Wednesday, December 31, 2014

What is Better Than a "WOW" Experience?


Many companies are looking for ways to delight the customer or provide the customer with a ”WOW” experience.  There are many marketing research organizations that provide all sorts of metrics to demonstrate how the customer experience is improving. There are companies that believe in creating strategies on the basis of improving the customer experience and is one of the best strategies they could have to improve their business performance. Is it possible they could all be wrong?

In a survey of nearly 100,000 US consumers who participated in online interaction with a business, the researchers Matt Dixon, Nick Toman and Rick DeLisi found “there is virtually no difference at all between the loyalty of those customers whose expectations are exceeded, and those whose expectations are simply met”.  They go on to note that there is virtually no statistical relationship between how a customer rated a company on a satisfaction survey and their future customer loyalty. From a statistical perspective the survey found that the correlation coefficient was just slightly greater than 0.3, which when translated suggests that there's only about a 10% information transfer between satisfaction and loyalty. That means 90% of the information that causes loyalty to change occurs from areas other than customer satisfaction.

The Customer Institute continues to focus on dissatisfaction as a key driver of loyalty/disloyalty. Satisfaction may aid in the development of loyalty but dissatisfaction has been shown to be one of the greatest drivers for disloyalty. As an example, cleanliness of a restroom in a fast food establishment will be a strong dissatisfier that will have more influence than features, such as the quality of the food or the speed of service.

Since dissatisfaction is such a dominant factor in the customer relationship, the obvious conclusion is that the best customer experience would occur when all the elements that create dissatisfaction are eliminated.  The study noted above suggests that a customer service interaction is roughly 4 times more likely to drive disloyalty then to drive loyalty.

The bottom line is that the most important aspect of customer loyalty is the absence of actions that create dissatisfaction.  Another way of stating this is the adage “customers may stay when satisfied but will surely leave if dissatisfied. “   The statistics prove it!

Tuesday, December 30, 2014

Loyalty May Not Be Rational


Customer loyalty is not always based on rational thinking. Customers often make decisions based on feelings and emotions. Psychologist Joel Weinberger, an expert in unconscious processes, is also the founder of Implicit Strategies, a consulting firm. Some of their research indicates that when you ask customers such as "Why are you loyal to the store", you may not always get an honest answer. The customers are not lying but may not be aware of some of the psychological aspects that drive their loyalty.

Weinberger suggests that loyalty can be increased when a business creates a caring relationship with its customers, which is based on a mutual basis of obligations to take advantage of the possible effects of unconscious implications of the contact. The company needs to treat its customers with respect, fairness and consistency. Similarly the customer on the other hand, needs to be respectful to the company.

Weinberger suggests that unconscious motivations often drive loyalty. While this is a relatively new idea, some of the research being done in behavioral psychology and neuroscience suggest that we often times make decisions based on feelings and emotions. There are two implications regarding loyalty that come out of this research regarding decisions based on feelings and emotions; namely,

1.       First impressions by customers may find one quality appealing and customers will use that impression to extend to other qualities not connected with the initial impression. An emotional aspect of this first impression is that if a customer has a positive predisposition of the brand, then we tend to have a positive predisposition to everything else associated with.

2.       Customers often place more weight on the first piece of information they receive than information contained in a later point in time. Quoting Weinberger “in everything you learn about someone or something is filtered through the first impression".  Hence, all aspects of the product or service will bedirectly influenced by the first contact.

The bottom line is that there are a few steps every business should take to accommodate these feelings and emotions of custoemrs that arise from the first contact/impression.
The first obvious step is to go out of your way to offer the best possible deal to first-time customers. You want to make sure that your first impression sets the perspective that you are a good company to do business with.
The second obvious step is to make sure that your customers know you and are familiar with you.
With that second step, and the third step, which is to make sure that you and your personnel are familiar with your customers; namely, build a relationship with each one.
One caveat to remember is the fact that the best deal you offer to first-time customer should be one that you can live with on an ongoing basis. Don't price yourself out of business.
The old adage that the first impression counts has been verified by the psychological research.

Friday, October 17, 2014

Connected customers may not be connected


In today's business climate the connected customers are seen as people who are highly educated and technologically social and mobile. A study was commissioned by Kitewheel and was conducted by the independent research firm Strategic Marketing Research, Inc. in 2014 to study ongoing efforts by companies to reach their connected customers individually.  The respondents to the study included 382 US-based connected consumers and 209 US-based senior level marketing executives. 72% of the marketing executives focused on B2C and B2B while 28% of the marketing executives focused exclusively on B2C.  63% of the marketing decision-makers were from companies with more than 1000 employees.

There were four key findings of disconnect between the companies and their connected customers.

