There's an old adage about it costing five times as much to acquire a new customer as to retain a new one. So why – in these difficult times - aren't more businesses focused on reducing customer churn, and improving customer service levels, to generate more repeat business?
This is fundamentally a cultural problem for many companies. There needs to be a shift in the mindset of larger organisations, in order to keep both staff and customers satisfied. I'm not sure that the balance is right, and I'm hoping that the next decade will be all about retention and satisfaction, so here I'm going to lobby for love. I want you to give more love to your customer services staff, for they are at the forefront of your push towards boosting customer satisfaction...
In an average organisation the sales and marketing department is primarily concerned with customer acquisition, and is rewarded for acquiring new customers. Staffers working in sales and marketing are used to acquisition-related bonuses. At a higher level, marketing executives may be involved in multimillion pound, cross-channel marketing campaigns, jetsetting around the world to oversee the filming of sexy TV ads. This is all very rewarding, in terms of compensation and job variety.
But does marketing really help boost satisfaction levels? And aren't acquisition bonuses a bit, you know, myopic? I'm not suggesting that you should avoid paying staff for bringing in new sales, but what really matters in business is profit. And profit is mainly related to retaining existing customers, keeping them happy, and growing the amount they spend.
So now let’s consider the lot of the embattled customer service department, which is primarily concerned with keeping customers happy. Staffers working in customer services roles (CSRs) are right up against it, judging by the state of the average hold time whenever I call up my friendly ‘service’ centre. These are unloved and undernourished departments, sometimes viewed as an out and out burden by CFOs (who may know a lot less about actual levels of satisfaction that the average CSR).
Yet customer services staffers are in the business of service, and service isn’t always about fixing problems. It can be about providing a helpful experience, based on an enquiry as opposed to an issue. It can also be about helping to convert a prospect to a customer, or about selling up. But CSRs are rarely compensated for acquiring new customers, or generating more money out of existing ones, much less paid a reasonable wage for keeping people happy. They are not used to receiving bonuses at all. And their jobs by and large suck, at least as far as variety and working environment and compensation is concerned.
Isn't this a bit of a joke? Isn't customer satisfaction as important a metric in modern business as any other? Aren't customer services staff more likely to impact satisfaction one way or another, compared to an advertising or direct sales campaign? A well-timed offer might help make somebody's day, but how often do you receive such an offer? Ads and direct marketing often annoy consumers, rather than delight them.
The fact is that we are often most likely to form a positive or negative feeling about a company whenever we engage with them directly. The customer experience at any number of customer touchpoints - in industry parlance - has never been so important. As such keeping your CSRs happy should be at the top of your agenda. Show them some love!
Big does not mean better
There often seems to be an inverse relationship between the size of a company and receiving good service. The bigger a company gets, the harder it is for them to deliver great service. Satisfaction is often measured using industrial, impersonal metrics, by the larger company: number of complaints, sales volume, late payments, and via badly-created surveys.
By contrast, and perhaps rather obviously, smaller companies can be far better at customer engagement than larger ones. They're also well-placed to deliver higher levels of service than the corporate heavyweights (and service can really help a small company to hit the big time). Small businesses do not operate the dreary call centres that make customers chooses from a range of automated options for four minutes before answering (or, as tends to be the case, placing the unfortunate caller on hold for an indeterminate amount of time, and often at the caller’s expense). Small companies are more agile, and staff tend to be closer to the front line, and can wear multiple hats. As such they have a real advantage over the corporate behemoths that spend many millions each year on marketing, but don’t pay enough attention to service and satisfaction.
So can small companies can become big ones without the need for those huge marketing budgets? I think the best ones certainly can. The key is in adopting a solid customer engagement strategy, which should encompass and embrace customer service. By providing excellent levels of service and support, and by proving that you listen to your customers, you can seriously improve your retention rates.
Take Zappos, the online shoe retailer, based in Las Vegas, and now owned by Amazon. At the start of this decade nobody imagined that you could sell people shoes via the internet, without allowing them to try them on, but this is exactly what Zappos does. In fact, it does allow shopper to try on shoes from the comfort of their own homes. It quickly ships the shoes for free, and it has a free returns policy too. As a result customers simply love Zappos. In fact they love the brand – ‘the service’ - so much that three-quarters of sales are generated by existing customers. And all that adds up to a cool $750m a year, with Zappos now turning over $1bn in online sales.
Here’s the nut of it: Zappos uses customer service as it’s marketing. It has described itself as “a customer service company that is in the business of selling shoes”. There’s a lot to take away from that. Customers are so happy with the service that they adore the Zappos brand, and keep coming back for more. This kind of customer-centricity is fundamental to customer satisfaction, yet - despite the myth - not all companies put customers first. It doesn't have to be that way. Simply put, by ramping up your customer engagement strategy you can boost satisfaction.
It is worth trying. Everybody knows that a happy customer sticks around for longer, purchases more often, and is more likely to recommend your brand (in other words, to increase your profits while doing your marketing for you). The end result is an improvement in customer retention rates, which is of massive importance in a difficult market environment.
Consider the rise of Twitter (Zappos certainly did, and uses it with aplomb). Some companies see Twitter as a free marketing platform, but it should be used – first and foremost - as an engagement platform. That means listening and responding first, and promoting as an afterthought. And if you do use it to promote things then be sure to do it in a meaningful way, and to demonstrate real value. We use Twitter to promote our service by giving away free advice, how-to articles, site reviews, and research. It drives interest in our paid-content business (as well as our in-company and public training, and our events). We listen and communicate via Twitter, and we’ve found it to be very helpful in boosting engagement both online and offline. And this is great, because we know that customer engagement is key to improving satisfaction and loyalty rates, and revenue.
By listening to customers, and letting them know that you are listening, you can improve your business, your products, and your levels of service. Your customers, along with your staff, should be your best assets. You need to keep bother customers and staffers happy, satisfied and rewarded.
Remember: happy customers will spread the love about your brand, and keep coming back for more. Zappos knows this, we know this, and you know it too. Make it so…
[Image by vlima via Flickr, various rights reserved]