Want to Keep Customers? Set Them Free

Imagine a retail store in which the staff blocked your way when you tried to exit without making a purchase. Imagine a TV network that discouraged switching channels by showing the end of one program and the beginning of the next simultaneously. Imagine a doctor's office that refused to transfer your medical records when you decided to change providers.

No one would try any of these strategies for one simple reason: They would drive away customers. Negative word-of-mouth would spread so quickly that it wouldn't be long before any of these businesses had no customers at all. But too many online products seem to be designed with the opposite idea in mind: that keeping customers from walking away is a necessary strategy for success.

In the dot-com boom of the late '90s, much was made of "stickiness" -- site after site was designed to make it ever harder to leave their bounded confines. These businesses tried to keep users clicking around in circles forever, generating page view after (hopefully) profitable page view. This turned out to be a losing strategy, as users gravitated toward sites that didn't introduce these barriers to exiting.


  Meanwhile, as the sites designed for stickiness were, one by one, going under, the grassroots community of blogs was uncovering a seemingly paradoxical counter-phenomenon: The more they sent users away, via links to other content, the more those users came back to them. These days, the most successful sites are those that understand that the Web isn't merely a delivery channel for their product, but a larger ecosystem in which they play a part.

It may be a profound understatement, but it's true: There's a lot of information on the Web. Some of that information is relevant to the needs of your users. By pointing your users to those resources -- even if they're provided by your competitors -- you project a sense of confidence in your own offering, and confidence that a customer will choose to do business with you when they're fully informed. Any business model that relies on customers never discovering your competitors is built on a shaky foundation indeed.

The importance of lowering the barriers to exit becomes even greater if your product involves user-generated content. Some sites allow users to put all kinds of data into their systems, but getting it out is either a tedious copy-and-paste chore or simply impossible.


  Other products do a little better, allowing users to export a copy of the data they've put in. But there's still the issue of removing data from the system altogether -- very few products are designed to allow users to delete information they've posted, and fewer still allow users to delete their accounts.

This principle applies to other kinds of customer data as well. Any company that tracks user behavior knows the cost of storing and mining that data. But the value of storing and mining data on customers who will never come back is minimal at best. If users want to remove themselves completely from your systems, it's not a sign that you aren't doing enough to lock them in -- it's a sign that you're failing to meet their needs in some fundamental way.

On paper, a dollar from a customer who was coerced into sticking around equals a dollar from a genuinely satisfied customer, but which customer is likely to generate positive word-of-mouth? Even dissatisfied customers, when given the opportunity to smoothly sever their relationship with you, may refrain from speaking ill of you after they're gone. A design strategy that keeps unhappy customers around rather than respecting their desire to move on doesn't deliver the long-term value that a strategy focused on nurturing happy customers does.


  Building customer loyalty comes down to trust. The success of any online business depends on the trust of its customers, but trust is a two-way street. To develop trust, you have to demonstrate trust. Online or off, people are more likely to enter into relationships they know they can get out of easily.

So let the user walk away. In fact, show them where the exits are. Show them that you trust them to come back to you should they decide to leave -- and they may never leave at all.

    Before it's here, it's on the Bloomberg Terminal.