Wednesday, December 31, 2014
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
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.