Friday, August 19, 2011

What Makes Customers Leave?

This is the last blog relating to the survey of 250 customers that responded to a survey regarding the purchase of consumer electronics that was conducted by Infinite Field Marketing of the UK. My two previous blogs on what gets customers in the door and what keeps them need a final chapter. This final chapter will focus on what makes customers leave or break their loyalty. The last part will answer the question of what would it take to keep a customer that is ready to leave.

When the question was asked what would cause a customer to walk out the door the answers were:
1. About 48 percent responded that negative contact with the staff was the primary reason.
2. The second most important reason (24 percent) was the store was too busy which made it difficult to find staff and products.

These results track the earlier results that kept repeating the mantra that customer service plays a primary role in dealing with customers.

When the survey took the next step and asked what would break a customer's loyalty the two primary reasons were:
1. About 70 percent said that bad service would be the reason, and
2. 21.5 percent said poor product knowledge.

Here again the primary reason that customers are saying they would break their loyalty to a company or store would be the result of customer service.

There is a logic that follows these results that suggests that bad service not only leads to lost loyalty but also leads to negative word-of-mouth which in the long run can lead to the demise of the company.

The final area of interest is the question of what can a company do when the customer is ready to break their loyalty and leave. In other words, the question is what is the best way to deal with a customer who is ready to leave. The survey yielded the following results:
1. About 40 percent thought that a discount would be appropriate, and
2. 28 percent said that an apology would be sufficient.

Although there were a number of other comments, there appears to be no significant pattern in them.

The bottom line that comes from this survey of what brings customers to you, what makes them happy and why do they leave has a consistent theme; namely, that customer service is very important and may be the strongest driver for business success.

The two questions that everyone who reads this should consider are:
1. Is good customer service a company policy?
2. How much is the company willing to spend to support this policy?

Experience has shown me that companies often think that initial customer training is sufficient and no refresher training is necessary. This is fallacious thinking.

Tuesday, August 16, 2011

What Keeps Customers Coming Back?

The research mentioned in yesterday's blog also provided some insight on what makes customers loyal to a particular store. Rene' Wright, head of computing at Best Buy UK is quoted as saying "if someone has walked out of a store having had a positive shopping experience, they are much more likely to return, consider, recommend and purchase from you in the future."

The research by Infinite Field Marketing provides support to that notion with the following statistics from their survey of 250 shoppers.
1. Approximately 55 percent of the respondents sad good service was the most important.
2. About 21 percent said that price was the main reason
3. There was approximately 11 1/2 percent of the respondents that said convenience was most important.
4. Product knowledge was most important for only about 8 percent of the respondents.

The message is the same as yesterday; namely good service is a key driver to customer loyalty. Of course, returning to a store or company does not necessarily assure purchases.

Making it easy to do business has long been considered an excellent step to build trust and a good relationship. As has been noted in previous blogs just solving the customer problem with no hassles is often the most important aspect of the customer interaction.

The bottom line is reputation and customer service appear to be consistent drivers of loyalty. While location, price and product knowledge are also necessary they may not be the glue that sticks to customers and brings them back.

Monday, August 15, 2011

What Drives Customers to Stores?

A study commissioned by PCR and compiled by Infinite Field Marketing addressed the topic of what drives customers to stores. The study consisted of 250 respondents in the UK. One of the key concerns of the study was when purchasing an IT/consumer electronics product what makes you go to the retailer in the first place.

Too often studies start after the customer has arrived and then examines the customers attitudes and performance. This study has an unusual starting point by first examining the factors that lead customers to the store in the first place.

While their findings are not unexpected, they have quantified and calibrated what many have perceived in the past. The major findings of what drives customers to the store are:
1. Reputation seems to be the clear leader with 36 percent of the respondents identifying this as the most important factor.
2. The second factor was cost and approximately 25 percent reported that as the driving factor.

One conclusion that continues to show in the research is that customer service is a key component of reputation. Since word-of-mouth has become an important factor in in both marketing and PR, reputation often has customer service as a cornerstone of their reputation both in the UK as well as the US. It would be no surprise to find similar results in other countries.

The bottom line is that customer service may be one of the most important forces that drives customer TO YOUR STORE. Some proof can be found in the results of this survey.

Monday, August 8, 2011

Ethics and Loyalty

An English agency, "23red", has completed a survey of 1,000 adults. The results mirror previously reported connections between purchase intent and the ethical credentials of companies. Their findings include:

1. 91% of shoppers consider the approach of the business to the local community, the environment and its terms of operation before making a purchase decision.
2. 53% indicated that a significant contribution to charities would play a large part in whether a customer made a purchase or not.
3. 60% suggested that broader ethical concerns helped guide their behavior.
4. 53% also noted that they were influenced positively when they knew the company contributed a percentage of their profits to charity and good causes.

When the demographics are considered respondents under 30 years of age placed more importance on ethical values. Similarly, women also placed a higher value on ethical issues than men.

The bottom line, is that in order for ethical programs to have an impact on customers, they must work and be seen to work. These results are consistent with the blog of June 1st. With these consistent results there may be a sea change on the horizon concerning what customers are thinking when they consider making a purchase.

Tuesday, August 2, 2011

A Different Measure for Loyalty

The Customer Contact Council of the Corporate Executive Board has conducted a study of more than 75,000 people who had interacted over the phone or through self-service channels such as the web, voice prompts, chat and email. A brief summary of their research was published in the Harvard Business Review issue of July-August, 2010.

Their research, which took about 3 years addressed the following questions:

1. How important is customer service to loyalty?
2. Which customer service activities increase loyalty and which don't?
3. Can companies increase loyalty without increasing service operating costs?

The research covered many industries from product industries to pure service industries. Responses came from North America, Europe, South Africa, Australia and New Zealand. The research was limited to non face-to-face interactions.

The researchers evaluated the predictive power of three metrics, namely, customer satisfaction (CSAT), Net Promoter Score (NPS), and the Customer Effort Score (CES).

They based their results on the following definition of customer loyalty:

the customer's intention to keep doing business with the company, increase the amount they spend, or spread positive word of mouth.

From this definition they found that CSAT was a poor predictor, NPS proved better than CSAT. CES outperformed both in customer service interactions.

CES is measured by asking a single question: How much effort did you personally have to put forth to handle your request?

Their results are:
1. Of the customers who reported low effort 94% expressed an intention to repurchase and 88% said they would increase their spending. Only 1% said they would speak negatively about the company.
2. Of the customers who reported high effort 81% reported an intention to spread negative word of mouth.

The bottom line is that this new metric appears to have merit. The statistics strongly suggest this has the ability to detect loyalty at the operational level. The next several blogs will provide further detail on this metric.

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