Are You Doing Customer Experience “Right”?

Recently, several reports have been published that have pushed the notion that providing an exceptional customer experience does not generate the expected returns in loyalty. One of the articles states that delivering “delight” will raise operating costs by 10-20% while only marginally adding to customer loyalty.

Such “experts”, that openly mention the “6+ service organization” have opined that providing great service may not make customers stay and therefore, delivering an exceptional customer experience is pointless. These reports gained traction. While these statistics are interesting –  and in some cases true – they do not tell the whole story. By only looking at a few aspects of loyalty and not taking into account other loyalty and top- and bottom line aspects, decision makers may make decisions on non-complete information. When asking yourself ‘am I doing customer experience right’ there are more aspects to take into account:, such as

  • Delivering the brand promise and creating brand value;
  • The Pareto Principle on customer profitability;
  • Cross- and upsell opportunities;
  • Amplification;
  • Delivering excellent customer service does not have to cost more.

Over the last fifteen years, I have seen more than 25 customer service, marketing and sales organizations up close as an analyst, manager, director and as a consultant. Everyone wants to see the return of their investment and clearly, “improving customer service” is not enough. It never was and never will be.

EXCEPTIONAL CUSTOMER SERVICE AS A BRAND VALUE

Some organizations, such as Starbucks, Zappos & Disney, have made it a culture to be truly customer centric, it is part of their core brand values and their DNA. These companies are centered around the customer in every way possible. Customers choose to buy products or services from these companies because they are willing to pay to be put on a pedestal, they don’t expect anything less. Telling these companies to not do this anymore would like telling McDonalds to stop selling hamburgers. Without providing this exceptional service, a key pillar of their service or product offering will collapse, most likely resulting in a huge drop in turnover and profit.

20% OF CUSTOMERS GENERATE 80% OF THE PROFIT

The Pareto Principle is well known and is still the rule of thumb for the large majority of companies even today. Some companies cherish this 20% base of customers even more than the mass customer base, whether it is in banking (preferred / private banking), in the Telco’s (customers with bills of over 400 dollars per month) or in the Airline business (Gold and Platinum frequent flyers). Each industry has this group of customers. Yes, it is more expensive to have this extra service to this group of customers, but what would happen if a company would stop doing it? The premium service offered to these customers helps companies build customer preference with this high value customer segment. If this preference would disappear, decision making by the customer would be based on other factors alone. The extra dollars spent by these customers when they contact your organization is well worth the increase of loyalty of these customers.

USING YOUR SERVICE CHANNEL AS A MARKETING AND SALES TOOL

In direct contact with customers, the company has the opportunity to make “the brand come alive”. Customers have an emotional connection with a brand or a company – even if you’re a low-cost airline, an electronics manufacturer or the monopolist public transport company. When your representatives “breathe the brand” in their contact with customers, you have the opportunity to gain trust and loyalty. It’s about delivering the right experience, rather than the best experience.

To top that off, I have seen in telco’s, banks, FMCG and hospitality that when a contact scores an NPS of 8 or higher, it more than doubles the opportunity to make a cross- or up-sell than contacts that score a 6 or lower. Authenticity and delivering on promises is key.

 AMPLIFICATION

Another aspect of which the impact is not always taken into account is amplification, from telling friends at a Friday night get-together, to writing online recommendations and sharing experiences via social media. According to the White House Office of Consumer Affairs, happy customers who get their issue resolved tell about 4-6 people about their experience, while a dissatisfied customer will tell between 9-15 people about their experience. Around 13% of dissatisfied customers tell more than 20 people!  Long ago, we had only email and calls, which were targeted at one single customer. Nowadays, customers share their experience proactively on their Facebook pages or twitter accounts or on review sites that are being visited by other (potential) clients. Often, customers even copy and paste discussions that they have in online channels for the entire world to see. Companies need to actively own the experience in order to drive positive amplification, and at the same time minimize negative amplification.

PREVENTION OF FAILURE CONTACTS, PROACTIVE SERVICE AND DIGITIZATION

For every organization, dissatisfaction is mainly generated by “failure contacts”. Failure contacts are defined as contacts that could have been prevented if the right measures would have been taken. When a customer needs to make an effort to get something solved that was not his/her fault in the first place, you begin the experience with a negative sentiment. Turning this negative to positive is often costly and time consuming. According to research it takes 12 positive experiences to make up for one negative experience (my reference is a book: Understanding Customers by Ruby Newell-Legner). When it comes to a failure in the experience of the customer, they need to contact an organization because somewhere along the Customer Journey, something went wrong. Three things can be done in every organization to prevent this from happening:

  • Contact customers proactively when something goes wrong; defuse the situation before your customer takes to social media. According to McKinsey, 70% of buying experiences are based on how the customer feels they are being treated.  Take them seriously and show that you value their business.
  • Ensure you have a continuous improvement loop in place to prevent these types of (potential) contacts in the future; learn from your mistakes and leverage learnings to drive structural improvement in your business.
  • Make it easy for customers to find answers on your cost effective channels. Nowadays, most people don’t want to call or email. They much rather have their questions answered or issues solved online.

By knowing your customer, their context and preferred channels and providing them with your authentic brand experience, you will be delivering the right experience, resulting in greater loyalty, more sales to the existing customer base and it will make it easier for you to attract new customers. Delivering delight doesn’t have to cost extra.. Business process improvement (cost saving) and greater customer experience often go hand in hand.

The RIGHT customer experience is different for each organization, for each customer group, for each time of day and for each type of service request. Thus instead of spending on achieving the best or most delightful experience for each customer all the time, businesses should rather focus on delivering the right experience consistently across channels and customer groups to create an impact and drive revenues from their CX practice.

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This article / point of view is written by Vincent Berndsen, Partner and Head of Consulting for TheEngage. Contact us at TheEngage for a discussion on how you can develop the right experience for your customers and drive your top and bottom line.