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Where Positive Customer Experiences Go, Profits Follow

Customer Experience

Owning a small business is a balancing act at times, as it requires a broad focus on the organization as a whole, as well as a detailed view of all the individual components that make a company successful.

However, there’s one underlying factor that reigns supreme in the business world, and threads its way into every department and across every role in your company from top to bottom. What is it? The answer is the customer.

Whether you define customer as an individual consumer, company, vendor or employee, your customer is – and always will be – the core of your business. But the question then becomes, what kind of experience are you giving your customers?

With the advent of digital marketing came a new phase in educating customers on products and services in order to facilitate “the sale”. But when social media arrived, it changed the dynamic between customers and businesses by setting customer service as a priority that needed to be addressed immediately.

Before the age of the Internet, call centers, brick-and-mortar stores and post office boxes were the only way to get in touch with a business. Because of this, customer service sometimes took a backseat to building profits, with the thinking being that customers were so far removed from where a product originated, had a limited ability to spread bad reviews, or there was such narrow competition that it never truly hurt the bottom line.

In the increasingly connected society we live in today, however, word-of-mouth advertising (good or bad) and the immediacy of making a negative customer experience known publicly on social media, blogs or websites like Yelp is forcing companies to rethink their customer service strategies.  This includes your organization’s internal culture [set by leadership], working as a team to create measurable positive customer experiences.

Take a look at these statistics from studies performed by government offices and private companies:

  • 96% of dissatisfied customers don’t complain, but 91% will never use a business again after a bad experience (1st Financial Training Services)
  • An unhappy customer tells between 9-15 people about their experience, and roughly 13% tell more than 20 people (White House Office of Consumer Affairs)
  • 70% of people base their buying experiences on how they are being treated (McKinsey)
  • 55% of customers would pay more for a service whose quality is guaranteed (Defaqto Research)
  • It takes 12 positive experiences to compensate for one negative experience that goes unresolved (“Understanding Customers” by Ruby Newell-Legner)

Yet, one of the hardest pills to swallow for businesses is discovering how deeply intertwined their customers’ experiences are with their financials. To illuminate this point further, here are a few more takeaways from studies that you will certainly find interesting as a small business owner and entrepreneur:

  • People are 4 times more likely to use a competitor if they experience a problem with customer service versus having issues with pricing or a product itself (Bain & Company)
  • A 2% increase in customer satisfaction/retention has the same impact as decreasing costs by 10% (“Leading on the Edge of Chaos” by Emmet Murphy & Mark Murphy)
  • It costs 6-7 times more to secure a new customer than it does to retain an existing one (Bain & Company)
  • 68% of customers stop using a business after becoming upset with how they were treated during a customer service engagement (US Chamber of Commerce)

Now that you have a better understanding of the effects of offering subpar customer service, let’s take a look at some ways you might be able to make improvements in this area.

On our radio show The Second Stage, we sat down with the author of PeopleShock: The Path to Profits When Customers Rule, Tema Frank, who revealed profound insights on how to get the ball rolling on providing positive customer experiences.

During our conversation, Ms. Frank made a particularly interesting point in regards to handling customers issues online, shedding light on how you can not only tackle a problem at hand, but leave a positive impression on others who see the interaction take place:

When you see a complaint online, you want to reach out to that person who complained – and reach out to them in whatever platform they complained on – and say, “We’re really sorry to hear you had a problem. We’d like to try and make this right. Can we talk with you about this offline…and let’s see what we can do?”

If you do that, you’re signaling to the whole, broader community that you’re taking [your business and your customer experience] seriously.

Some other ideas you could also begin implementing, whether online or offline are:

  1. Keep things simple: Even if you don’t have a call center set up, the simplest approach is usually the best approach. If customers have to go through multiple touch points to have a problem resolved, there’s a much higher chance they’re going to report a negative experience. Give your customer service contacts the power to do things right the first time and you’ll keep your customer.
  2. Focus on your online: Potential customers typically do a lot of research about a product or service on the web well before they make a purchase. This includes reading comments on your social media channels, checking out business reviews and other areas outside of your control. Having issues is inevitable, but as Ms. Frank mentioned above, it’s the way you handle things online that makes the difference – and could lead to both retention and conversion.
  3. Build brand champions: A Forbes headline from last year, Customer Experience is the Future of Marketing, perfectly illustrates the need for providing experiences that lead to customers becoming brand champions. Why exactly? Because customers are now connecting brands with experiences, and when an experience is positive, the brand and its marketing become elevated – sometimes exponentially – through the loyalty of customers.

You can explore more helpful tips by viewing other topics on our blog or listening to our radio show The Second Stage. We also provide a number of valuable resources for entrepreneurs that can assist you on the road to your company’s success.

Posted by: Brendan Anderson A co-founder and managing partner at Evolution, Brendan has spent the past 20 years as an investor and manager of businesses ranging from manufacturing to financial services. @Brendan_Andersn

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