Customer retention tips. Yeah, yeah, I'm tired of hearing them too. But If you run a business or you are a freelancer, this is a must-read. The following months will be more about retention than acquisition. Hopefully, this nit-bit of information will offer you a new perspective to tackle this taxing task. So let's jump straight into it.
Behavioral economics is a fascinating science. It studies what drives behavior and how we can incentivize people to take certain actions. It feeds us all a humble pie showing us that we aren't as rational as we would like to think.
It turns out that even in complex situations, our subconscious mind often calls the shots. In fact, 90 - 95% of our purchase decisions are subconscious.
Yet many businesses operate as if this was not the case. And they are losing money because of that. They are focused on pushing the benefits of their products or services forward.
Behavioral economics is the perfect tool for this because it addresses substantial factors of how we make decisions and offers simple and elegant solutions to universal problems.
It encourages us to look well past the obvious, well-rehearsed but not so effective ways to address retention and encourages us to try the counterintuitive. And hey presto, it works.
So here are some tips you can try when you face a massive exodus of your customers.
What to say to make your customers rethink their escapist tendencies?
This is a thorough guide on what to say when a customer hits you with a request to cancel your service. (these are some of the strategies we used for our clients in the Spring of 2020.)
If you run a subscription service you may have noticed an increase in the number of subscribers signing out. A large portion of them might do it for no good reason at all.
Especially in times of uncertainty, we're even more prone to making emotionally charged, impulsive, and irrational decisions.
The Ogilvy behavioral team was asked to increase the success rate of call center agents at Adobe who were approached by customers calling to cancel the membership.
The team tested several approaches to improve retention. The most effective was changing the initial question asked by the call center agent. Instead of asking: "Why do you want to cancel the product?" the agents asked," Why did you initially decide to try Adobe?"
The success rate increased by 8.8 %.
The reason lies in the psychological principle of commitment and consistency. When you ask a customer why they're canceling your service, their reply indirectly affirms the decision. When you ask why the customer originally paid for the service, you direct the focus and conversation to the benefits of your service.
Introduce Alternative of choice, to the mix.
Maybe you've already used this technique when setting up a date or a future commitment when instead of asking: "Could we meet on Tuesday and discuss this further?", you gave a person you really wanted to see but who might be a bit more reluctant, two options which both lead toward the positive outcome:
"Looking at my calendar, I'll be in your area on Tuesday and Thursday. Which day would be best for you, Tuesday or Thursday?"
And when they paused to respond they were led towards this or that response, not a yes or a no type of answer. So kudos to you, that's a good strategy.
The same goes for your customers at the moment they're considering leaving your subscription or service.
If you give them two alternatives, the decision will no longer be whether or not to accept, but which alternative would be better - not only do you redirect their attention from a yes or no decision towards either an option 1 or an option 2 decision, you also give them an illusion of control. That increases your chances of making them say yes to one of your suggestions.
It's also a bit harder to refuse if you see someone's trying to go above and beyond trying to accommodate your needs
Before offering anything, lean in to listen. Then you let them know that you understand and might even be on the same boat.
Show them Unity, in other words, that you understand what they're going through and that their reason for canceling your service might be valid or even that you're going through a similar situation.
"I see, I'll be honest with you, we've been experiencing the same issues lately."
When the customer feels safe, they're more willing to open up and talk to you in greater detail. This is necessary if you want to change their decision. Plus listening carefully will enable you to come up with a better-suited solution for their situation. So it's a win-win.
On the contrary, if they feel threatened or pressured to take the offer right off the bat, it will turn on their defense mechanism and they won't be open for discussion.
Then double down on Social Proof showing your customer that other people in the same circumstances (or with similar reasons to cancel the service) have decided to remain because of XZY.
Adding social proof after listening is paramount because people tend to follow what others around them do. They are especially affected by those who are similar to them. And it turns out this tendency grows with the uncertainty they face.
So to cash in on that power, show the person you're trying to convince that other customers in the similar circumstance and faced the same decision, decided not to cancel but to continue.
This will be more trustworthy and convincing proof than to list out a series of logical arguments, which we are so often inclined to
If the only reason to cancel is to save costs, you can try to get the customer to defend the product by asking:
"That makes sense. Just curious, is there anything that wasn't OK with the service lately?
You want the customer to pause and think:" like the service and the cost of it isn't devastating. Do I really need to cancel?"
At this moment, a possible addition comes in handy: "What could I do to find a solution which works for you even in this situation?"
Show them you're making an effort to come up with alternative solutions.
"Let me check if we can figure something out..." Then wait a minute or two before the next response. The bottom line is to make an effort to make the offer feel personal.
And it will because, you've listened, shown them that it's not the product itself they wanna cancel. And you've gone about and beyond to come up with alternatives to adjust to their current needs.
At this point, the ball is deeply in their court.
Itching to know more? To keep the momentum going, download our free ebooks on Fairness. It's full of hacks on how to communicate your price in a way that customers perceive as fair.