(Part 4 of a 4-part Series)
Even in this day and age, some people still need convincing that improving the customer experience actually generates more revenue and saves on costs. Many studies have been done on this topic over years past, along with more recent articles, speeches, books and blog posts. It made me wonder why people still question this. Here are some of the key findings consolidated from these various sources:
Price is not the main reason for customer churn; it is actually due to the overall poor quality of customer service. – Accenture Global Customer Satisfaction Report
A customer is 4 times more likely to defect to a competitor if the problem is service-related than price-related or product-related. – Bain & Company The probability of selling to an existing customer is 60 – 70%.
The probability of selling to a new prospect is 5 – 20%. – Marketing Metrics
For every customer complaint, there are 26 other unhappy customers who have remained silent. – Lee Resource
A 2% increase in customer retention has the same effect as decreasing costs by 10%. – Leading on the Edge of Chaos (Murphy & Murphy)
96% of unhappy customers don’t complain; however, 91% of those will simply leave and never come back. – 1st Financial Training Services, Inc.
A dissatisfied customer will tell between 9 – 15 people about their experience; and around 13% will tell more than 20 people. Happy customers who get their issue resolved tell about 4 – 6 people about their experience. – White House Office of Consumer Affairs.
70% of buying experiences are based on how the customer feels they are being treated. – McKinsey & Company
55% of customers would pay extra to guarantee a better service. – Defaqto Research
It takes 12 positive experiences to make up for 1 unresolved negative experience. – Understanding Customers (Ruby Newell-Legner)
A 5% reduction in the customer defection rate can increase profits by 5 – 95%. – Bain & Company
It costs 6 – 7 times more to acquire a new customer than to retain an existing one. – Bain & Company
80% of the population thinks that smaller companies place a greater emphasis on customer service than large businesses. – American Express Survey
In the last year, 67% of customers have hung up the phone out of frustration that they could not talk to a real person, or get an answer quickly. – American Express Survey
So, with this weight of evidence, it makes sense to focus on improving the Customer Experience. News of bad customer service reaches more than twice as many ears as praise for a good customer experience. Any business that has customers is in the “people business”. Smaller companies can differentiate themselves from large competition and gain new customers through great service.
Action Item 1: Take the time to sincerely address unhappy customers and do everything in your power to remedy the situation. It’s not only worth keeping their business, but also avoiding any negative exposure through word-of-mouth.
Action Item 2: Customer feedback is gold! Come up with internal processes to track complaints and manage their resolution. Make it easy for customers to give feedback and tell you about problems they are having. The value added to your business is worth it!
Losing even a single customer can be very costly. It’s crucial that companies turn a complaint into a positive for the customer (and for the company moving forward).
Action Item 3: Eliminate unnecessary barriers between you and your customers. Allow your customers to ‘self-serve’ themselves by implementing a Customer Service Portal.
Bruce Springsteen once said, “Sustaining an audience is hard.” Although your customers won’t love you if you give bad service, your competitors will. Competing on price alone isn’t the most effective way to develop customer loyalty so your business sustains itself.
Great service, delivered time and time again, is defensible against the stiffest competitors and the most well-funded competition. It demands a consistency of thought, of purpose, and of action, over a long period of time; and, it must be ‘driven’ from the top of the management chain.“Whatever you are, be a good one.” – Abraham Lincoln