence risks completely missing the mark and often triggers lukewarm initiatives that only address symptoms. However, armed with up-to-date customer intelligence (like forensics), organizations not only can launch preventive measures to read early signals of impending customer departure, but they can also implement more efforts targeted at fixing deeper problems that contribute to customer turnover.

Police Science 101 informs us that the building blocks for solving a crime are motive, opportunity, and alibi:

• Alibi means the excuse used for not being the perpetuator was either false or not credible.
• Opportunity implies that facts put the perpetrator in a position to do the deed.
• Motive suggests that the perpetrator of the dirty deed had a reason to do it. Customer forensics uses a similar framework.

Alibi
The first step in customer forensics is to rule out all of the “natural” influencers to customer churn. Natural influences are like alibis—they can camouflage the real reason a customer leaves. The objective is to isolate those reasons that are organizationally caused. For example, if a retail store noticed an increase in sales for the month of December, conventional wisdom would suggest it was due to holiday buying. It would be important for the organization to seasonally adjust sales figures over several years to know if the real reason for a December sales increase might be something the organization did to ramp up sales.

The first “alibi analysis” technique is to look for any peaks, valleys, and patterns that may have contributed to a loss of customers. The goal is to spot aberrations in churn to discern what factors contributed to customer departures. The second data cut is to ferret out any clues that follow demographic patterns (e.g., customers primarily in a particular location, city size, climate). Similarly, ethnographic or psychographic filters can ascertain whether departed customers fit a homogenous social arrangement (e.g., more white males, more politically conservative, more single baby boomers).

Opportunity
Wise organizations look for ways to exit interview departing customers. Exit interviews create a potential opportunity to save a customer. They also create a learning opportunity at that juncture when the reasons for exiting are clear, sharp, and raw…not sometime much later after the customer has left when ire has dissipated and memory is hazy.

Opportunity analysis can also be enhanced with “truth syrup.” Truth serum is used to get a person to disclose truth without control over what is revealed. Obviously, this would not be a positive procedure with customers! However, if you change the concept to “truth syrup,” you get a more wholesome application. Customers who might otherwise be bashful about telling the real reason they departed might be incented to be more forthright. One organization held a fancy reception followed by a nonjudgmental “Be Frank” discussion with attendees, all customers who had left the organization.

Motive
Motive assessment involves direct communication with the departed customer to learn the motives for leaving. In its simplest form, it is a learning orientation rather than a sales or marketing orientation. While customer forensics insights can help shape a customer win-back strategy, their practices must never be mixed. Customer forensics takes an attitude of curiosity, discovery, and openness to divergent learning. It is a willingness to be drawn into the world of the former customer. Marketing is more about an attraction—drawing the customer to the organization.

Assessment questions focus on learning the reasons that caused customers to begin to have reservations about their relationship with your organization. They are also crafted to learn the defining incident that represented the tipping point and exit. For example, a survey question might ask: “What were the top three causes for your decision to no longer be our customer?” This question might be followed by: “Select one of the three reasons and indicate the features or actions that left you disappointed or angry.”

True motive can also come through by asking a question like: “What incident could you identify as being the final straw in your decision to leave?” Another question that can yield great insight is: “If our organization asked you to be a consultant to help us learn steps we can take to keep customers like you from leaving us, what one piece of advice would you give?”

Customer learning is a never-ending effort. Customer expectations are not only continually changing, but they are also constantly increasing. A crucial part of customer learning is the intelligence gained from those customers who leave. As the old Polish adage goes: “A guest sees more in an hour than a host sees in a year.” Insider blindness can be significantly reversed by viewing the organization through the lens of former customers.

“A complaining customer is my best friend.” —Stew Leonard

© Chip R. Bell and Performance Research Associates. All rights reserved.
Adapted from Managing Knock Your Socks Off Service (Third Edition), by Chip R. Bell and Ron Zemke. Used with permission of publisher, AMACOM, a division of American Management Association.

Get valuable tips about how to hold on to your customers in the AMA seminar Customer Service Excellence: How to Win and Keep Customers.

About the Author(s)