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Wednesday, September 30, 2015

The Five Most Powerful, Yet Least-Frequently Heard Words in CRM

You don't have to look far to find a story, a You Tube video or a Facebook post about how a company or organization failed to satisfy a customer.  Stories of dissatisfaction are just all too prevalent.  When things go wrong, it’s appropriate for customers to complain and today’s ‘enlightened’ management seems goaled to respond.  But far less visible are stories of satisfaction.  Not because they occur less frequently.  No doubt, most service encounters and customer interactions end up with satisfactory if not delighted outcomes.  But, when satisfaction is delivered, there’s less motivation to act on it.  Appropriately, customers shouldn’t feel the need to compliment a business for simply doing ‘the right thing’.  But sometimes, when a customer is unexpectedly delighted they are motivated to comment on their delight.  But this action, this comment imposes a whole new challenge to the business.
We write our fair share of letters of complaint; but we also try to send letters of compliment in situations of extraordinary outcomes.  Our complaints are almost always acknowledged.  But our compliments?  Funny thing, they’re almost never responded to!  So ask yourself, have you ever told a customer these five powerful words, “Thank you for your compliment”? 

It's Not 'Rocket Science'!

Acknowledging compliments should be one of the most obvious practices a business can undertake.  And yet, few businesses do so.  Why?  Well, first off, a compliment bears no troubling threat (“I’ll tell 100 people”, etc.).  Second of all, no one is in charge of compliments!  Larger, forward thinking organizations with Chief Customer Officers should probably institute “compliment departments”, but currently we know of none.
So why our concern?  It’s all about building relationships with customers, and these days nobody doesn’t want a relationship with their customers.  So, put yourself in the role of an enthusiastic customer.  He or she takes the time to reach out to a company or brand to exclaim their extreme satisfaction.  And then, what happens?  Nothing!  And lo and behold the bond with this customers has been weakened - if not destroyed!

An Example: We're Acknowledged

We were reminded of this issue because a month or so ago we wrote a note of compliment on a restaurant’s database counter card.  We noted that our server was extremely attentive, very knowledgeable and a real ‘host’ for the restaurant.  About a week ago (a bit late, but still exemplary) we received an email from the manager of the restaurant, thanking us for our compliment.  Bingo!  The result?  We felt: listened to, appreciated, and acknowledged.  In short, we felt closer to this business; our relationship was strengthened - we'll definitely return.
Ever since our first book,
Aftermarketing, published in 1992, we’ve recommended the following course of action for responding to compliments:

  • Respond as quickly as possible and use a medium of communication with a priority equal to or higher than that by which you received the compliment.  (Don’t respond by USPS letter to a compliment received by email.)
  • Restate the exact compliment you’ve been given. This helps reinforce, in the customer’s mind, the praise offered you.  If possible, back up your restatement with some additional facts or evidence.  This information will provide the customer with 'content' to share with others. 
  • If you’re involved in a telephone call or on-screen chat, try to elicit the compliment from the customer again (further reinforcing the compliment).
  • Thank the customer for their business(If you have affinity merchandise, send something along to further bond with the customer.  A paperweight or other item can serve as a ‘conversation starter’ allowing the customer easier entry to telling others about their delight with your company/brand.)
  • Encourage advocacyIf you have a user community or other channels for ‘privileged information’ about your company or brand offer the customer participation.  If not include some "insider news" about your company or brand - it'll give your customer something to mention to others (in the name of your brand).

Customers with compliments are everyday advocates asking to be reinforced in their zeal and commitment towards your brand.  Don’t let yourself down by failing to ‘close the loop’ with them!  Formulate your 'compliment handling process' today.

4:09 pm edt          Comments

Tuesday, September 22, 2015

The Role of Customer Satisfaction in 'Won and Done' Categories

Acquiring customers is an expensive proposition.  But marketers readily invest in attracting them because they know that over a customer's extended lifetime they  generate profits as a result of: 1) their stream of repurchases; and 2) the upsells they engage in (purchases of related products and line-extensions).  Both actions are dependent on their satisfaction with the original product. These actions are the most generally acknowledged rationale for satisfying current customers. Unfortunately, only secondarily are current customers’ recommendations, referrals, and positive word of mouth offered as an additional justification for insuring their satisfaction.  And, maybe that's a result of disparate purchase frequencies among product categories.

The Role for Satisfaction without Immediate Repurchase

In the world of fast moving consumer goods and services (from soft drinks, to auto insurance, to running shoes) the repurchase/upsell model is commanding and the need to satisfy customers is obvious.  But what about categories of less frequent repurchase and non-existent cross-selling?  How is customer satisfaction to be promoted in categories in which the re-purchase cycle is extremely lengthy or when the need to re-purchase doesn’t normally recur at all?  For example, how many times will one buy a house, need a new baby stroller, purchase a refrigerator, or get braces for one's kids?  For that matter, the typical American car is now being replaced only every 7+ years, and the interval between return trips to Disney World has extended as well. In these categories there simply is no ongoing stream of purchases; no opportunity for upsells nor cross-sells to be impacted by customer satisfaction. Yet marketers competing in these categories often nevertheless crusade for satisfied customers. What do they know or what have they assumed?

