The Blackberry Effect in a Recurring Revenue Economy

Inspired by my customer experience at Starbucks, in a previous blog I described the ‘Starbucks Effect’, showcasing how the coffee chain’s customer-centric focus fostered customer loyalty, customer retention and ultimately cross-sell and up-sell.

Recently, I had a customer experience that produced the antithesis of the Starbucks Effect. Let’s call it the ‘Blackberry Effect.’ Although the experience I’m about to describe has nothing to do with Blackberry, their fall from grace foreshadows the demise of other companies that lose sight of evolving customer needs and market shifts.

Let’s begin…

My wife had a two-year lease on her car which was about to come to an end. We were faced with an important decision: stick with the same dealership (to buy, re-lease or do a new lease) or go somewhere else.

Being in the business of sales and customer loyalty myself, I was shocked by the lack of outreach from the dealer in the weeks leading up to our lease expiration – or at all for that matter. Not once did our salesperson contact us to ask how we liked the car and our intentions at lease-end.  The only person I heard from was from the manufacturer’s finance team, only to communicate the process for returning a car.  Not once did they tell me about their new line-up or offer to have a salesperson contact me.

Feeling abandoned, we specifically avoided our salesperson when we went to the dealership to discuss our options, but were redirected to him anyway. As I sat in his office, my frustration peaked.  My comment to him, “I run a sales org and certainly would have expected my people to follow up,” was met with a shrug.   Worst of all, he didn’t even have our correct information – despite the fact that both the leased car and my car have been serviced there multiple times over the last 4 years.  With such sub-par service and all the other choices available to us, my wife and I ultimately decided not to lease from this dealership again.

This disappointing experience got me thinking about the power of customer experience – and its impact on renewals.

Appreciate what you have before it becomes what you had
In an increasingly competitive recurring revenue economy, more than ever before, customers have greater options without having to make long-term commitments. But even with more choices, what is the #1 reason customers don’t renew? Their salesperson never followed up; never inquired about the experience; never talked about the evolution of the product. Take my experience at the dealership – when we were looking to enter into a new lease, my wife and I received top-notch customer service. But once they won us as a new customer, they dropped out of sight.

In the spirit of the New Year, here are three resolutions to make when it comes to keeping the customers you already have:

1. Change your sales culture
Sales teams tend to focus their attention on new sales and neglect the customers they’ve already won. To avoid this problem, consider splitting sales teams in two; one side concentrating on new customer acquisition and the other on customer retention and customer success.

2. Make sure data is squeaky clean
Before sales teams can even consider taking a dedicated approach to renewals, they need to ensure that customer data is accurate and up-to-date. Was my salesperson trying to contact me about my expiring lease but relying on dirty data? “So sorry, I was trying to call you but I had the wrong number” just doesn’t cut it.

Dirty data is a problem that companies struggle with daily, and is a root cause for an estimated $30 billion in recurring revenue that slips through the cracks every year.  When the data sits in multiple systems, you need to work continuously to keep it accurate. Don’t give up.

3. Follow-up, follow-up, follow-up
Once you’ve allocated a team to specifically handle renewals and data is ‘renewal-ready‘, it’s time to ramp up customer engagement. This is more than contacting a customer right before contract or subscription expiration, but early and ongoing outreach throughout the cycle. Monitor customer satisfaction and address changing customer needs, which can lead to cross-sell and up-sell opportunities – all while nurturing the customer relationship, an important factor when it comes time to renew.  Oh and by the way, my new salesperson landed a lease that was 50% higher than my prior one. I bet that sales rep wishes he didn’t ignore me now.