Exploiting your business assets to win the hearts and minds of your customers

The economics of customer loyalty are simple; it costs on average 7 times more to acquire a new customer than it does to retain an existing one. Furthermore loyal customers are more cost effective to maintain in difficult times; they typically increase their purchases and percentage of spend with you; their value exponentially increases as they go out of their way to refer others; they are willing to pay a premium in return for what they perceive as value; and the costs of sales associated with them are amortised over a longer period. Companies with high rates of customer retention and loyalty are typically seen to outperform the competition.

Building customer loyalty becomes challenging however for companies offering highly commoditised products and services as they are less able to influence the customer’s level of involvement or indifference in a purchasing decision. In this environment inertia is low, ambivalence high, and switching suppliers requires little effort. In a highly competitive sector where differentiation on products, service, and price is difficult, more creativity is required in the loyalty building program.

The first step in building loyalty is to adopt a customer-centric approach within the organisation; although the benefits of this are well documented, many companies remain either product or service-centric, daunted by the prospect of the transition.  Only when a company has placed the customer at the heart of its operation, can it start to optimally leverage its business assets in order to cultivate and nurture loyalty within its customer base.

Business assets that can be exploited in the process of loyalty building principally comprise Environment, Knowledge/Data, People, Product, Service, Process, and Brand:

Environment has a multifaceted part to play in engendering loyalty. Whilst the location, attractiveness, and accessibility of a company’s physical premises can impact the customer’s perception and experience of the organisation; so can the intuitiveness and usability of the company’s online presence; or the efficiency and responsiveness of its contact centre.

Knowledge/Data otherwise referred to as customer insight or intelligence is paramount in building loyalty and advocacy. Rich data pertaining to customers’ preferences, purchase history, and expectations provides a firm foundation for effective customer incentives and highly targeted loyalty programs.

People play a key role in building customer loyalty; they have the interpersonal skills and inherent ability to establish credibility, confidence, and trust in their relationships with customers. Employees best equipped to support a company’s loyalty drive are those who are fully engaged and who have been empowered to make decisions that benefit the customer. Research undertaken by Towers Perrin found significant correlation between engaged employees and emotionally engaged customers; 84% of highly engaged employees believing they have an impact on product quality and 72% believing they have the ability to positively impact customer service (compared with 31% and 27% of disengaged respectively).

Products are most successful when they are developed and marketed in the context of the customer’s requirements and objectives. Companies are no longer able to dictate what they sell or how they sell it, rather if they are to compete effectively in this loyalty economy they need to define and communicate their products’ quality and value from the customer’s perspective.

Service provision that is able to demonstrate reliability, flexibility, and consistency will always draw customers back. Reliable service is crucial, if there is a reason why a deadline is going to be missed – be proactive, communicate, and be prepared to compensate. Inject flexibility and employee empowerment; loyal customers expect to see a commitment to resolving their issues, not to be rigidly read the company’s policy guide.  Be consistent, whilst loyal customers have a greater tolerance of the occasional mistake or inconvenience, inconsistency in a company’s level of service has the power to erode loyalty that has taken years to build.

Processes must be designed and implemented with customer experience and loyalty in mind. Most companies have deployed technology designed to facilitate process automation and the management of volume customer throughput, resulting in operational efficiency and significant cost savings. However loyal customers do not tolerate being treated as “transactions”, they value real-time exchange of communication via whichever media they chose and during whichever point in the process they require it. Onerous, inefficient, non-customer friendly processes and procedures will ultimately lead to customer defection.

Brand is defined by what a company is and what it can offer; as such it plays a tremendously important part in securing customer loyalty. Customer experience is the delivery of a company’s “brand promise”, so developing and delivering a consistently branded experience for customers is paramount in enabling them to form the essential “emotional” bond that keeps them loyal to the brand and the company.
So what is a branded customer experience? A customer’s loyalty is increasingly determined by the experience he has with a company; companies who have succeeded in securing loyalty and indeed advocacy, have done so through providing customer experiences that are intentional, differentiated, consistent, and valuable. A branded customer experience must meet a customer’s perceived needs or wants (for example product quality or value for money) whilst at the same time evoking a highly positive emotional response. A product can be of superior quality, but if the process of obtaining that product results in stress or irritation, then the customer experience is severely impacted. Acknowledging the important role “emotion” plays in a customer’s choice processes and propensity to give you their business and refer others, is key to defining a branded customer experience.

