It happens to the best of us: Customers decide to send back your product, unsubscribe from your newsletter, or cancel after the trial. Your first thought might be: OK, this customer won’t bring me any more revenue, so let’s focus on the paying customers. But IMHO these customers are a gold mine no one really cares about. Why?
First, customers don’t quit without a reason. Understanding why customers churn provides very valuable feedback on how to position yourself in the future. You have heard this before – in fact you probably already ask for the reason using a quick questionnaire when they quit. That’s good, but you are only half way there.
Second, and even more important, these customers can become your nightmare or your evangelists, depending on how you treat them. Remember the marketing class you took where it said that people will tell 13 other people on average when they have a negative experience? Remember the horror stories you read on Facebook when one of your friends tried to cancel the phone subscription? Well, it turns out that customers will also tell 4-5 other people about it when they have a positive experience. Now, making the quitting experience suck less is probably not too hard, which helps you avoid the nightmare scenario. But turning these customers into evangelists requires a bit of creative thinking. Let me give you an example:
Let’s assume you run a online mattress business. Like everyone of your competitors, you probably have a 100 day no-questions-asked return policy. It really sucks when someone decides to send back their mattress as it is not only revenue lost but also adds additional costs for picking up the mattress. So spending 1 cent more than absolutely necessary is not something you are really interested in. But think again from the customer’s perspective: No one sends back a mattress because it is fun to do so. They probably weren’t comfortable with the mattress, maybe even had back pain, and now they have to go through the hassle of getting rid of this thing (which cannot be rolled up nicely anymore) and getting a new mattress. In order to turn these people into evangelists your job is to amaze them beyond their expectation (the expectation being that the mattress will be picked up at an agreed-upon date). That’s when they tell 4-5 of their friends this: “Yeah, the XYZ mattress was not for me but they did a fantastic job when I returned it. You should definitely try them out.” Suddenly you didn’t just avoid 1 angry customer and 13 other negatively influenced people, you added 5 positively influenced people through a genuine recommendation.
Here’s how I would do it:
1. Add a moving kit to every mattress. The moving kit would come in a nice little box with a huge plastic bag for the mattress and a nice little blank paper note inside. Your mattress probably has a 5-10 year guarantee and chances are that the person will move with the new mattress, so the plastic bag can provide protection during the move. But more importantly, if people decide to return the mattress, ask them if they would like to donate the mattress (e.g. to the local homeless shelter). If they say yes, kindly ask them to write a short donation note on the paper and wrap the mattress up with the plastic bag. That way this person will have a positive experience with your brand (the donation) even though the mattress did not turn out to be the right one for him/her. I bet they will tell their friends about this, they might even take a picture and share it in their social media streams.
2. Send out a confirmation email with alternative options. This email should include the agreed-upon pick-up date and a list of alternative mattress options. Yes, you read it right, links to your competitors. Why? They will go to your competitors anyway but this is your chance to give them one final WOW experience they will share with their friends. If they said the mattress was too soft include a list of hard mattress choices. If you want, you can even turn this into a revenue opportunity by using affiliate links. Make getting a new mattress as easy as possible and they will thank you by not only thinking positively about your brand but also telling their friends about it.
So, $1 for the moving kit and a slightly different confirmation email means 4-5 people are likely to consider buying you. And you might recoup some of the lost money through affiliate links. And most importantly: People will think your brand is awesome.
PS: The difference between 5% positive monthly churn and 5% negative monthly churn: 73% more revenues in one year.