I Got Scammed on Airbnb and Learned Valuable Business Lessons From It
Churn-stopping features that every entrepreneur should consider for their businesses
Churn-stopping features that every entrepreneur should consider for their businesses
When I booked a Hawaii vacation rental on Airbnb several weeks ago, I would have never imagined that I would be sitting on the street in the middle of the night with all my luggage, desperately trying to find an accommodation for the night because the apartment I booked doesn’t exist, after all, I have been a loyal Airbnb customer for years and have had countless great experiences, until now.
But dragging multiple pieces of luggage through town at night, dodging drunk people on the sidewalk, and spending a huge amount of money on a last-minute overpriced hotel room was just the beginning. The real nightmare was to contact the customer support teams of Airbnb and Evolve Vacation Rental.
Nobody knew how to deal with the situation even though this is NOT the first time this kind of thing happened (I personally have read multiple stories about people encountering scam listings on Airbnb). After hours of going back and forth with both support teams, I managed to get the full refund but was offered no compensation for the extra cost incurred. Airbnb successfully convinced me to take a break from it and to log back into my Marriott Bonvoy account.
The truth is, it didn’t have to end this way. There were a lot of “second chances” hidden in the whole process that, if taken, could have kept me from churning. Being a data scientist obsessed with product analytics, I can’t help but think back to all the churn-prediction models I built over the years and the churn reduction initiatives I helped clients launch as a consultant. It really comes down to several simple features — features every business should consider in order to stop customers from churning.
When something goes wrong, it is your chance to shine
Price is not the main reason for customer churn, it is actually due to the overall poor quality of customer service — Accenture global customer satisfaction report 2008.
When we realized that we would not be able to stay at the Airbnb we booked, we first contacted Evolve vacation rental, as they were listed as the host. We reached a friendly support agent that, even though she was new on the job, tried her best to help us. After confirming that the apartment was indeed not available, she asked us to book a hotel room and assured us that in the morning a team would reach out to us that specializes in “re-homing” customers.
Of course, nobody contacted us the next day; and even worse, when we called Evolve again, the agent we talked to 1) had none of the information from our previous call available (i.e. we had to start from scratch), and 2) was adamant that Evolve would not be finding us a new place, but that it was Airbnb’s problem.
At this point, we had already wasted more than half a day of our vacation and had gotten nowhere closer to resolving our situation. I was deeply frustrated with Evolve for several reasons:
They did not value my time. Every time I talked to Evolve support, I had to start at the top of the agent’s call script and repeat the information I had already shared. It should be easy enough to create a ticket in the system and maintain notes from previous calls.
They provided inconsistent information. You have probably been there: you call a company’s support hotline multiple times and get contradictory information from the different agents. This is easy enough to prevent with either a proper knowledge base and training for support reps (in the case of standardized solutions) or documentation of prior agents’ decisions (see point 1), which ideally should be upheld.
The support feels process-driven instead of customer-centric. As a traveler, I should not be expected to understand, or care about, the nuances of Evolve’s and Airbnb’s business relationship. Even if legally Airbnb is ultimately responsible for support of all bookings that go through them, it is simply not a good look for Evolve to flat out refuse to help us out, and I am unlikely to ever book a vacation rental through Evolve again (whether through third-party sites like Airbnb or directly with them).
Have a solution for emergency situations
I was left on the streets of Honolulu after the Airbnb incident, which is hardly the worst or most dangerous place to be; but imagine someone freezes their head off next to the ocean, in a deserted parking lot with coyotes roaming around, waiting for a tow truck because the tech-enabled rental car won’t unlock and the customer service doesn’t have a good solution (happened to us recently with Zipcar).
I hope this extreme scenario made it clear why businesses need to have a way to handle those emergency situations. Either escalating to a dedicated team or partnering up with other businesses (in the Airbnb example, it would be helpful to partner up with local hotels so desperate travelers can have another place to check in if not their Airbnb).
You may think to yourself, is it really worth it for a business to pay for a hotel room in order to keep a customer? Google “customer acquisition cost” and you will see, most businesses’ customer acquisition cost (CAC) will be higher than a nightly hotel rate, especially in mature and highly competitive industries like travel.
