When you have some savings and you keep it in your bank account, your money cannot work for you. Many studies proved the importance of customer experience, yet we let the learnings remain in the drawer.
According to Eurostat, out of the total financial assets of EU households in 2022, currency and deposits accounted for the largest share (34.1 %). As an average number, this share contains some countries where it was even bigger. The big problem with it is that the savings of the households will be worth less and less due to inflation. As a conscious business person, we would definitely want to use the learnings others have accumulated before. Just as our savings, if we don’t do so, our customer experience management gets worse and worse.
There are many studies that reveal the importance of our existing customers over the new customers, or the quality over the price and how a positive experience makes a difference.
The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20% - Marketing Metrics.
A 2% increase in customer retention has the same effect as decreasing costs by 10% - Leading on the Edge of Chaos, Emmer Murphy & Mark Murphy.
It costs 6-7 times more to acquire a new customer than retain an existing one - Bain & Company.
eCommerce spending for new customers is on average $24.50, compared to $52.50 for repeat customers - McKinsey.
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.
A customer is 4 times more likely to defect to a competitor if the problem is service-related than price- or product-related - Bain & Company.
70% of buying experiences are based on how the customer feels they are being treated - McKinsey.
55% of customers would pay extra to guarantee a better service - Defagto research.
Customers who rate you 5 on a scale from 1 to 5 are six times more likely to buy from you again, compared to only giving you a score of 4.8. - TeleFaction data research.
For every customer complaint there are 26 other unhappy customers who have remained silent - Lee Resource.
96% of unhappy customers don't complain, however 91% of those will simply leave and never come back - Financial Training services.
A dissatisfied customer will tell between 9-15 people about their experience. Around 13% of dissatisfied customers tell more than 20 people. - White House Office of Consumer Affairs.
Happy customers who get their issue resolved tell about 4-6 people about their experience. - White House Office of Consumer Affair.
It takes 12 positive experiences to make up for one unresolved negative experience - "Understanding Customers" by Ruby Newell-Legner.
Why don’t companies act seemingly in line with all the above mentioned?
Mature companies have already established the systems and processes that serve the business goals. They did so in the case of the customer experience, too. Those who implemented the right tools knew exactly these connections between the customers and the business. In a big percent of the cases, everything is fine, the methods do their jobs, and customers are served well. However, big systems are designed to work for the typical use cases. Professionals cover more and more use cases, but they need to fight with more and more specific ones along the journey. That’s why there will always be occasions where the well established process fails you. Also, short term goals that are in sight of the managers will not necessarily serve the long term goals the owners aim for.
Let’s see some aspects which have an impact on the learnings above.
It’s worth differentiating the business model as different ones have different impacts.
In a subscription based or a durable consumer good (e.g. car) business, the customer decision is for a certain amount of time. Growth potential can be realised at the next decision point which can happen after months or even years. On one hand, companies try to exploit the cross-sell and deep-sell opportunities until the customer gets into the re-purchase situation. On the other hand, acquiring a new customer has an immediate effect on the results.
In a transaction based business, you might not have the customer contact to motivate the client to the next purchase, like having dinner at a restaurant. That’s why these businesses play around with tools that foster customer return, e.g. loyalty scheme, couponing.
When it comes to visibility and communications above the line, companies broadcast messages that are for many, let them be existing or new customers. They are typically about new promotions. It also means that working on the existing base happens below the line, because personalised messages that take the actual and individual contact history into consideration require direct, 1-to-1 communications. So the clearly visible and recurring activity of the company deceives us that the company focuses on the new customers only.
Knowing these can lead us to define the best available tools that can ensure we take good care of our customers.
Operations are defined for the mass once again. When the operation is not mature yet and the service struggles with shortages, better service quality is clearly visible, yet, it can be unavailable. Health care gratuity has a major role in certain countries and patients buy the proper quality with it, not the differentiated premium service. But when an industry sets high service levels and improves its processes, there is little room left for improvement that is efficient businesswise. So it’s always challenging to meet the specific demands.
To be serviced is individual, yet servicing as a system is standardised.
How we feel about ourselves as customers depends on emotional matters. Customer care representatives need to be sensitive enough to meet these human demands, but their competence level can be below this requirement as customer service can be a huge cost element and is managed by students in many cases. How can you expect young adults to be professional psychologists for a limited amount of salary?
Also, different types of customers might look for different things. Elderly people of the veteran and baby boomer generations are said to value respect in whatever interactions. A technology savvy youngster who is socialised in the digital age and gets prepared even before the interaction with the service provider prefers self service solutions. You cannot have the same approach for both.
Addressing these differences and challenges can take you to the next level.
In many cases, we as customers are neutral with the transaction. We want to buy something, we go there, we get it and pay for it. Nothing special happens. However, it depends on what we take as a comparison. Compared to 10 years ago, we are far ahead. Compared to ideal, we can go the extra mile.
The competition also has an effect on the expectations. When we get used to a certain service level, for the companies, it is hard to provide something special, a positive experience. Fighting habituation is the big challenge of the companies. It urges the revival and the renascence of the service all the time.
That’s why there are so many customer experience measurements. Everyone tries to evaluate the service level and to find the next possible action. In this abundance of surveys, feedback fatigue shows up and complaints get dominant, because the anger of the negative experience mobilises bigger energies.
Due to this feedback fatigue, it gets harder and harder to rely on what customers tell you, you don’t get smarter and smarter. Yet, you can deal with whatever you have.
Sue was working as a market researcher and she was responsible for the customer satisfaction measurement. As constant growth of satisfaction was expected from the company, she needed to take measures to cover new areas of the business repeatedly. Covering more special use cases resulted in a few responses only. When her colleagues got a small sample for their topics, they were unsatisfied with the results, they complained that they could not make a general conclusion based on a few responses. This approach is wrong.
A limited measurement is not valid for telling the exact value or level of service. A change in the figures won’t be significant, so you won’t be able to know if it goes up or down. But you see some of the problem, at least. The limited number of responses is more by a limited number of responses than nothing. Even if the problem is not crystal clear or you cannot tell what is the most important part of the operation to deal with, you can start working with what you have. You can tell that the progress is rather positive or negative - that’s a start. You can tell the order of the elements. A is better than B, and B is better than C. You can identify problems to be solved. By solving these, you will do something right for sure. You do not have to think if this is the best, you just have to use what you have.
The lack of perfection cannot paralyse your actions.