Ultimately companies who profit despite this challenging economic climate will be those who have leveraged all assets at their disposal in order to create truly branded experiences that encapsulate both their customers’ physical and emotional needs. They will have won the hearts and minds of their customers leaving them insusceptible to competitor offerings, loyal to the brand, proactively referring others, and driving profitability well into the future.

The “post recession” consumer

Experian’s latest report refers to a “seismic shift in consumer behaviour” stating that the recession has caused even the most affluent of consumers to reflect on their spending. The company states that over half of consumers surveyed have switched from a supplier in the last year due to “poor or indifferent” service; and indicates that customer experience, referrals, value, and green considerations will be the major influencing factors on consumer loyalty and spending moving forward. Research undertaken by Loudhouse concurs with this prediction; when recently polling consumers about why they would remain loyal to a company 65% cited because of ‘past good experiences’, 53% ‘good reputation’, and 51% ‘offers best prices’.

There is no doubt that customers make purchasing decisions more slowly and deliberately in an uncertain economy; however their decision processes are further influenced by the proliferation of cost comparison websites and abundance of customer reviews via social networking sites and blogs which are serving to radically transform consumer pre-purchase research.

Today’s customers have unprecedented access to information on companies; technology is facilitating the sharing of this information outside of their immediate network; and they are compelled and empowered to voice their views on their experiences with suppliers. Recommendations and referrals have become core criteria of a customer’s purchasing decision; in the same research Loudhouse found that 69% of consumers most value word-of-mouth recommendations from friends and family. In this environment candid customer reviews in the public domain can help make or break a brand.

This shift in consumer behaviour is causing many companies to increase their focus and efforts on enhancing the customer experience, so as to build loyalty, and transform their most valuable and loyal customers into brand advocates.

The importance of benchmarking

Benchmarking is an essential activity for companies of all types, shapes, and sizes … be they B2B, B2C, B2B2C, public services companies etc. Popular metrics include revenue, profit, share price, customer base, and market share. However, in the domain of customer service and customer perception, ascertaining a company’s competitiveness takes on a whole new and different level of complexity.

Customers are constantly comparing their providers’ service provision to that of other companies; their choice processes are complex, and their decisions often driven by emotions evoked during their interactions with those companies. These customers have a desire for consistent, intentional, differentiated, and valuable experiences throughout their journey as a customer … Welcome to the Experience Economy!!!

In order to compete successfully in today’s Experience Economy; organisations need to understand how their “customer experience” compares to that of others in the marketplace, and in order to ensure that their service provision (as perceived by their customers) is sufficient to keep them competitive.

However the complex nature of this Experience Economy coupled with the difficult task of identifying customers’ physical and emotional needs in the realms of customer experience means that organisations need a new way of measuring their performance in this area. Traditional cost-focused management tools no longer equip managers with the kind of information they require in order to compete as this business context continues to evolve.

The iCustomerExperience Index fills this void, providing managers with a unique and unparalleled means of measuring customer experience performance as perceived by their customers and in relation to their sector and the wider marketplace.

Statement: Finance Directors are not customer facing, so are not interested in customer experience! True / False?

In our recent discussions with sector specific publications as part of a general “Awareness Campaign”, we came to have dialogue with an editor of a well known and respected publication for finance professionals. We were somewhat taken aback to hear the statement, “Finance Directors are not customer facing so are not interested in customer experience”.

We have a saying at iCustomerExperience and we are sure most customer experience experts will agree: “Customer Experience is paramount to securing customer loyalty and advocacy which in turn delivers profitable growth”. Now I don’t know about you, but I can’t imagine any finance director out there today whose ears wouldn’t prick up to those two words “profitable growth”!!!

