Numbers Have Different Meanings

Numbers carry different connotations in different parts of the world. An interesting article was written by Natalie Kelly of Smartling Corporation.  In this article she points to a several places around the world where numbers have meanings other than their numerical values.

For people who live in United States the number 13 carries with it a meaning of bad luck. For this reason, many buildings do not have a 13th floor nor do airplanes have a row 13. On the other hand, there are some numbers that carry with them a positive connotation rather than negative. For example, a product priced at $6.66 would be considered lucky in China because that number sounds like the phrase “things are going smoothly" when spoken.  In fact, many Chinese companies will hang 666 above their door. The Christian world, on the other hand, considers the number 666 to represent Satan and hence carries a very negative connotation.

The number nine is a bad luck number in Japan because when spoken aloud it sounds like “suffering”.  For that reason it is unlikely to see a product priced at $9.99 in Japan.   The number four also carries some negative connotations in Asian languages. The number four is spelled the same as the word “death”.  Hence, it is unlikely to see an Asian company using this number or combinations of this number, such as 4444 in a telephone exchange.  The Japanese filmmaker Fuji has taken steps to avoid using the number four in its marketing and goes from a series 3 to a series 5 for its products.

There are two numbers in Mandarin Chinese that have very negative connotations. The address 7456 sounds like “to make me angry” and the number 250 when spoken can mean “imbecile".

The number 17 is considered very unlucky in Italy.   The Vietnamese consider it bad luck to have three people in a photograph.

The bottom line is that numbers often have meanings other than their numeric value and hence when presenting numbers to your customer base you should do your homework and make sure that the numbers do not carry negative connotations.

Loyalty is not black-and-white

There have been a number of articles written regarding loyalty as if it were a black-and-white topic. The authors have made loyalty appear to be a term something like pregnancy. You're either pregnant or you're not. This kind of writing is not correct and is confusing, at the very least. Companies are looking for loyal customers, as if there is only one kind of loyal customer. We think it is time to address this issue of loyalty.

Can I be loyal to company without giving it all my business? Of course I can. Many companies are loyal to a given set of suppliers.   Just because I go to a specific restaurant, can I still be a loyal patron and frequent other restaurants?  Because I buy a particular brand of shoes, do I have to buy all my shoes with that brand in order to be loyal? 

The obvious answer to the above questions is that customers can be loyal to companies or businesses without giving them all their business. I can be loyal to a company by giving them most of my business. I can be loyal to company by giving them some of my business. Let's look at a few examples of loyalty. In each of the four following ten purchasing sequences I am loyal to company A.

1.     A A A A A A A A A A (all 10 purchases to company A)

2.   A B A C A D A E A F  (5 purchases to company A)

3.     A A B A A C A A D A (7 purchases to company A)

4.    A B C D A E F G A H  (3 purchases to company A)

In each of these preceding sequences, I continue to return to company A. The degree of loyalty can be thought of as a percentage of my pocket (the amount of money I have to spend) relative to my spending at other businesses or companies.

One way to view loyalty is the degree of commitment that one company has to another to purchase or utilize its products or services. While this may not be a pure academic definition of the word loyalty, it is intended to show that there is a degree of variability in the word loyal when dealing with customers and companies. To a certain degree, loyalty is connected to trust, but trust does not guarantee loyalty to the extent shown above in the first sequence.  It is present in all four sequences.

 A more personal way to think of this is that we have friends to whom we are loyal and while at the same time we have friends who are only acquaintances, and to whom we have less loyalty. The degree of loyalty that we give to other people is no different than the degree of loyalty customers will give to different companies with which they do business.

The bottom line is that we must not look at loyalty as a black-and-white parameter. There are degrees of loyalty, which we will give to different companies depending on a number of reasons. The challenge is to find ways of differentiating the different degrees of loyalty. That is a subject to be dealt with in a later blog.

Do You Think Your Customers Don't Know You Are Watching Them?

The book 1984 brings to mind the concern that big Brother is watching you. The Radicatti Group recently published the results of the study that shows that as much as 83% of all e-mail traffic is spam. Customers are wary of sharing their e-mail addresses and personal information for fear that information will be used for purposes other than their benefit.

There is an anxiety in the marketplace that companies are being too invasive with respect to their customers. With this comes the assumption that collecting data from the customers invades their privacy. The underlying customer assumption that many companies make is customers lack a faith in believing that the information gathered by the company is for their benefit.  This assumption may no longer be true.

If 21st century companies do not understand that customers already know that they are watching them and accruing information about them, they are either naïve or don’t care. In fact, there is a cultural shift with customers that is slowly taking place. Many customers no longer see data collection as being inherently invasive; rather customers are beginning to understand that the data they provide has the potential to reduce costs (and prices) and improve services.

The key gradients to move customers from not trusting the company to use their data are: (1) trust and (2) communication. In other words, 21st-century companies need to focus on communication with the customers so they can build a strong relationship and understanding of how the information will be used. This only occurs when there is trust between the company and the customer.

One point that companies overlook is that they are asking for something of value from their customers (information about the customer) without “paying” them for it.  In this sense “paying” the customer means giving the customers something of value in return for the valuable information that they have just given the company.  

The bottom line is customer data has value to the company and the company should be willing to return value directly to their customers for that data. Customers in 21st-century are wise enough to know that you as a company are watching them and capturing data about them. When you communicate with your customers and show them that the information they share with you will be used to improve the quality of your products and services, they will be able to see and appreciate why it is important for them to provide that data. The next step is to return something of value to your customers.

 

Trust is required by the company so that customers will provide accurate information. Trust is also required by the customers that the information that they share is for the sole benefit of the company to improve the level of product quality and service. We can only hope that the company and their customers will honor that trust.

