Cashing In On Customer Experience
It's becoming increasingly clear that customers not only expect a quality experience today; they demand it. While the recession may be starting to slowly ease its grip on the global economy, companies are still fighting tooth-and-nail for wallet share. According to new study from Strativity Group, companies that believe it is a war on price rather than one of value will become stragglers.
"As we're starting to -- slowly -- come out of the recession, customers are going to remember companies that continued to deliver exceptional customer experiences, and will reward them with continued business," says Michael Starr, customer experience expert at Strativity and lead author of the report, "2009 Customer Experience Consumer Study," which surveyed 1,994 consumers.
Starr explains that while the study's conclusions did not surprise him, the degree to which the statistics bore out did. He notes that unhappy customers are 10 times more likely to cease doing business with companies within the next 12 months than loyal ones -- and happy customers three times as likely to continue doing business with a company for 10 years -- as examples. "I thought I'd see more gradual numbers, say remaining loyal for two to five years instead of 10," he says. "There's a dramatic punishment for not delivering an exceptional customer experience."
Not only will companies that deliver a good customer experience to consumers be rewarded with a longer relationships, it will also be more profitable. According to the study, 40 percent of loyal customers said they were willing to pay 10 percent or more to continue purchasing from companies delivering great experiences.
In contrast, poor experiences force companies to chop prices to try and retain customers. Fifty-two percent of unhappy customers will only continue doing business with a company delivering poor experiences if it offers a discount of 5 percent or more. While it may seem that, in the short-term, it would be easier to chop prices than fix customer experience, Starr says this is misguided logic. "People confuse price and value," he explains. "Customers are seeking value -- it can come either from a great experience at a fair price or a discount if they're not getting that experience. Companies have to choose where they want to play."
The choice, to Starr, is simple: Either invest money in creating better experiences which can lead to higher revenues, or keep the money and chop prices. "You're going to have to make an investment either way," he says. "Smart companies are getting it -- they realize that the experience must be exceptional."
The study found the drivers that help create that exceptional experience include:
- quick and effective issue resolution;
- common sense and discretion;
- exceeding expectations; and
- ease and simplicity.
While investing in technologies that enable customers to help themselves, such as interactive voice response and Web self-service, is important, Starr says companies shouldn't forget to bolster areas that provide consumers with the opportunity to interact with a real person. According to the study, customer loyalty correlates most strongly with consumers' satisfaction with the following organizational touch points:
- retail stores;
- written communications; and
- call centers.
"People are seeking self-service opportunities, but when those don't meet their unique needs, they turn to humans and that is the critical moment of truth," Starr says.
Digesting the entirety of the report, Starr says it is important for companies to realize that investing in customer experience is not a one-time deal. "This is a continuous process," he stresses. "You don't do it once. You can't buy a tool off the shelf -- you must develop a strategy for a differentiating experience versus your competitors."
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