Strategies for Defusing Customer Defections

by Edward J. Hopkins

Rather than complain, most
dissatisfied customers quietly source new suppliers.
Rather than obtain client feedback, most sellers assume
that "no news is good news"-until the bomb goes off.
Here are five ways to defuse customer defections
by actively soliciting complaints.


In a typical B-Grade Western, the climax occurs just after a tiny band of square-jawed lawmen find themselves cornered in a log cabin, which is in the process of being shot to pieces by a gang of ornery outlaws. Soon, our heroes pick off 50+ of these desperadoes and everything falls silent. "Sure is quiet out there," says Gabby, the lovable drunk (who's a dead-eye shot) crouching beneath a window. "Yeah," says Pecos Pete. "A little too quiet." Pete doffs his 10-gallon hat, props it on a stick and waves it in front of an open window. Within milliseconds, the hat is reduced to Swiss cheese and all hell breaks loose.

Clichéd as it may be, this movie vignette contains a kernel of common sense for the astute marketer or salesperson: Silence is deadly! This is especially true when it comes to so-called "regular" customers. Whether you supply advanced telecommunications, state-of-the-art computers or new-'n'-improved detergents, a quiet customer is a dangerous customer. The clients who don't complain-who are "too quiet"-are the ones who should worry you most.

Customer complaints are so important that you are shooting yourself in the foot if you don't insist on getting them. Studies show that the cost of acquiring a new customer is eight to 10 times higher than the price of retaining an existing one. Hence, it's just common sense that you learn as much as possible about your current customers-their expectations, their needs and (especially) their level of satisfaction.

Case in point: In January 1991, a Manhattan-based public relations firm was poised to double its revenues. With annual revenues of nearly $6 million and a solid core of "happy, regular clients," the agency had just landed an account with a Fortune 100 pharmaceuticals company. But by August, the agency was on the verge of extinction, and 70 percent of its employees found themselves in unemployment lines.

How did this happen? Easy. Instead of hiring additional personnel to service his new, megalithic account, the chairman demanded that his account executives give the new client "top priority," in terms of both time and ideas. The "happy regulars"-hardly a demanding bunch-quickly noticed that they were being ignored and jumped ship. It is important to note here that most of these companies defected without one word of warning. This is not an unusual story. Rather than complain, the average customer simply stews in silence as he or she sets about locating a new supplier. Rather than solicit customer feedback, the average seller takes his or her customer base for granted, assuming that "no news is good news." Nothing could be further from the truth. No news is a slow fuse!

Why don't disaffected buyers call to complain? Sometimes they do, but it's usually an extreme case, e.g., where your products or services fall so far below expectations that you end up on the phone with an attorney who's threatening to sue.

In most instances, dissatisfied customers quietly vow never to do business with you again. This code of silence occurs for a variety of reasons. Some people are embarrassed over "making a mistake" (re: trusting you). Others will assume that you're doing your best, but your competitors can do better. For example, when a regular discovers that your competitor makes a better mousetrap, he or she will probably assume that if you were capable of producing such a device, you would have said something.

Finally, given the multitude of choices offered by the U.S. marketplace, most disgruntled clients would rather "switch than fight." Customers today become intensely impatient with suppliers who don't hit home runs in their first "at-bat"; second chances are fast becoming a thing of the past.

The equation looks something like this: Dissatisfied Clients + More Choices = A Shorter Fuse. Unhappy customers will drop you more quickly, and with less warning, than ever before. Think about it. If you don't like your waiter's attitude at Le Petit Poulet, do you scream for the manager or quietly pay the check, swearing never to return? If you hated the Broadway show on which you just spent $150, do you toss rotten fruit at the actors or applaud cordially, later telling all your friends that the play stunk.
bviously, it is up to the marketer to gather pertinent data on a customer's level of satisfaction or risk losing business. As most of us know, a dissatisfied customer is a loose cannon. This customer is likely to tell four to eight of your prospects about your "poor performance." And that is the real time bomb. It's hard to determine how far the shock waves will travel beyond those initial four to eight people. One person tells two people, they each tell two people and so on. The ensuing damage to your reputation may eventually result in the loss of dozens of new clients.

There are two forms of customer-satisfaction information gathering: passive and active. Passive CSIG is generally done after the fact and is very valuable for improving the product or service for the next customer. Active CSIG is much more valuable; it occurs before the fact.

Service-industry companies are particularly adroit at passive CSIG. We have all seen customer-satisfaction surveys in hotel rooms, on restaurant tables or in department stores. How was the food? Was the service excellent, good or poor? Was the room clean?

Such information is valuable. Hopefully, it will be used to change the delivery system to ensure that the next customer is better served. The obvious flaw with passive CSIG is that while you tabulate the survey results, hundreds of exasperated people are telling friends that Zero's Discount Depot has no AAA dry-cell batteries or that the chicken at Tony's tastes like a deep-fried inner tube. That is why passive CSIG is insufficient. Especially with nonretail companies, marketers must determine what will satisfy customers well before providing the product or service.

Using active CSIG, marketers must reach out and force customers to discuss expectations before they are even ready to purchase what you supply.