The first disconnect was in the area of real-time commerce. The study found that 91% of consumers feel an “in the moment" offer might influence their purchase whereas only 32% of the marketers indicated they have the ability to deliver on this “real-time” promise in practice.

The second disconnect related to mobile devices that are used by connected customers. The study showed that 76% of consumers use their mobile devices to compare prices and read reviews while shopping. However, 51% of marketers do not manage their mobile apps as a consumer touch point. As a secondary issue 55% of the consumers are frustrated by finding that the company app offered no functional difference from the business’ website.

The third disconnect with related to tweets between the connected customer and the company. Approximately one in three connected customers expect a response to their tweets within 24 hours. Unfortunately, 45% of marketers indicate that it's unlikely that their company can respond to every one of the social media opportunities.

The last major disconnect has to do with the customer loyalty programs themselves. 73% of the connected customers believe that companies should show the connected customer how loyal they are to the customer but 66% of the companies see it the other way around.

The bottom line is companies do not yet appear ready to deal effectively with the connected customer who uses today's technology as a primary tool for connecting with the company.  This data should provide a wake-up call to companies who are in the world of technology and think that they are using their technology effectively. The magnitude of the differences between the perceptions of the company and the perceptions of the connected customer dramatically make the case that these companies have a long way to go before they are truly able to support connected customers.

Friday, October 10, 2014

Neuroscience Can Be Used to Improve Customer Loyalty


There has been some interesting work done by Dr. Daniel Kahneman, a professor at Princeton University in the area, behavioral economics. Dr. Kahneman received the Nobel Prize in 2002 for his work in economic sciences. One of the phenomenons that he has written about, and which has been given much attention is the peak – end rule. This rule provides some excellent guidance for building customer loyalty.

In essence, the rule explains how experiences are judged with the primary focus being on intensity of emotions at their peak moments coupled with the endpoint or resolution of customer experience.  What is research has pointed out is the most positive or negative emotional intensity. In the end resolution of the service experiences have a disproportionate influence on the overall experience of the customer.

What makes this insight of Dr. Kahneman particularly attractive is that when we identify the customer’s peak moments during the customer experience and then focus on how the service experience ends we will create the most impact on how the customer feels about overall experience. When these moments from managed the company can plan on increasing the lifetime value of its customers.

Thus, there are two areas that must be managed well; namely, (i) the careful identification of the customer’s peak moments (those moments with maximum intensity of emotions) and (ii) the last touch point of the service experience (the last actions that occur before the experience ends). Many companies forget the importance of the closing experience. Even though there have been many very positive aspects with the customer during the customer contact, the manner in which the call ends can negate much of the goodwill and loyalty that was created through the service experience.

The bottom line of this neuroscience approach to customer loyalty is that we now have a way to focus on those aspects of the customer’s experience which will have the greatest impact on the overall memory of the customer experience and hence should increase our ability to create and sustain loyalty.

Saturday, August 30, 2014

Surprise: Men and Women are Different


A study of 1500 US consumers between the ages of 18 and 65, was conducted by the Marketing Store in partnership with research vendor IPSOS. The report was published August 26, 2014.   The study was titled “Living Loyal” and it focused on customers who participated in loyalty programs for travel and retail. The categories considered for this study included hotels, retail women's apparel, supermarkets, airlines, and retail sporting goods.  For more detailed information, the report can be found on the internet.

There were general findings from the study that support current knowledge about the retail market. In particular, the study found that customers have on average 10 loyalty cards. Of equal importance was the finding that nearly 2/3 of the customers indicated that being loyal to a brand is not particularly important.

One of the key findings of the study was that men and women approach loyalty from a different perspective. One of the most important aspects of investigating men and women separately was the strategic implications that can be drawn from the differences when it comes to designing loyalty progams.

The study found that men see loyalty primarily as a matter of honor or commitment. Loyalty from a man's point of view relates more to the organization than to individuals. It's as if the man is signing up to join a team.  Men often use logos on their apparel as a way of identifying themselves with a privileged group (those who wear products with the same logo) thus demonstrating their loyalty.

Women on the other hand, attached loyalty more to individuals within organizations. Women appear to look for highly personalized communications with an individual or individuals within the company. While trust is not a concern for men, trust and devotion are particularly important for women.

When these differences are considered, the loyalty programs for men should aim at identification of the brand with some sort of membership that would suggest some type of exclusivity. On the other hand, the loyalty program for women should be designed to create some form of one-to-one communication between the company and the individual.

The bottom line is that loyalty programs that include both men and women must consider the way that men and women view loyalty.  Even though many companies see the marketplace from a unisex perspective, genetics and chemistry demonstrate that differences do exist between sexes. The companies that recognize these differences and develop their loyalty programs with these differences in mind will win.

