Neglected, then out the door

I was a DIRECTV subscriber for about six years, until I wasn’t.  Meaning, over time the ~$65/month (once it was all said and done) started to sting more and more, and while I was generally happy with the service, the volume of alluring communication I got from everyone else pushing me to switch was in marked contrast to the bill and nothing else I’d get from DIRECTV month after month.

In the TV and telecom businesses, customer “churn” is one of the most important metrics to manage.  This is because customer acquisition and setup costs are high: the costs of giving someone a subsidized phone, or of sending a technician to physically install a costly satellite dish in each new customer’s home, are layered on top of all the regular sales and marketing costs everyone takes on.  That makes it especially important to keep customers from leaving once you’ve gotten them on board.

The challenge for DIRECTV and its ilk is that they have no information at all about how happy I am.  As long as I’m paying, I’m paying – until the day I leave, ending what could have been a 10 or 20 year relationship (which, at $65/month is somewhere between $7,800 and $15,600 in lifetime revenues).

The irony in the TV business is that the marginal cost of surprising or delighting a current customer is so low compared to the value that walks out the door when she leaves.  A free month of HBO for every year I’ve been a customer, or getting NFL Sunday Ticket for free one season if you’ve been a customer for five years (just hypothetically, of course!), could pay off in spades.

Because metrics (customer acquisition costs, churn, etc.) are so much harder to come by in nonprofit fundraising, and because each “customer” is so different in terms of how much they pay/give (DIRECTV’s customers might pay $30 or $200 a month, but that’s about as big as the range gets; a donor could give $500 or $5,000,000), we rarely do the math on customer acquisition costs or churn.  And so we hunt for the next donors at the expense of tending to the donors we already have.  It’s so easy to forget to delight those who are already with us – to give our true believers tools to evangelize on our behalf, and to make those who are happy feel proud, delighted, and occasionally surprised at the little gifts we give them to say “thank you.”  (And by “gifts” I don’t mean trinkets, though those are nice too.  I mean helping them see what they have helped accomplish, and showing them true and honest gratitude.)

We all have lurkers in our midst who are about to leave but we don’t know it.  Of course some folks will leave no matter what, and some will be too expensive to retain.  But let’s at least make that a conscious choice.

It’s a shame and a loss when someone who has been supportive, someone who has been a loyal and important customer, walks out of the door for no better reason than low-level neglect.

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3 Responses to Neglected, then out the door

  1. Mark says:

    Great points, Sasha! I sometimes think problem (or at least part of the problem) is that as fund raisers we are often stuck dealing with the exigencies of current needs and goals. Frankly, in most immediate terms that is what keeps up employed, yet I think a lot of what really drives successful programs is connected to a long view strategy – one that might have a 5 or 10 year cycle. How do we implement a long range plan amid the din of the urgent? That’s the question I’ve been trying to sort out.

  2. While all true, for this particular example you’re forgetting a major point: companies like DIRECTV are part of a former monopoly. It used to be that TV companies (and Internet companies today) didn’t *have* to care about surprise or delight.

    Now they’re facing competition in the form of streaming services, but it’s the first major threat to their business model in almost a hundred years.

    So yes, they need to start adapting to where they’re at. The other problem is that they’re just so big now that change like this (mentality or action) doesn’t come easy, and it certainly won’t come overnight.

  3. Sasha says:

    If they don’t move quickly, they will find themselves turning into the record companies.

    For $1.99 on Amazon Prime I feel like I can get most of what I want to watch; I’m sure if I added Hulu I’d get 95% of the way there. It’s just laziness that’s keeping me from dropping to $10/month for consuming video content (aka “watching TV”) and pretty soon that logic will become overwhelming.

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