You loser, you legend

You loser, you legend - image for article by Greg Alder

Businesses lose clients all the time. Most losses aren’t noteworthy. If you’re going to become famous for losing clients, you can’t learn anything from these.

However, there are plenty of well-documented and spectacular client losses. Each one is unique in the circumstances that led to the loss and the way events unravelled. They will give you an idea of how high you’ll need to set your goals if you’re to become a legendary loser.

When a spectacular client loss makes headlines, take note of how these individuals and companies went about the business of losing their clients. Emulate their actions and people might one day be talking about you in the same hushed tones with which we mention some of the legendary losers of the past.

Need a little inspiration? Then let’s begin.

Here’s an example of how one well-known company went about the business of losing their clients.

This is the story of American General Corporation.

One policy, two prices

For reasons known only to the good fathers of this insurance giant, a decision had been made at some time that American General’s burial insurance policies should cost some policy-holders more in premiums than they cost other policy-holders. Why not? It’s American General’s business. They can do what they like. At least, that’s probably what they were thinking.

Insurance companies regularly charge differing premiums for their policies. Your life stage and health will determine the premium you pay for a life policy, for example. The security of the suburb or town you live in will influence how much you pay for home or car insurance.

As you’ll read, however, this case was a little different.

American General got away with charging two prices for the same policy for a while. What they didn’t figure was that a couple of policy holders might be chatting over a beer, the conversation would morbidly turn to burial insurance and the two policy holders would realise that each is paying a different premium for the same insurance cover. It really only becomes interesting when you add this detail into the scenario – one policyholder is white, the other black.

Of course there’s no suggestion that, as a company, American General holds racially prejudicial views. But the facts, as they eventually came to light, were hard to fathom.

For some reason, thousands of the company’s African American clients were paying up to 33% more for their policies than lighter toned clients. You have to wonder why, don’t you? Did American General’s actuaries have figures that showed dark-skinned clients somehow died more expensively than pale-skinned ones? Did they have a habit of dying more than once?

No client likes to feel he’s being charged more than another for the same service. American General’s black clients certainly didn’t seem to be at all understanding when they realised they were paying more because their skin wasn’t white.

Once the insurer’s duplicity was revealed, not only did the company lose more than a few clients and a fair chunk of respect, they also felt obliged to repay around $206 million in overcharged premiums.

What’s the lesson in this?

Well, apart from the message that losing clients can be embarrassing, and very expensive, there is one other very important and positive learning from this –

Be patient

The folks at American General didn’t wake up one morning, realise they had some clients they didn’t want and then contact them to resign their business. That’s no fun.

Instead, they implemented a corporate policy that some of their clients might find unacceptable – if and when they ever learnt the truth. That done, the American General team went on with business.

Years later when things blew up, they could publicly claim remorse and blame predecessors or computer glitches for the premium anomaly that caused the client revolt. Best of all, the loss of these aggrieved clients would have come as a genuine surprise to those who were now at the sharp end of the company.

The lesson for those of you yet to experience a major client loss? Implement a questionable policy and see how long you can get away with it. Get away with it long enough and the client loss will likely come as a complete surprise. And surely that’s the best way to lose clients – when you least expect it.

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