Tuesday, March 3, 2015

The #CX Proof is In the (Diet) Pudding

Image courtesy of Pixabay
I have a few questions for you about your company: 

Are you focusing on acquisition or retention? 

Are you rebranding your image or are you reinventing the customer experience? 

What are your priorities?

I recently wrote some posts about how companies have this misguided focus on anything but the customer experience.

With one, I posed the question: Are you delivering a great customer experience - or are you just relying on advertising to create awareness and sell your products?

Do Your Customers Talk About Your Products or Your Ads?

With another, I asked: Have you ever wondered why customers say they buy your products based on price - and then, in the end, they also stop buying because of price?

Why Customers Really Leave

And finally, the last one pondered this: Is your customer acquisition (and retention) strategy based on discount pricing? How's that working for you?

Discounts Sabotage

So imagine my (lack of) surprise when I read this in last Friday's Business Insider Closing Bell email (bolding is mine):

Weight Watchers' shares tumbled as much as 34% Friday after the company reported fourth quarter adjusted earnings per share of 7 cents on revenues of $327.8 million, down 10.4% year-over-year. Expectations were for revenues of $389 million, while EPS was in line with forecasts. During the earnings call Thursday, CEO Jim Chambers said recently launched ads and customer promos couldn't avert the 15% loss in active subscribers last quarter.

I clicked the link to read more. I wanted to find out if that was really their strategy to save the business. Sure enough, it is. They've been rebranding their image and trying to overcome some obstacles of late. The article goes on to say that, during his earnings call, Jim Chambers stated that a new marketing campaign and promotions to build membership were the company's main strategies. That's not unusual (unfortunately). The problem is that he's talking acquisition here, not retention. What about the 15% of subscribers that he lost. What's he doing to keep his customers? Instead, he's just trying to plug holes.

The article then cites some Duke University research that uncovered that the average user was getting less value (and weight loss) for his or her money at Weight Watchers than at competitors like Jenny Craig. Ah, the "V" word. Value. So they're paying a lot of money and not losing any weight, or not as much as promised/hoped.

Promising is the fact that Jim did mention the member, member feedback, and the member experience in the earnings call. I'm just not convinced that he's doing anything more than lip service at this point. I don't think there's a concerted effort there. And I'm a bit skeptical when someone (their CFO) says: We are getting excellent feedback on the product, as Jim mentioned 90% really like it. So that’s why we feel we have got a good platform on which to build. Why skeptical? Well, Jim actually said (bolding mine again):

Importantly personal coaching is receiving extremely positive feedback from our members. Over 90% would recommend it to a friend, demonstrating the power of personal support and accountability on member experience and success. While the take-up rate for personal coaching has been low so far, with about 3% of recruits choosing this option over the course of the year, we’ll actively explore ways to bring this rich experience to more people.

Did 90% of the 3% recommend it? That's a lot different from 90% of all of your subscribers. I can't imagine someone who hadn't used it would recommend it. Ah, semantics...and pedantics.

A Bloomberg article states that Weight Watchers is just not keeping up with customers' needs and the way they are tracking activity, weight loss, and more. “Weight Watchers really has to change what they’re offering -- they have to get modern,” said Meredith Adler, an analyst at Barclays. “People are just more digital now than they ever were.”

Frankly, we were slow to innovate and add value to our products,” Weight Watchers Chief Financial Officer Nicholas Hotchkin said at an investor conference on Nov. 11. “We were particularly susceptible to the proliferation of free apps and activity monitors.”

I think it's time for them to listen to customers and understand: who they are, what their needs are, how they want to lose weight and track their health and fitness activities, and more. They talk about member feedback, but if it's the wrong kind of feedback, if it's the wrong kind of - or approach to - listening, it's meaningless. And if you do nothing with the feedback you get, if it doesn't prompt deeper investigation, innovation, and change, then it's pointless. Focus on retention over acquisition; focus on the customer experience; you won't have to work so hard to acquire new customers - your existing customers will do that for you.

Most of us understand that innovation is enormously important. It's the only insurance against irrelevance. It's the only guarantee of long-term customer loyalty. It's the only strategy for out-performing a dismal economy. -Gary Hamel


  1. I used to work for a credit card provider in the UK. They had a customer that held steady at about 4 million. Customer attrition was about 25% a year yet all the focus was on direct marketing to acquire new customers.

    The Population of the UK is about 60 million. If we say that roughly 40 million of them were credit card users then you don't have to be too good at the maths to work out that they were spending a small fortune on junk mail.

    I couldn't agree with you more Annette. Focus on retention over acquisition...

    1. When you put numbers to it and see/hear the magnitude, it really is disturbing. I think every company should go through that exercise.

  2. Hi Annette,
    When you pointed out that 'Jim Chambers stated that a new marketing campaign and promotions to build membership were the company's main strategies'. This was on an earnings call, right?

    This makes me wonder if these words have been chosen carefully for the audience: stock analysts - and to fit their worldview and that of the 'market'. I am willing to be proven wrong but I believe that most of them still believe that acquisition is still the best route to growth.

    It'd be interesting to get a stock analysts view on CX, retention etc and how the 'market' would view this.


    1. Yes, it was an earnings call. Your point is well taken... the message was likely crafted for the audience. And yet, details of these earnings calls, as we can see from that article, live on well beyond (and outside of) that call. I'd love to get that view, too.