The Money Is In Customer Engagement
by Miki Saxon
If I suggested that you spend five times more money to sell your product than you are currently the most polite thing I can imagine you saying is, “You’re nuts!”
Yet that’s what it will cost you every time you turn off a current customer and have to find a new one to replace her.
An article at the Gallup Management Journal on customers reminds you that
“Frederick F. Reichheld, author of the widely read The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value, showed that making loyalists out of just 5% more customers would lead, on average, to an increase in profit per customer of between 25% and 100%. Reichheld’s analysis showed that the cost of acquiring new customers was five times the cost of servicing established ones. The implication is that managers who depend on all manner of snazzy products and flashy ad campaigns to lure new buyers will always be playing catch-up with companies that concentrate on keeping established customers happy. “
Loyal is different than satisfied.
“Proprietary Gallup research shows that the key to wooing customers isn’t price or even product. It’s emotion.”
What’s better, Gallup explains its new 11-question metric of “customer engagement,” called CE11, including the actual questions and formulas involved. I highly recommend that you click the link, read it, print it, discuss it with your team and develop your own version to use.
Stats and surveys are great, but my own experience says that what makes learning easiest are stories from the trenches. In this case, stories of companies who are using spectacular customer service to retain what they have, as well as grab new market share.
Stories galore, along with cautionary tales, are offered up in Business Week’s cover story Customer Service in a Shrinking Economy that includes the top 25 companies in BW’s third annual customer service ranking.
“Top performers are treating their best customers better than ever, even if that means doing less to wow new ones. While cutting back-office expenses, they’re trying to preserve front-line jobs and investing in cheap technology to improve service.”
According to a study by The International Customer Management Institute, “eliminating just four reps in a call center of about three dozen agents can increase the number of customers put on hold for four minutes from zero to 80.”
That is a huge hit if the 80 include your most loyal customers.
Amazon took first place and I think Jeff Bezos’ comment on the difference between customer service and customer experience is well worth taking to heart.
“Customer experience includes having the lowest price, having the fastest delivery, having it reliable enough so that you don’t need to contact [anyone]. Then you save customer service for those truly unusual situations. You know, I got my book and it’s missing pages 47 through 58.”
When laying off, companies tend to do it bottom up and “bottom” frequently means customer service/customer support—which is just plain dumb.
Jeff Bezos understands that as do the CEOs of the other 24 companies on the BW list and thousands of small and medium companies across the country.
When you do sit down to analyze where to save remember two things
- if you don’t keep your current customers really happy you won’t be around; and
- if you decimate product development it won’t matter.
That said, perhaps it’s time for companies’ “across the board” cuts to include the senior staff. You can pay a multiple customer service/support people for the cost of one vice president.
Cross training at all levels should be standard and asking people to cover two jobs should apply to upper management and executives, too.
Image credit: sxc.hu
