The Case for Customer Lifetime Value…


Just when things were going great…

Not long ago, I praised a certain  Big Satellite Company  for the outstanding customer experience I had when moving across town (despite some other shortcomings – full article here).  This past month, with a single billing related event, Big Satellite Company almost destroyed our relationship forever.  Let me tell you a story.

Thirteen years ago

As cable TV was riding high and the internet was still a baby, I placed a bet on who I wanted to deliver television content to my home.  Primarily due to the exclusive availability of a certain sports programming package, my bet was placed on (what is now) Big Satellite Company.  For over a decade, through four moves in two states, my chosen television delivery partner provided a fantastic experience in all facets of our relationship, to include my most recent move (full article here).

This year, as a result of some uncertainty with the professional sports league featured in the programming package, Big Satellite Company made a wise move (in my opinion) by not automatically renewing customer subscriptions for this package until the leagues disputes were settled.  However, once resolved, subscribers like myself were forced to contact Big Satellite Company and re-subscribe to the package.  This was not the end of the world assuming I was able to simply renew the subscription, at the previously established renewal rate.

Herein lies the rub

As I prepared to renew the programming package, the pricing I was offered via the website was approximately $85.00 more than what I had paid for previous seasons.  I contacted the customer service center via telephone and was offered a statement credit of $5.00 per month for the next 12 months.  That still left us $25.00 apart from what I felt was fair.  As I was on the telephone, I looked into my account billing history, and proceeded to inform the service agent that as a 13-year subscriber, my customer lifetime value to date exceeded $23,000 and I asked her if she was prepared to let me walk over $25.00?  She responded with a counter offer of additional free services and content, and ultimately got us to where we were only $5.00 apart.  I asked again, are you ready to let me walk over $5.00?  She was.  At this point, I decided to perform an experiment by NOT asking for a supervisor and simply saying “no thank you”.

Everyone who heard this story said “you should have asked for a supervisor, you would have gotten what you wanted” – to this I say, the companies to which we send our hard-earned money in exchange for services, need to have more respect for their customers. The protocol for solving a customer problem should never end with the customer leaving.  I argue that the customer service agent should have proactively escalated me to a supervisor with more authority as opposed to letting me walk.  Most consumer technology services companies (i.e. phone, TV, internet) seem to be in a customer acquisition arms race, as opposed to focusing on serving the customers they already have.

So how does the story end?

Last week, approximately 3 weeks after the incident described above, I was contacted by a “manager” from Big Satellite Company who proceeded to offer me the desired programming package renewal, discounted beyond what I paid in the previous years, plus the additional services and content from the previous negotiation.  Apparently he is one guy who knows it is cheaper to keep a customer than acquire a new one – it’s a shame it took 3 weeks to escalate through the CRM system.  This could have easily been avoided if Big Satellite Company had a robust customer segmentation system and armed the customer service agents with a well thought out “next best offer” strategy for retention of key accounts – maybe even immediately pushing my call to a more senior or experienced agent given my tenure and status.

Have you had a similar experience?  Or is your company losing customers faster than you can acquire them?

Tell me about it.

Did you know that I have now posted more than 30 articles on this blog?  If you read and enjoy the content, please don’t be afraid to Comment, Share, Like, Tweet, +1, or whatever you do.  I would greatly appreciate the feedback.

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Anyone out there suffer from Marketing Withdrawal?


It has been said that on a daily basis, American exposure rates to advertising and marketing messages in ranges from as low (low?) of 500 to several thousand and beyond depending on the source.  Most Americans have tuned out buzz and as a result most marketing messages are wasted.  However, in my case, as Marketer I pride myself on trying to be exposed to even more than the average bear so I can continue to build my body of knowledge and understanding of what is working and what is not.  I quickly, but carefully, look at each email, direct mail piece and banner ad presented to me.  I’m the kind of nerd that  likes sorting and taking inventory of my direct mail mail at home; this enables me to create an index or barometer of sorts in my mind about the state of marketing and more specifically consumer targeting and relevance in my small part of the world and for my “peeps” who share my demographic category – we typically receive multiple pieces for each category below in either CRM or prospecting efforts on a weekly basis:

  • financial services
  • automotive dealers and manufacturers
  • insurance companies
  • credit card offers
  • cable and satellite TV
  • real estate
  • travel
  • education and seminars
  • pool cleaners, landscapers
  • local restaurants and shops
  • home improvement mag-a-logs
  • mail order catalogs

You name it, we get it; the volume of mail ebbs and flows to a cadence I quickly would recognize.  I gleefully open and devour each one, thinking about the relevance, the creative and the offer presented.   Now that I have moved to a new house, our mailbox is very empty these days.   Since much of this mail is not sent First Class, it is not forwarded by the post office, and the mailer will have to wait until they process their file through the NCOA process to discover that I have moved.  The fact is, moving in to a new house costs money and advertisers are missing a key behavioral cue – when you move you need things and you are eager to spend on building the nest.  We also need to know who delivers take-out food here, where is the closest grocery, and where I will get my dry cleaning done.

You may have read on this blog the on-going saga related to my recent residential move and the customer service challenges we have faced with the various service providers for [Satellite TV] [DSL Internet] – the DSL situation was never resolved and I have since cancelled the service.  In trying to place an order for Cable Internet service there seems to be some complications there as well – more to come.  I thought we were becoming a service economy?  If so what happened to service? 

