Understanding Why Customers Leave May Be More Important Than Understanding Why They Comeby Arjun Sen Published: September 01, 2010CMO Strategy Column, AdvertisingAge The cost of acquiring new customers can easily add up to five times that of retaining current customers. In the new world of marketing, where CMOs are more cost conscious than ever, a focus on customer retention is a necessarily logical pursuit.This isn't just my opinion; we've done the research to back it up. Our company recently completed our fourth annual study of the restaurant industry, the Leaky Bucket 2010. The study analyzes the return intent of customers to a restaurant brand. Conducted in March, the study included 2,483 respondents and analyzed more than 146 brands. Our methodology analyzes a brand's leak score. The higher a leak score, the more customers that brand is losing; lower leak scores indicate a higher level of customer retention. For the fourth year in a row, the study results overwhelmingly indicate that brands that invest in guest experience retain more of their customer base and can thereby reduce marketing expenses and increase profitability...

As I sit in a USAir flight from Charlotte to Denver, it dawned on me that the airlines are going through a transition from a hospitality industry to that of retail.Earlier it was all about hospitality.  Hospitality included a greeting at the door, assisting the elderly to their seat, getting the customer a pillow and blanket, and of course offering refreshments that included food or snacks and beverages.Somehow in the process of cost cutting, I see a classic case of death by pin-prick evolving.  First the free food disappeared to cut down expenses.  Then some financial genius measured the aggregate payload carried by an airline as a result of all the magazine weight, resulting in the higher fuel cost, and there went the extra magazines. Then went the peanuts and pretzels and the airlines started using captive hungry customers as a revenue generating opportunity by selling food. If that was not the first step to retail, I do not know what retail is!As airlines move in this format, the big question is the evolving role of flight attendants.  Why do we need them to still greet us as we exit the airplane?  Why the farcical service of walking down the aisle with water once in a three hour flight?  Why not be consistent and completely be a retail service.  In that case the role of the flight attendant becomes more of an enforcer, similar to the ticket collector on a train. We do not expect the ticket collector to get us a pillow, do we?To be consistent, put some vending machines on the plane, change the flight attendant clothing from hospitality aprons to service jumpsuits and simply offer great service, but don’t try to be in the hospitality industry.  Customers might appreciate the honesty.Then, if some airlines want to stand out and offer hospitality the old fashioned way THAT would be a true brand differentiator!...

After I boarded the flight and sat down in my seat, the flight attendant brought me a glass of cold water.  The water hit the spot.  She saw me with my Taco Bell bag and came to me and asked, “Can I have it?” My immediate reaction was, “No it is mine.”  She smiled at me and said that since I was in the first row I could not have stuff on my lap or in front of me.  She then took my salad and very carefully placed it in one of the stainless steel bins for takeoff.  I watched her closely and was not sure if I should approve of her actions. As the flight reached cruising altitude and the seat belt lights turned off, she came over and opened my table for me and put a linen table cloth on it. Then she very carefully brought my Taco Bell salad to me with another glass of water. The white linen, the silverware, and the fact that I was the only person enjoying this salad made this a memorable dinner. Thank you, Taco Bell, for making it happen. But the magic in the air was just beginning.  Mrs. Adams, the flight attendant, tied her apron tightly around her.  She took out a wicker basket and started arranging chips, nuts, and Biscoff cookies.  She arranged them in the basket with ultimate care then with a white cloth over one arm, she came to serve us snacks. I would have never looked twice at pre-packaged snacks on a flight, but her care and pride in the way she served them made me sample some nuts.  After she was finished with the basket of snacks she walked up and down the aisle making sure no glass of water, wine, or soda was empty. Her level of service and desire to make our flight a wow experience was no less than that of a renowned Nordstorm employee or a waiter in a high end restaurant. I kept thinking about what the airlines provided for her to provide wow service.  Some chips, some nuts, some cookies, a basket, some linens, and a limited beverage selection that includes coffee, tea, water, soda and two kinds of wine. Instead of complaining about the airline not giving her the opportunity to provide wow guest service, she took it upon herself to make the best out of the situation and put customers first. Wow Mrs. Adams. You were a simply amazing flight attendant. United Airlines should be proud of you and I am so glad that I got to experience your wow service....