Only a fraction of first-time users will turn into loyal repeat customers, so keeping these users happy should be a top priority. This means it would simply be cheaper for Airbnb to pay for a hotel than to replace me as a customer, and that’s not even considering the ripple effects that can come from a churned, unhappy customer that might convince their friends and coworkers to rethink using the service that disappointed them.
Do not lose the human touch
Nowadays, more and more companies try to automate customer service for the sake of saving costs. That’s understandable; I’m a data scientist, it’s my passion to automate things. But I hate automated customer service — especially if you cannot manage to get around to a real human no matter what.
Most customer service “robots” are good enough to handle common Q&As (which most businesses have a section on their website anyway, and making a machine repeating the same thing on a phone is condescending and useless), but fail to provide solutions to complicated situations (which is why people decided to call instead of trying to find solutions online).
There are other solutions to decrease the cost of customer services than using a one-size-fits-all automated solution. For example, consider implementing email support (for non-emergency situations) so requests can be handled remotely and in batches so there’s no need for real-time staffing.
What’s more frustrating than customer service machines are machine-like representatives (anyone who has ever called a government agency should know what I’m talking about). Customers like to talk to representatives because humans, unlike rule-based machines, should be capable of empathy and making decisions that are not laid out in a flowchart.
Make sure to give your representatives enough training and empower them to make decisions on their own so they don’t have to follow a phone script and run into infinite futile circles like a badly written while loop. Customer service is supposed to be the last line of defense to stop churn; don’t make it an accelerator of churn.
Have a loyalty program
The name says it all, a loyalty program can help keep your customers loyal to the business (if designed correctly).
Without a loyalty program, there’s often little distinguishing your brand from your competitors’. So you will be forced to enter a price/promotion war with your competitors in order to keep customers, a situation in which nobody wins (take Uber’s war with Lyft as an example, and the billions of dollars that were burned in the process).
Designing a good loyalty program is no easy task for sure, and there’s no one-size-fits-all solution. No doubt it’s harder to build brand loyalty in some industries than others, but just keep in mind the name of the game is to make your customers feel special. Everyone likes to feel special, especially when they are regulars. So add some small perks to encourage brand loyalty.
You will be surprised by how much a tiny perk, like an occasional room upgrade, a welcome basket, or early access to a new product launch, can win over customers’ hearts. Specialized priority support is also a great option for loyal customer tiers that ensure that they have the best possible experience, even if something goes wrong.
In my case, I have booked dozens of Airbnb’s in the past including month-long stays, but the fact that there is no loyalty program tying me to the company, and that Airbnb’s support makes no effort to keep repeat customers happy, makes it easy to take my business elsewhere.
Handle negative reviews gracefully
A lot of entrepreneurs try to avoid negative reviews like the plague, but bad reviews won’t necessarily ruin your business if handled correctly; salty/rude replies from the owner (or no replies at all) WILL.
I wrote to Airbnb about my experience and got a “promise” from the chatbot that “someone will get back to you”. And you guessed it… the robot lied. Most customers are willing to give businesses the benefit of the doubt and a second chance if approached sincerely.
Not being able to handle negative reviews properly can also deter future customers. Every time I read reviews online about a business, I pay more attention to the reply from the business than the reviews themselves. Because let’s face it, you can’t be loved by everyone; there will ALWAYS be people who criticize your business.
Most customers know this and won’t avoid your business just because there are a handful of negative reviews. But they will if they anticipate a bad customer service experience if they encounter problems.
The ability to handle criticism gracefully is the distinguishing factor that sets your business apart from the others. The best way is probably to have a dedicated team monitoring your social media accounts and review platforms, and reply/handle negative reviews as timely and gracefully as possible.
Churn-stopping features are especially important in today’s competitive market since it’s extremely hard to acquire customers and distinguish yourself from your competitors. Proper thoughts need to be put into the design of all those features so your business won’t end up on customers’ “will never touch again” list. Because trust me, once you lose the customer, it’s hard (and expensive) to get them back.