Anyway, as a result of no direct mail and no internet access at home (for nearly a month now) I must say that I am suffering from Marketing Withdrawal.  As a Marketer, I feed on marketing and rely on it to spark new ideas and thoughts.  Has anyone else suffered this condition?

Spray and Pray is NOT a Customer Contact Strategy


My family and I recently moved  into a new house, and in the process I utilized the “moving” services offered by Big Satellite Company [name changed to protect the guilty].  I was a little perturbed when I was unable to coordinate the moving service online, but that’s another topic.  Anyway, all went well and the move went great – they even threw in some free premium channels for free as a “value add” to using the service.  Great way to protect against attrition to competing companies or, god-forbid, cable.

Here’s the kicker – a day later I received an email from Big Satellite Company asking me “Did you know that you can manage your account online?”.  My first inclination was to reply and ask them “Do you know that I had been doing so for my 10+ years as a customer?  Not to mention that the account service I most recently used was not accessible online?”.

Obviously there is a business rule trigger that sent me the email, likely because I called in to the service center to request the moving service, but the automation rules failed to recognize the fact that:

  1. I am frequent user of their online system for account changes.
  2. The service most recently used in not available online.

To borrow from the ESPN crew, C’mon MAN!

I know this is probably rocket-science to some, but companies can do better!

Spray and Pray is not a Customer Contact Strategy – by this I mean that automating communications with your customers should not be done simply for the sake of doing it, and furthermore, not all customers are created equal.   A sound Customer Contact Strategy should span each and every potential interaction a company could have with a customer regardless of contact or delivery channel.  And, these contacts should be well thought out, situational, and personalized to maximize relevance to the customer.  This results in improving sentiment towards your brand with the big payoff being not only the retention of customers, but perhaps more important, the recommendation of your product or service to the customer’s extended “network” of friends, family, and colleagues via social networks .  This is often exacerbated by the  interactions being handled through different software platforms and the wide spread practice of outsourcing portions of CRM processes to different companies (or handled internally by different teams)  as well as the proliferation of subcontracted delivery channels – but trust me when I say that it can be done!

Ask me how…

If it’s worth doing, it’s worth doing RIGHT…


We’ve all heard variations of this sentiment – many credit it’s creation to Hunter S. Thompson in his epic adventure “Fear & Loathing in Las Vegas” (yes I called it epic).  Having spent nearly 7 years in the Army, I vehemently subscribe to this train of thought and often find myself discouraged when business owners and marketers take short cuts to save a buck now, when in reality they could be costing themselves more in the long run. 
Here are 2 recent “personalization” experiences that illustrate the point (I have changed the names to protect the guilty).  In both cases, these prestigious, national brands are applying technology to reach consumers with personalized communications, but the effort is lackluster at best due to some shortcomings on the data side:
 
I am a subscriber to the print edition of Super Cool Business Magazine, although I have not activated or created an online profile with the companion website.  My subscription to the magazine was offered to me via direct mail, and I responded (and paid) via the web, and this is not the only title from the publisher to which I subscribe.  So – let’s recap.  The publisher has my name and postal address, as well as information about other magazine titles they offer to which I also subscribe.  They have my personal email address derived from the online subscription activation/payment as well as online profiles associated with other titles
 
Herein lies the rub – over the last month or 2, my wife has been receiving emails from Super Cool Business Magazine and “trusted partners” personalized to me (“Dear Mark”).  Obviously they have performed some sort of email address append to their file and/or performed some data massaging to “household” my record – the result is that my wife’s personal email address is associated with my name and postal information.  I say to her – “No problem – just forward me the email, and I will go online and update my communication preferences to include my email address instead of yours”.  Easier said than done.  When I clicked the link in the email to make changes to my profile, the only option was to completely unsubscribe.  So I did – too bad for this publisher – now their database is short one email address and who knows how many others experienced the same thing?  All of this results from having the right intentions (combination of marketing + technology) but with poor execution. 
 
My second example comes to us from a respected German automaker; my wife and I both drive cars from this brand and we loyaly use the local dealership for our maintenance and repair needs.  Our vehicles are both model year 2004 sedans, but different models.  The dealership’s use of email as a CRM extension and marketing tool has been sporadic at best.  The various emails we receive related to marketing promotions, coupons, and service appt reminders all seem to be coming from different systems – to the point that the email templates (colors, logos, fonts) seem to have no cohesive design elements connecting them. 
 
Herein lies the rub – the dealership cannot seem to get my email address associated with me and my vehicle, and my wife’s email address associated with her and her vehicle.  They will personalize a marketing message with “Dear Mark”   and reference my Model/VIN# in an email to my wife and vice-versa.  Sometimes, the emails will have her name and my VIN# to my email address.  There does not seem to be any rhyme or reason.  To add insult to injury, there is no way to go online and self-police the data in a communication preference center – again, the only option is to unsubcribe, and the unsubscribe page for each email is different.  We have even made calls to the dealership providing updated information to no avail – it appears that the dealer marketing system, the dealer service scheduling system, and the corporate marketing database are not synchronized. 
 
So what’s the lesson?  Don’t take shortcuts and make sure your data is in order before personalizing communications or at least offer a 2-way dialogue that enables consumers to contribute to the conversation.  Here is a great article on personalizing email communications from MediaPost:
 
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