Have you ever made a decision that you wish you could take back? One wrong decision can destroy the trust of a loyal customer. There are always going to be hard decisions to make and without effective communication you will easily ruin a current or future relationship. Communication is the key to any successful relationship (business or personal).
One company that had to figure this out the hard way is Chargify. They decided to make the change from offering a web-based free service to a paid service. David Hauser, co-founder, describes their experience in his post, How to Break the Trust of Your Customers in Just One Day. He tells us how, “…[Chargify] discovered that those businesses that we thought would initially pay nothing and then grow into paying customers just never ever did…” Simply, Chargify had to increase their revenues because only 0.9% of their customers were paying customers; the other 99.1% were using the free account and rarely upgrading to the paid account.
Customers had become dependent on Chargify’s free service. They were mostly upset when Chargify sent a single e-mail with the details of the changes, when they were going to happen and that free accounts had 45 days to change to a paid or find another alternative. Businesses would have to begin budgeting to pay for Chargify’s service, which was once free.
When changing up your services there are some important things you should look think about and disclose. Here are five questions I believe you should address when planning to make a change that affects your customers:
- When will the changes happen? Be as transparent as possible. Let your customers know that you are making changes. Don’t just let them know last minute either; timing can have a huge affect on how your customer reacts. Let them know as early and often as possible what is going on.
- Why you are making the changes? It is very easy to get upset at changes that you don’t understand. Let your customers know exactly why you are making the changes. You can include research, studies, and/or your company’s belief. The more your customers understand the more likely they will be to accept the change.
- How is this going to benefit the customer? Explain how the changes you’re making are going to help your customers. Many companies make changes that help themselves but sadly do not help the customer. In reality you should be making changes if it benefits your customers first. The best decisions help out you and the customer.
- What are you changing? Be open about what is changing. It doesn’t matter if you are improving, adding something new, or taking away a service. Make sure that your customer knows everything that will be happening with the update. This helps set expectations and helps provide feedback for the next question.
- Any Concerns? Even if you do all the above, that doesn’t mean everyone is going to be happy. Make sure customers know how they can contact you if they have concerns. This will allow you to get a soft response to the changes. If you get an overwhelming amount of negative responses, you might want to rethink some of the changes. If you wait until you make the changes to get responses it could be too late.
In the end Chargify learned had they answered these questions upfront, they would’ve avoided having to do damage control to deal with a lot of unhappy customers. Even with all the negative feedback they did however complete their goal to bring up revenue by increasing paid accounts. They ended up with increasing their paid accounts by 900%.
Communication is important in any relationship. It creates false perceptions if not done properly. I can see why some customers might look at Chargify as a greedy company who just wanted more money, but I can also see Chargify trying to increase revenue to better provide service to their users. Where Chargify went wrong was not properly communicating to their customers the when, why, how, and what. Avoid making that same mistake by answering the four questions above.
Is there something in your personal or business life you could’ve avoided or better handled with effective communication?
Mike Alder is a University of Utah business marketing student and marketing specialist at Lendio. Passionate about entrepreneurship, small businesses, and inbound marketing. Mike shows his passion by sharing stories of successful entrepreneurs and companies with small business owners on the Lendio blog. He makes these big success stories easy-to-apply in simple and easy to read language for the everyday small business owner and entrepreneur.