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Annette Franz

Quality Insider

The Customer Experience Proof Is in the (Diet) Pudding

Customer retention comes before customer acquisition

Published: Monday, March 16, 2015 - 13:12

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 articles about how companies have this misguided focus on anything but the customer experience.

In 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?”

In 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?”

And finally, in the last one, I pondered, “Is your customer acquisition (and retention) strategy based on discount pricing? How’s that working for you?”

So imagine my (lack of) surprise when I read the following in a recent issue of the Business Insider Closing Bell e-newsletter (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 percent loss in active subscribers last quarter.”

I clicked the link to read more. I wanted to find out if that is 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 percent of subscribers that he lost? What is he doing to keep his customers? Nothing—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 or hoped.

What is promising is the fact that Chambers mentioned the members, member feedback, and the member experience in the earnings call. I’m not convinced, however, that he’s doing anything more than providing lip service at this point. I don’t think there’s a concerted effort there, and I’m a bit skeptical when someone (the company’s 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.”

So why am I skeptical? Well, Chambers 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 percent of the 3 percent recommend it? That’s a lot different from 90 percent of all of your customers. I can’t imagine someone who hadn’t used the service 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 those customer wish to track 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 CFO Nicholas Hotchkin said at an investor conference on Nov. 11, 2014. “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. 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, and focus on the customer experience, and then 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

First published March 3, 2015, on the CX Journey blog.


About The Author

Annette Franz’s picture

Annette Franz

Annette Franz, CCXP is founder and CEO of CX Journey Inc. She’s got 25 years of experience in both helping companies understand their employees and customers and identifying what drives retention, satisfaction, engagement, and the overall experience – so that, together, we can design a better experience for all constituents. She's an author (she wrote the book on customer understanding!), a speaker, and a customer experience thought leader and influencer. She serves as Vice Chairwoman on the Board of Directors of the Customer Experience Professionals Association (CXPA), is an official member of the Forbes Coaches Council, and is an Advisory Board member for CX@Rutgers.