So OK, maybe what the editor was trying to say was that this publication’s subscribers expect or have come to expect coverage of the movers and shakers of the finance sector, debt reforms, insolvency, bankruptcy, economic recovery etc. Maybe customer experience content would be slightly out of place and would sit better in customer, marketing focused publications … hell no, what am I saying!!! I wholly disagree with the statement and the publication’s rather short sighted view of customer experience and its importance.

The current economic climate has produced an unprecedented challenge for financial directors; they are charged with making tougher decisions about where to invest and where to cut expenditure. It would appear that many have responded by cutting or at best streamlining critical programs that impact the very core of customer value and perception, customer experience is one of these areas. The iCustomerExperience website cites research that was carried out during and after the last economic decline, which substantiates the recommendation that if a company wishes to emerge stronger from this downturn, it should be looking to maintain or even better, increase its investment in customer related initiatives

Ultimately it is my view that when customer experience has the ability to:

  • impact a company’s bottom and top line revenue
  • provide a source of sustainable competitive advantage
  • enable it to emerge stronger from an economic downturn

“Every” CxO in “every” sector has a right to hear about it!

Ensuring optimal customer experience at each customer touch point

My recent dealings with a well known high street electrical retailer has left me convinced of the importance of consistent customer experience across each customer touch point and throughout the entire customer journey. Many customers will rate their experience or relationship with a company in its entirety and not just according to each interaction; therefore it is essential that companies ensure consistency across all of their operations.

My story starts when my wife and I bought a 50” Plasma screen TV for our new extension, a not too cheap purchase, and a one I’d been talking my wife around to for quite some time. Being a northerner, I like a good deal so insist on shopping around (from my seat at my desk with my laptop), however that is where my bargain hunting stops … I “always” end up at the same retailer! I know they are not always the cheapest, but hell when you are talking about spending this kind of money, what does £20-30 matter? But I can’t explain it … their outlets are big and roomy (as my wife will testify I hate shopping, especially in small shops); they always have a lot of relatively knowledgeable staff on hand; they have the widest range of electrical goods; a cracking website; and good delivery service – you actually get to chose when they deliver rather than them telling you!

So, hearing me talk so highly of them, you may be asking what went wrong. Well, quite simply the TV! Within its first year we have had the engineer out three times, problem with the speakers and I won’t bore you with the details.

Each time the engineer has been responsive and knowledgeable, he obviously had a number of remedial steps he needed to make before on his final visit, he concluded that the problem remained and recommended that since we were approaching the end of our 1yr warranty we return the set and request a refund. This recommendation was all written up in his report which would then be referred to head office. This is the point at which our experience of dealing with this retailer (a relationship which has spanned some 10+ years) started to turn sour.

Head office have no record of the engineer’s final report, we are outside of our 1yr warranty, and despite several visits to the store and numerous promises of call backs, we are still no further forward. It leaves me wondering whether my experiences have been positive on account of the fact that I have never had a problem with any goods before and therefore not had to return anything – kind of like when you think you have a fantastic home insurance policy UNTIL you have cause to make a claim.

So this high street retailer provides a good range of products, good physical and online environment, knowledgeable in-store staff, good delivery process, but that “feel good factor”, that “emotional bond” that has led me to purchase from them at a premium over and above other suppliers is being slowly eroded by this last experience.

In terms of the customer journey I am right the way through to stage 5 having enjoyed a long-term relationship with the company, my propensity to refer others is optimal. I have found staff in the company’s stores to be friendly, attentive and knowledgeable, but staff in the company’s contact centre to be significantly less so – there is a clear disconnect between the two operations. Whilst the company’s processes are fine-tuned and efficient in the pre-sales / sales phase, they are clearly lacking in the post sales stage.

In today’s difficult climate customer retention is paramount, companies need to be maintaining their customers’ loyalty and transforming them into true brand advocates. In order to do this it is essential that the customer purpose is embedded into each and every part of their organisation, ensuring that the customer’s experience of dealing with them is optimal and consistent regardless of touch point and stage in the customer journey.

Will I get my money back or get a replacement TV? Of course I will. I know that the situation will finally be resolved, but as a long-term, high value customer why have I had to endure this?