Consider the 'Won and Dones'

Marketers in such won and done businesses resign themselves to the situation and accept it as just the reality of their category. They make today’s sale, find gratification in their satisfied customers and move on to find their next new customers. In their preoccupation with winning more new customers, they may do little to maintain active relationships with their ‘past’ (done) customers.  Furthermore, they may dismiss the potential of word of mouth, mistakenly considering it an "unmanageable force". Faced with such impotency, they simply ‘hope for the best’.

We’re strong believers in word of mouth, as you no doubt know. And, interestingly, it’s these won and done categories that make the best argument for harnessing the power of word of mouth.

You see, the only way to directly benefit from satisfaction in a won and done category is to motivate satisfied customers to acknowledge to others the good product, superb service and/or excellent care they’ve received!

Word of mouth gets that job done. But it requires direction and management. That’s where approaches like our 
Identifying & Arming Advocates program comes in. You need to identify those customers most likely to communicate about a company (or its products) and then provides them content, opportunity, and motivation to advocate.

8:31 pm edt          Comments

Tuesday, April 7, 2015

Convert More Leads To Sales
Only 3.6% of leads from customer and employee-referrals convert to sales.  (1,000 leads produce a paltry 36 closed sales!)  However, 3.6% looks good compared to conversion rates from other lead-sources.  Consider:
  • 1.6% for website leads
  • 1.5% for Facebook/Twitter/Social Media leads
  •   .8% for advertising and marketing leads
  •   .6% for trade show leads
  •   .5% for webinar leads 

While discouraging, these closure rates probably aren’t a complete surprise. If you consider it further, the superiority of personal recommendations should be no surprise as well.  We’ve previously cited research from Nielsen and other organizations to reinforce our belief in the power of personal communications versus institutional sources.  People simply trust other people!

There's No Hiding From the Numbers


Yes Implisit, the sponsor of the research that generated this information did gather the

numbers in a B-to-B environment. No doubt many consumer products enjoy higher close

rates.  But even so if generating new sales weren’t so critical we might be tempted to ‘throw in

the towel’ on the lot. After all, the highest conversion rate is a measly 3.6%! 


Or, the Reality

The answer might just have to be one of generating a lot more leads - the most productive type of leads - those generated by customer and employee word of mouth.  Unfortunately, no matter how great your product or service, even the most loyal of customers usually don’t generate the level of word of mouth you deserve.  And strange as it seems, even those people whose paychecks are dependent on your company’s success (your employees) may not be of the mindset or have the total corporate picture needed to speak to their friends, neighbors, relatives or strangers about your brand.

Turning Customers (and Employees) Into Active AdvocatesPositive word of mouth can be an incredibly powerful force in encouraging potential customer to consider and buy a brand, but it doesn’t easily happen without some facilitation.  Both customers and employees need a well-orchestrated word of mouth management program; one that provides them:
  • Motivation
  • Opportunity
  • Content
so they can effectively lobby for your brand.
Until such individuals are reminded of their connection to your brand they won’t be motivated to promote it.  This holds unless and until an incident or event occurs that provides them with an opportunity to express their opinion.
Further, until they are provided with content and a 'story' to tell, most won’t be helping you build awareness/consideration and they aren’t likely to be heard recommending your brand.
8:28 pm edt          Comments

Saturday, February 21, 2015

A Simple Story of Customer Lifetime Value

We don’t read much today about Customer Lifetime Value.  Maybe it’s not exotic enough to command much attention, but we all know it’s critical to business success.  Our friend, Tommy the barber, understands the concept completely though he won't use the term.  Follow with us through an example of lifetime value using Tommy's barbering business.  We’ll not only consider the value of a single customer over time, but also the added (and often overlooked) value of a customer's ‘multiplier effects’ that add far greater significance to a customer's value.

Our friend Art is a long-time customer of Tommy, an aging barber in his little old-fashioned barber shop.  Including tip a haircut at Tommy’s costs $20.  At this price, an individual hardly seems worthy of too much attention.  But Tommy would be the first to point out the error in that observation.  Tommy knows that Art’s worth far more than the $20 he pays on any given visit.  That’s why Tommy will stay open a half an hour later if Art’s running late, and never hurries his attention to Art’s cut – even when the waiting area is full.

Those $20 Bills Can Add Up!

