Do Companies Really Care About and Value Their Customers is by Ray Miller as was originally published in 2011
Apparently not enough!
Last week American Express released the findings of its Global Customer Service Barometer, a survey conducted in the U.S. and eleven other countries exploring attitudes and preferences toward customer service.
Following the release of this survey I expected to hear alarm bells going off across the corporate world but so far at best I have heard only a resounding tinkle. Maybe it’s the dog-days of summer or perhaps the FIFA final last week. Regardless, these survey results are an important wake-up call and if you want to improve you organization’s performance you will want to have a hard look at it.
We all know that there is plenty of corporate rhetoric and advertising which espouses the importance of the customer but I am sure you will agree that actions speak louder than words. Far too many companies are not living up to their promises and the Amex survey results confirm this.
Depending on where you conduct business, 4 to 6 out of 10 customers believe that most companies are helpful, but don’t do anything extra to keep their business. While on the surface this may seem to be acceptable, given the fact that the vast majority of customers (90% or more) want greater value in the form of an exceptional service experience, this number becomes significant and perhaps, scary.
To make matters worse a further 2 to 3 out of 10 feel that the companies they conduct business with take them for granted or don’t care.
Most people seem to feel that their service experience has not changed or it has become even worse. In numerical terms, it suggests that 8 or 9 out of 10 customers may be at risk.
The research further indicates that roughly nine in ten customers or more find customer service to be important when deciding on companies with which to do business particularly during the current economic environment. The only markets not affected appear to be France, the Netherlands and Japan where it seems that the service experience is not as important.
It doesn’t take an MBA to realize that the customers at risk are quite likely the same ones that consider service to be important, especially in the current economic environment.
Last week I also saw some research which suggested that you should not focus on delighting customers, but rather focus on a positive customer experience. Keep in mind that from the customer’s point of view, there are three possible experiences; Negative, Neutral and Positive.
Dissatisfy = Negative
Exceed Expectations = Positive
Satisfy = Neutral
Remember if all you do is Satisfy customers this means the experience they have had is actually one which is nothing more or less than they expected. Certainly not an experience which they will tell others about. This becomes significant considering the survey findings which indicate that close to 90% of customers are highly influenced by the recommendations of friends and family. And if a customer expected a mediocre experience, this will hardly guarantee any repeat business.
I don’t know about you but if every company that I dealt with focused on a positive experience, I would be both shocked and delighted.
The Amex study also revealed that the criteria used by most customers when making buying decisions these days includes: (in order of importance)
- Value for the price
- Overall quality of customer service
- Knowing the company will be there to resolve any problems
- Benefits the product or service provides
- Convenience
- The way the product or service makes me feel
Customers appear to think that the three most influential factors when deciding which companies they do business with include personal experience (98%), a company’s reputation or brand (92%), and recommendations from friends and family (88%).
Upon closer analysis of the Amex research findings, the companies at greatest risk of losing a significant percentage of their customers are located in Canada, the UK, Australia, and Italy where only 10 to 15% of customers report they feel valued and have any sense of loyalty. In the USA 24% of customers feel valued. And while that number is better than others, it means that 7 out of 10 customers are at risk.
Here’s the wake up call.
Clearly customers are focused on getting good value for their money. A high percentage indicated that companies haven’t done enough to improve their approach to service in this economy. If you don’t act now, you will lose customers.
There is a huge Pay-off for any Company serious about enhancing the customer experience.
There is plenty of empirical evidence which supports the view that customers are willing to pay more when they believe that the company they are dealing with delivers excellent service and demonstrates that they value the customer’s business. The Amex study has reconfirmed this and the pay-off is significant. Depending on where you conduct business, customers are willing to pay from 7% to 11% more.
In addition, current thinking suggests that it is 5 to 7 times more expensive to acquire new customers than it is to keep the ones you have. AND, loyal customers cost less to serve so a greater percentage of each sale finds its way to your bottom line.
While we are at it, did you know that the cost of poor service is typically between 25% and 35% of your gross operating expenses?
What Next?
You have several options.
Door #1: You can “stay the course” and deal with a smaller customer base. This is probably fine since you will need to eventually cut back on more staff anyway.
Door #2: You can focus on acquiring new business. That should get you plenty of new faces to replace the ones which will be leaving out the back door. At least until they have a service issue and don’t feel valued.
Door #3: Make customer focus a strategic part of your business plan. Not when the next budget cycle starts, but now.
If you decide to go with what’s behind door #3, here are some thoughts to get you started.
In a Customer-Focused organization, Leadership, Processes and People are customer-aligned. This means that:
Every action is shaped by a relentless commitment to meeting and exceeding customer expectations regarding product and service quality.
Customer touch points and supporting internal processes are constantly evaluated and improved to meet or exceed those expectations.
Employees are aware of their role in maintaining a valued relationship with their external and internal customers.
- Use a piloting approach to role out your customer focus strategy. Learn, adjust and then roll out, while using managers involved as internal change agents and catalysts.
- Make this issue important. Don’t hand everything over to HR or Marketing. Identify a Senior Sponsor who is passionate about the customer experience and provide the budget and resources needed to make it happen.
- Create a balanced set of customer-based measures as key indicators to manage the business and enable real accountability for them.
- Design Customer Focus from the outside in. It needs to be driven by the Voice of the Customer and deliver it from the inside out by using the Voice of the Customer to drive internal deployment, culture change and alignment.
- Conduct external measurements and surveys first and act on them with clear priority setting and assigning accountability for outcomes.
- Ensure your employees gain the knowledge and skills they need in order to understand and execute their Customer Focus role and get them trained.
- Ensure that your People/HR team translates the customer needs into Customer Focused hiring specifications.
- Ensure that the performance management system is aligned to embody Customer Focus, and that your measures and rewards encompass the desired Customer Focused behaviors and skills.
- Ensure that team leaders, supervisors, managers at all levels and senior leaders are trained to lead by example and do what is needed in order to build and sustain a customer-focused environment. We call this Customer-Focused Leadership.
If you are not sure where to start, get some external help. We have been helping our clients sharpen their customer focus for over 20 years. Any gains you realize in the short term will more than offset any investment you make. And we can show you how.
If you have not seen the summary of the American Express Global Customer Service Barometer results we have them in our article library. Amex gave us permission to post it on our websites, so feel free to have a look.
The opportunity is significant for any Company willing to do what it takes to join that small number of highly successful customer-focused organizations.
Ray Miller is the Author of That’s Customer Focus! and The Customer Focus Companion and Managing Partner of The Training Bank
The Training Bank is a full service training and development firm which specializes in fully customizable Leadership, Customer Focus, Service Excellence, Management and Supervisory Development training.
Visit our websites at www.thatscustomerfocus.com and www.thetrainingbank.com or call us at 519 284-8080. We will be pleased to be of service.