Monday, July 28, 2014

The Rewards of Analyzing Your Customer

A recent report published by the Aberdeen Group presents some interesting statistics regarding the value of customer analytics. The author of the report was Omer Minkara.  Perhaps one of the most impressive statistics that was presented in the report indicated that the average year-over-year increase in customer lifetime value was 7.6% for those organizations that invest in customer analytics. The other side of the coin is that the organizations that do not invest in customer analytics see a lifetime value declined in customer lifetime value by 4.3% year-over-year.

There were a number of other specific statistics that have additional impact. They are noted below.

1.      The number of positive mentions through social media channels was 14.6% for those who invest in customer analytics and 2.9% for those who do not.

2.      The cross sale an upsell revenue was 11.6% for those with customer analytics versus

negative 2.3% for those who do not.

3.      Annual company revenue increased 10.5% for those with customer analytics versus 3% for those who do not.

4.      The return on marketing investments was 8.3% for those with customer analytics versus 4.9% for those who do not.

5.      The improvement in average cost per customer contact was 5.1% for those with customer analytics versus an increase in cost per customer contact of 1.7% for those who do not.

These statistics developed by the Aberdeen group are amazing. To see the dramatic difference between those companies who participate in customer analytics and those that do not paint a picture that is hard to ignore. Even if the sample size and rigor of the analysis that led to these statistics is even close to being true, one would wonder why companies are not jumping on the bandwagon of customer analytics.  Of course, the challenge that most companies face is how to acquire personnel with the analytic skills that will lead to the kind of statistical performance noted in the Aberdeen Group report.

There is a new book published through the Harvard business review press titled “Keeping Up with the Quants” written by Thomas Davenport and Jinho Kim. It is an introductory guide to understanding and using analytics in business. This book complements the report noted above and gives further justification for the use of analytics.

 The bottom line is the statistical improvement in performance that is consistently demonstrated by companies using customer analytics compared to those who do not is no longer questionable. Companies must learn how to take advantage of customer analytics.  Those companies, who either do not want to learn how to use customer analytics or don't know how, will find themselves at a distinct disadvantage in the marketplace.

Saturday, July 12, 2014

Social Media is Changing the Game


The results of the 2014 State of Multichannel Customer Service Survey have been released.  The same parameters of time and speed-of- answer are still prominent.  The survey sampled responses of 1,000 U.S consumers and noted the following statistics which are consistent with past data:
1.       The most important aspect of good customer service experience is “getting my issue solved quickly”.   (41% of responses)
2.       The second most important was “getting my issue resolved in a single interaction”.  (26% of responses)

These results have been consistent for more than 20 years; however, it is worthwhile to note the magnitude of the percentages as a way to gauge the impact of time on the overall experience.  The impact of not meeting the customer expectations for timeliness can be seen in the additional responses.
65% of the respondents indicated they have left a brand over a poor customer experience.  The reasons that they listed are:
1.       Making multiple contacts for the same reason (47%)
2.       Transferred from agent-to-agent (43%)
3.       Poor communication skills (poor manners) (37%)

There were a number of write-in responses that were the result of language difficulties.
Social Media Impact
Social media impact was considered on the survey and some interesting results were obtained.   The survey results indicated that 84% of those responding used search engines to try to resolve their customer service questions and more customers use the social media to give positive responses (52%) than to complain (35%).  The impact of social media can be seen by the high percentage of customers who are now using social media to get assistance.  These statistics suggest that companies should give significant attention to their web sites.  Satisfaction can be driven from the web site as well as through making contact with an agent.  

The bottom line from this survey is that time to resolve customer issues remains at the top of the list.  The second takeaway is that speed alone is not the answer.   A quick answer that does not resolve a customer problem will not be viewed positively by the customer and will cost the company additional money and resources to eventually resolve the problem.  One of the best management strategies used is to “kill the call.”  By killing the call the company is saying spend enough time to get the problem resolved.  It makes no sense to deal with a customer without getting a resolution.  A call back from the customer is expensive and does not create satisfaction.  The objective of each transaction between the company and the customer should yield two outcomes; namely the problem should be resolved and the customer concern should be alleviated.  In other words, fix the problem and fix the customer.  Of these   two, fixing the customer is more important. 
The social media component takes on equal importance based on its pervasiveness into our customer culture.  Whereas we would have been surprised if 20% would have used a search engine to resolve a problem 25 years ago, the percentage of customers with access to the internet today puts a high level of importance on the performance of the company website.  It can be as dissatisfying for a customer to have difficulties on the website as talking to an agent.  The business of customer service just got a bit more complicated.
 

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