CEOs have the toughest time accepting this technique. More than anyone else in the organization, they find it difficult to ask "perfectly happy" prospects and/or customers for complaints. Some people literally believe that "silence is golden," failing to realize that a dissatisfied customer usually looks and sounds identical to a satisfied one. Consequently, they tend to ignore "satisfied customers," preferring instead to obsessively focus on new business development.

Companies interested in client retention must constantly probe and prod customers into revealing what is really on their minds. There are five proven ways to obtain information about the true satisfaction level of seemingly satisfied customers. All of them require taking some risk.
Offer a guarantee. That's right: a guarantee, not a warranty. Fashion it into some form of policy or operating dogma, but make it clear and unambiguous. "We will meet your expectations each and every time without question and without exception." Pick the words that suit you, but deliver the message. You are not going to try to satisfy them-or make your best effort. You will absolutely meet their expectations. When you have written the statement, make sure that it reaches your customers, by mail or (better yet) hand delivery.

Wait a moment," you say. "How can I give a guarantee? That means my customers will expect me to meet their expectations each and every time! And if I don't meet their expectations, they'll complain constantly." Exactly. But when you encourage them to speak up, you will know how to satisfy them.

By the way, if you already perform up to expectations, why worry? Your regulars will probably yawn, scratch their heads and mutter, "So what else is new? Isn't that what they're already doing?"
Don't exceed a customer's expectations. Not until you have asked them about a proposed change that you believe constitutes an improvement or an added value. This may seem contrary to the proclamations today of many companies that advertise about exceeding customer expectations. But here's a question: How does a company really exceed customer expectations? Does a cement company deliver six yards of cement instead of five? Does a surgeon remove an appendix during a hernia operation as an "added value?" I recently began working with a client who decided to exceed a customer's expectations by delivering two truckloads of product on Friday afternoon, rather than on the selected Monday morning. A nice surprise to get an early delivery, they thought. What they forgot was that the customer was totally unprepared to receive the material early. They didn't have the space or the people to handle the delivery. What was worse: Friday afternoon was March 31 and Monday-when the delivery was due-was April 3rd. The customer immediately assumed that the supplier was playing games by booking a first-quarter sale and shifting inventory to the customer's books.
Customers have the right to expect that certain things will happen just as you've promised-nothing more, nothing less. Companies must continuously probe customers to learn about new needs and how they can fulfill these. Companies must also continuously innovate and, of critical importance, present the results of this innovation to customers. New products and services are the only genuine way to change expectations and, in a sense, exceed expectations.
Send out a questionnaire with a blind response. Ask customers to rate your performance. "Are you satisfied with the service?" "Have we ever missed a delivery date or been late for a meeting?" "How do we compare with our competition?" These are good, tough questions. The answers might surprise you. Depending on the industry, you may even gain strategic information on your competitors.
his kind of survey is best done, and most reliably, by an independent third party. Obviously, confidentiality is important. It not only reassures the customer who is responding but significantly increases the response rate. Get outside help with the survey design and data collection. Plenty of consulting firms are experienced in this area.

Test the data you receive from these surveys before you proceed. A training/consulting company with 35 to 40 trainers based in central Florida surveyed their customers nationally and heard, "We would like you to be closer to us in the North-Central and Western states." Over the next 18 months, the company proceeded to open training locations around the country. These new locations stayed empty, while the central Florida location continued to flourish.

You see, the customers really wanted access to local field reps-people who understood local issues and were within an hour's drive. The customers still wanted to go to Orlando for the training. The field training locations failed and were shut down in less than three years at significant cost to the company.
Invite customers to your company as often as possible. Set up a regular forum-two, three or four times annually-when customers can visit your operation in groups and participate in brainstorming the industry, a new product, a lobbying issue or some other matter of common interest. This takes some planning, but creating this kind of ad hoc advisory board will yield amazing information about both your company and its customers.

Keep these tips in mind when asking customers to visit: First, keep it short. Two or three hours is enough. And second, if you feed them, they will come. A working breakfast or lunch at your facility is enticement enough for many customers.
Go beyond benchmarking. The notion of benchmarking became popular during the 1980s. Stated simply, benchmarking suggests that companies and organizations within companies should seek out counterparts in other companies, sometimes competitors, and measure themselves against their performance. On the surface, this may seem to be a valid indication of how well a group is doing. The problem with benchmarking is that it causes the company to measure itself against the wrong standard. The only standard that is meaningful is the customer's standard.

Benchmarking can be useful-if it is viewed as a learning tool. But it should never become the standard by which you measure your efforts. Your situation and customers are different from your competitors'. Therefore, you must develop your own strategy to continue improving customer satisfaction.


Finally, remember that customers change. They change their minds, their expectations and their suppliers. The only way you can gauge this evolution is through continuous and active probing of your customers' minds.

About the author . . .

Edward J. Hopkins is president of Paralax Partners Inc. in Point Pleasant, New Jersey. Paralax is a consulting group involved in business development and marketing strategies, which often takes them into the world of customer satisfaction.