Tommy’s figured things out.  He understands that Art gets his hair cut every three or four weeks – like clockwork.  So, since he’s been a customer, Art’s value each year to Tommy has been about $300.  And, because Art has been a loyal customer of Tommy’s for the last 10 years, he’s put no less than $3,000 into Tommy’s old cash register.  This could be Art's “lifetime value”; an amount considerably more meaningful than the $20 transaction for a single visit.
But There's More....
But Tommy would point out that Art’s lifetime value is actually a lot larger.  Not only is Art still a relatively young man with years of haircuts ahead of him but his word of mouth is extremely valuable to Tommy's business.  Art was responsible for recommending Tommy to us.  We subsequently recommended him to three others, who each became his customers.  We know at least one of those customers has recommended Tommy to two additional folks who also became customers. So the ‘snowball’ of positive word of mouth accumulates adding an exponential amount to Art's own, personal contribution.  The fact is, Art and the additional customers he's sent to Tommy have been worth almost $6,000 - to date - and that amount grows each month!

In past articles and talks we’ve employed similar examples from local pizza parlors, gas stations, life insurance agents, etc..  These examples taken from businesses with seemingly small transaction revenues dramatically make the point that a customer is worth so much more than his or her typical purchase.

No doubt you were ahead of us as soon as you began reading this column.  But, we hope Tommy’s appreciation for Art's value gives you some ideas about how to compellingly communicate customer lifetime value to your colleagues and subordinates (sometimes even higher-level managers).  It’s a lesson that can’t be underestimated in its importance.

8:46 pm est          Comments

Thursday, January 29, 2015

Do Your Employees Know Too Much to Think Like Your Customers?

Mark Zuckerberg and a coalition of technology companies (including Ericsson, Qualcomm, Nokia and Samsung) and nonprofits have teamed-up with the aim of bringing the Internet to the two-thirds of the world’s population that currently doesn’t have it.  A lofty, admirable goal.

Beyond our respect for the societal benefits of this project, we discovered within reports of the project an intriguing challenge they faced: getting ‘Silicon Valley types’ (who live with high, hi-tech items) - to comprehend life in, say, a farming village in India!
While building a permanent lab to simulate in-market technology conditions, Facebook became aware of the ‘disconnect’ between their view of their category – as ‘insiders’ – and the perspective of their target customers.  To Silicon Valley insiders a 2010 Android phone is “ancient” but to many of their target customers it’s “high technology”.   When forced to interact with such hardware, staffers were heard referring to “low-end” phones and networks.   Of course for the majority of the world’s population a first generation Android phone is not “low-end” or ancient but rather is current reality.  And before the engineers could begin to conceive of how to tackle the adoption problem, their mindsets had to be drastically altered. Rather than thinking and talking about “low-end equipment and service” they needed to start referring to it as “typical hardware”.


Great, But What's This Got To Do with Your Business?

You aren’t tasked with bringing the Internet to the world’s population, but we see an important lesson here.  Just like those Facebook technologists, most business executives and marketers are simply so close to and so knowledgeable about their products and category that they fail to relate to and experience their category from their customers’ perspective.  They’re privileged to use the latest and greatest versions of their products and by doing so can be out of touch with their customers’ current perceptions and problems.  Like Facebook’s technologists they are industry insiders and very different from most of their customers and prospects.

Consider a few examples we’ve encountered in past assignments:

  • Insurance company executives observing focus groups conducted among their policy holders refused to believe they were bona fide customers.  Why?  Because the participants hadn’t carefully read their insurance policies and didn’t really understand the coverage they were paying for.  (The executives, on the other hand, lived and breathed the details, understood the terminology and legalese, and would never have bought a policy without reading and digesting every word.) The executives weren’t bad people, they simply couldn’t comprehend any customer not having the same information as they had.
  • Auto executives found owners' descriptions of the Owner Experience as inconsistent with their reality.  In lengthy discussions it was learned that the executives had never purchased a car in a dealership but rather selected their next year’s model from a company website and the car was subsequently delivered to their corporate office.  They hadn’t visited a dealership for service because their Administrative Assistants scheduled their cars for servicing.  The car was picked up at their office and dropped off later the same day, washed and detailed to perfection.  They knew all the design features and specs and how their cars compared with the competition, but their corporate positions actually limited their opportunity to experience their product in the same way as their customers.

Challenge Your Perspective, Step Outside Your Office and 'Look In'

We all want our executives and staff members to know everything there is about our products and our category.  Ideally we would like customers to share much of the same knowledge.  But pragmatics interfere; consumers interact with too many types of products and services and lack the time or the inclination to listen, read, or digest the information available.  The two realities are very different.  Taking steps to help management understand the experience of a “typical” customer, and even encouraging your internal partners to modify the language they use to talk about it, as Facebook’s coalition did, can lead to progress in delivering higher quality products and services.


5:39 pm est          Comments

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Customer Experience Partners, LLC
Measurement, Management, Optimization
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