What About the Customers in the Middle?

There is a general rule in the market that customers will generally only offer feedback when they either have a really bad experience or great one.  If you believe that customers rarely say a word when their experience falls somewhere in the middle you are missing some valuable information. The point here is that most of the customers will typically be in the middle and they are the ones that will drive the success or the failure of business.

Most companies maintain a well-oiled customer satisfaction measurement system. There may be additional dimensions to the measurement that will lead them to believe that they are also measuring customer loyalty. When companies measure customers that have either had a bad experience or good experience, their measurement is inherently biased. They have missed the opportunity of measuring their entire database of customers from this selection process.

Most customers will reside in the middle and will not have had either a bad or great experience.  They are generally ignored and not measured.  In order to understand the customer experience of your entire customer base it is necessary to include those customers in the middle.  ForeSee, a survey company, ran an experiment that compared customer satisfaction scores from satisfaction surveys (which probably measured responses from customers with a recent experience) and then compared the scores from a random sample survey which included all customers. They found that the random sampling does a better job of measuring the wider range of customer experiences rather than just a select group of customers that often respond to the surveys from good and bad experiences.

A boss I had many years ago reminded me not to expect what I don't inspect.  The bottom line is that measurement of customer satisfaction must be done properly. The process of customer selection must include the customers in the middle.  If you are currently measuring only the customers with bad experiences and customers with great experiences you may be missing out on some rich information that resides with the customers in the middle. 

Satisfaction Has a Legal Meaning

You may not be aware that the term "satisfaction guaranteed" has a legal meaning.  The Federal trade commission’s advertising rules are very specific about using the term "satisfaction guaranteed." Most courts when addressing cases regarding satisfaction have stated that satisfaction means "what ever a reasonable person would expect from a product or service."

The Better Business Bureau code of advertising and FTC rules both suggest that the term "Satisfaction guaranteed" should be used by a seller when advertising only if refunds for the full purchase price can be expected when requested by a customer. If there are any limitations or restrictions on a guarantee, those conditions should be clearly and prominently displayed for the customer.

Here are a few examples of a proper “satisfaction guaranteed” ad:

1.       We guarantee your satisfaction with our product/service.  If you're not completely satisfied, we will gladly refund the full purchase price.

2.       Return the product in its original package within (some limited amount of time) and we will fully refund your purchase price.

3.       If our service does not meet your complete satisfaction, your full purchase price will be refunded.

This is serious business. Businesses have been taken to court by customers and have been penalized a significant amount of money. The bottom line is that satisfaction is not only a wonderful word for marketing but also brings the responsibility of making the customer “satisfied".  There is a very strong trend in the market that customers are becoming more litigious. Not all customers are nice customers.

What Customers Say

There's been some interesting research performed Dr. Wes Schultz and Dr. Robert Cialdini that suggest the answers that customers provide might not always be correct. If you politely ask a customer a question regarding what they're thinking or what they may doing in the future, customers will most likely give you an answer.  According to the research, the answer the customer provides has a reasonable likelihood of being wrong.

In many satisfaction surveys customers are asked to provide reasons why they gave a specific answer or what they are likely to do in the future. Some of the confusion that may arise when asking for comments comes from the fact that the customer may currently be considering the response to the current survey while at same time being asked how he would behave in the future. While this has not  been specifically studied by Drs. Schults and Cialdini, it's the first step in recognizing that we often ask too much of customers during the time they are taking a survey.

These scientists performed a study of several hundred California homeowners and asked them to predict which of four messages would be most successful at persuading them to take steps to conserve energy and reduce their overall energy consumption. The four messages were 1. Conserving energy, helps the environment; 2. conserving energy protects future societies; 3. Conserving energy saves you money; 4. Many of your neighbors are already conserving energy.

The results of the study suggested that the message about what the neighbors were doing was the least likely to influence their behavior. The researchers, however, discovered that this was the most effective message when it came to changing the behavior of the neighbors. One conclusion was that even though most of the neighbors denied its effect, the desire to keep up with the Joneses was the real driving force.

While there is much to be said about the other experiments performed by these researchers, the bottom line maybe simple. One conclusion that might be drawn from this research is that people don't always act consistently with what they have said.  If this conclusion has merit, those who are performing customer satisfaction and loyalty surveys may want to reconsider both the design of the survey and interpretation of survey comments. In the end it may be more important to watch the way the customers act rather than to act on what the customers say.  We are sure someone's mother must have said at one time or another "it's not what you say but what you do that counts."

Customer Retention of Contract Customers

The customer Institute usually publishes information regarding a specific research topic. This blog will be different in that it is primarily commentary. The topic of this blog "customer retention" will focus on companies that have long-term contracts with their customers. Customers with long-term contracts are very different from customers that are dealt with one event at a time with no long term commitment.

A study was done by the customer Institute several years ago that examined the migration of customers between competing companies. The objective of the study was to examine the roles of customer acquisition versus customer retention. One of the most interesting outcomes of the study was that the impact of customer retention (increasing the rate of contract renewal) on market share was greater than the impact of customer acquisition.

One of the challenges that companies (with long-term contracts with their customers) have is remembering the value of that customer even when the long-term relationship has been legally consummated and now is the time to start supporting the customer. Companies can easily become complacent once that long-term agreement is signed.  It becomes very easy to give the long-term customer lower priority than the potential new customer. However, it is important to remember that the long-term value of the customer (with the long-term contract) is greater than the short term opportunity.

The bottom line is that companies who develop long-term contracts with their customers need to focus on  retaining those customers. Long-term growth in market share comes from increasing retention rates of those customers with long-term contracts. In other words, the long-term customers represent your greatest opportunity for growth and market share.