In today’s tough economy, every store is trying to find ways to increase its guest count.  Sometimes, the smallest of gestures or actions makes a customer walk away.  What is worse is there are times we set an expectation to the customer and then disappoint the customer.  A disappointed customer of course is very unlikely to return.Think about the store hours that are posted outside any store.  In today’s world customers can access store location and store hours from the web or their smart phones before making plans to visit the store.  How much of a customer base could be saved by simply swapping out a couple numbers on the front door of the store and on the website? I don’t suggest increasing labor costs by extending store hours. All I suggest is setting the right expectations to help brands retain more customers. The ZenMango Leaky Bucket study has consistently reported that an average of 20% of customers who leave a brand and don’t come back do so because of service.  When a store advertises a closing time then regularly cuts off customer transactions 15 minutes, even an hour prior to that time it disrupts the guest experience and frustrates the customer into choosing another brand. The store is effectively pushing its customers to try its competitors by closing early.Let me put things in perspective with a series of events I recently went through at the DFW airport.MY SEARCH FOR FOOD: At the end of my three day business trip to Dallas, the anxious-to-be-home, the road warrior in me got to the airport at 5:30 PM although my flight didn’t leave until 7:26. I headed straight for the airline lounge until the announcement came that the lounge would close at 7:00 and last drink orders at the bar would be served at 6:45.  It was nearly 6:30 and I was sure they wouldn’t feed me on the plane so I headed out to search for a grilled chicken salad before my flight.  Right in front of the lounge was a Taco Bell, but that evening I was on the hunt for something slightly more gourmet. I walked past the Taco Bell and came to a Mexican restaurant with a Grilled Chicken and Mango Salad on the menu. Perfect. I found an employee near a computer and before I could finish my request she told me they were closed.  Hmm, the sign in front said they close at 7:00 PM and my phone said it was currently 6:35 PM. I tried to reason with the person but to no avail.My reaction: You baited me, you teased me, and then you turned me away. MY SEARCH FOR FOOD (CONTD.): I quickly left the restaurant so I could find food somewhere else to eat before my flight left. I found a barbeque restaurant and this time I asked the right question.  “Are you open?”  The lady behind the counter smiled and said, “Yes we are.”  I looked at the menu, spotted a chicken salad, and placed my order. As I reached back for my wallet she interrupted me and said, “Sorry, we don’t have salads now. You can only get what we have here in the display.” I looked in dismay at the display. After some conversation with the employee I discovered that the restaurant stopped making food at 6:00 PM, an hour before closing.  In the last hour they try to sell out everything they have made.My reaction:  Is there some unwritten rule I missed?  Am I doing something wrong?MY SEARCH FOR FOOD (CONTD.): In sheer frustration I walked to my gate. It was nearly 7:00 PM, there was no chance for any food in my life that day.  As I passed Taco Bell, I decided to go and give it a try. The lady behind the counter was full of energy when I hesitantly asked if I could have a chicken salad, she smiled and nodded.  I was amazed as she took me through the ingredients and made sure I only had what I wanted in the salad. Then I asked her if I could add some extra chicken. She said of course, but it would add $1.25 to the order and asked if that was alright.  I gladly paid, and was very happy to receive my Taco Bell salad as I dashed to my gate. Third time’s a charm.My reactions:  Wow that was unexpected.  I feel bad that I walked passed Taco Bell the first time! Will I get this treatment at every Taco Bell, every time?  Now that would be cool. I know exactly what I will pick up next time I am at the DFW airport.When a store says that they close at 7:00 PM, shouldn’t that be the last minute they are ready to serve their customers with a complete guest experience? Are they not telling a customer that if you can make it by 7:00 PM, we will make it worth the trip?  Or does that mean that employees will leave at 7:00 PM and need to do all the store closing before that, effectively closing the store 30 to 45 minutes early?  The same way when we send a coupon out to a customer stating that it expires on June 30th, we do not decide randomly to stop taking it a week early so we can report accurately in the half yearly statement.  So why do we do this with store hours?Closing early may be a great way to manage labor cost and reduce food waste and in a captive environment like an airport.  Hence the restaurant sales at the airport locations most probably will not be impacted by these practices, in fact the store may be more profitable as a result of this. But after this kind of “compromised guest experience” will the customer visit the brand outside the airport ever again? Was it worth losing all of a customer’s future business just to save 30 minutes of labor?  I think not.MY SEARCH FOR FOOD (CONTD.): The story does not simply end here.  Still to come is my United Airlines flight from Dallas to Denver with my Taco Bell salad. You will be pleasantly surprised to learn how in an industry marked by cutting costs, one team member decided to stand up and provide a wow customer experience....

My daughter, my niece, and I woke up at 5:30 in the morning to get to Cherry Creek Mall on June 24th because the new iPhone came out.  Of course as a dad I did not want to miss the opportunity to get the first iPhone on the first day just to make my daughter smile. We got to the mall at 6:15 and to my utter surprise, we were sitting in a line behind at least 100 people.  There were other dads and moms with kids, business professionals ready to go to office, young couples, people with colorful hair, and people from all walks of life standing or sitting in line. The Apple team was out walking around with bottled water, coffee, and breakfast from Einstein Bros Bagels. As I looked around I saw a few things in common among all of us. All of us either had an iPhone or an iPod in hand and some of us were sitting with Macs or iPads on our lap, but there was no one with a PC around. I am starting to understand that it was the coming out of the cult of iPhone followers. All of us could have waited for two weeks to get the new iPhone without any line or wait, but somehow all of us felt it was important to come out and show our support for the favorite “working toy” in our life.  Now that I get it, I am surprised that there was no one with their face painted; no banners or cheering.  I guess we, the iPhone gang, are a group of somewhat quiet introverts who were just happy to be there. The store opened a few minutes before 7a.m. and iPhone sales started at 9a.m.  Even if I couldn't have gotten my iPhone that morning, I was glad I was there, out with my daughter and my niece, out with other members of the iPhone gang. I get it. This is what brand insistence is.  We were not there for a phone, we were not there for an upgrade, we were there to celebrate a way of life around our Macs, our iPods, our iPhones, and our iPads that we all discovered in our own ways. Marketing gurus may call it a brand insistence but to me it is truly a way of life....