In the Age of the Customer, superior customer experience is the path to success

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Satisfaction Guaranteed stamp - 190We live in the age of the customer. Never before have customers had so many options, so much information, and so much power.

What customers wants from companies is simple: a consistent, high-quality, on-brand experience every time they interact with the company.

Consistency is one of the most important parts of this formula. Customers don’t expect happiness or delight every time they interact with a company, and don’t need it. They do want their expectations fulfilled.

And 89% of customers say that a poor experience will lead them to consider switching, while only 49% of senior executives realize that.

Every year business analysts at Forrester survey tens of thousands of consumers to learn which companies they think provide the best customer experience, which includes did the company meet the consumer’s needs, make it easy, and were they enjoyable to do business with. Some of the top rated companies for customer experience include Amazon, USAA, Southwest Airlines, local credit unions and regional banks, Marriott Hotels, Hilton, Old Navy, Kohl’s, Costco, and UPS. Internet service providers and cable companies don’t generally rate very high.

An analyst at a different company looked at the Forrester customer experience leaders and laggards over a six year period and compared the performance of their stock to the broad S&P 500 index. He found that companies with highly rated customer experience significantly outperformed the market average, and those with poor customer experience underperformed the market.

Graph: customer experience leaders outperform market and laggards

There may be a “causation versus correlation” issue here. But given that it costs several times more to gain a new customer than to retain a current one, and that 89% of customers who have a poor experience have switched brands, it seems pretty intuitive that companies that provide superior customer experience will prosper.

It may seem intuitive, but we’ve all experienced companies that provide inferior products or poor service. Sometimes they go out of business, other times individual product lines fail. And sometimes a company, likeWal-Mart, can continue to prosper despite poor service by providing everyday low prices.

So what’s a superior customer experience look like? Just walk into an Apple store.

When Apple decided to open retail stores they didn’t just copy successful retailers, they deconstructed the entire retail experience to figure out how to improve every aspect of it. When they opened, walking into a new Apple store was unlike any other retail experience. The products were beautifully displayed and available for trying out, knowledgeable Specialists and Experts moved around happy to answer questions, and Geniuses provided excellent customer support. Maybe the real transformational moment, though, was when you actually bought something: you didn’t have to stand in line at a cash register. The sales person just pulled out a small handheld device, swiped your credit card and you were on your way. Delight.

Apple Store

Now compare that to the experience that my wife and I had with a major appliance store chain. When our 20 year old dryer died we bought a new dryer (a lengthy payment process at a computer terminal out of the 1990s) which was supposed to be delivered in less than a week. After a few days they called to say that the dryer that had arrived from the warehouse was damaged so they’d need to get a replacement and delivery would be delayed a few more days. No big deal – until a few days turned into a week, and then two weeks, and then three, and still no dryer. So we finally cancelled. Ironically, we had become so comfortable with hang-drying our clothes in the meantime (it just takes a few hours on a sunny day outside, or overnight in our basement with a dehumidifier that’s always running anyway), that we never did buy a dryer. They refunded the original purchase price on my credit card, but the receipt that they sent me came in a plain envelope with a hand-written return address, not a company envelope.

A few months later when our 12-year-old washer died (it was the Year of Dying Appliances, our 9-year-old hot water heater also went in the same period but at least it was still covered by a warranty), we bought a new washer at a local appliance store that was recommended by friends, and it was delivered and installed five days later.

So the large appliance store lost out on about $2,000 in sales due to a poor customer experience.

Zappos Free Shipping and ReturnsSometimes the product return experience can be key to customer satisfaction. When Zappos opened they told customers that they could return shoes for any reasons. That was kind of radical. Did customers believe them? I heard the CEO of Zappos, Tony Hsieh, speak and he described how they learned that their most loyal, repeat customers were ones who returned the first pair of shoes that they purchased. They had tried out and learned that the guarantee was real, and it was easy, and that made them comfortable with buying more goods from Zappos. Ironically people who kept their first purchase didn’t have as high of a lifetime value.

Companies in any industry can provide a superior customer experience. USAA consistently outscores other financial services companies. It’s a member-owned company, and all members are current or former members of the military and their families. Since it does not have stockholders,  profits to go the members; in 2010 it distributed $1.3 billion (and did not need a government bailout in 2008). They have a senior executive in charge of Member Experience, it reimburses up to $15/month in ATM charges by other banks, its credit rates are 43% below the national average, they were one of the first banks to allow depositing a check by email or smartphone, and much more.

USAA home page

They actively preach customer service, and they practice what they preach.

One of the least likely areas in which you’d expect a great customer experience is in debugging software. Crashlytics provides software that tracks smartphone apps and reports to the developers when they’ve crashed and the line of code involved in the crash. Software engineers can take these reports, find the patterns and debug the software.  That’s very useful.  And Crashlytics covers those basics brilliantly. But how close to “enjoyable” can that get?

Very. Here’s one example. When an engineer fixes a bug and closes a ticket a big red stamp comes down onto the ticket and electronically stamps it “closed”. Engineers were so delighted by this that they re-opened and re-closed tickets just to see the animated stamp do its thing again. That stamp became part of their brand identity.

Crashlytics beta stamp

And then the engineers tweeted about it. And then more and more engineers started using it. And then Crashlytics was acquired by Twitter after less than two years in operation and Crashlytics founder Wayne Chang became the Global Head of Developer Experience at Twitter.

Because that’s what happens in our social media era. People praise, and complain, online. And buyers take recommendations and reviews by people they know very seriously when making a buying decision. Not surprisingly they weigh those recommendations far more heavily than the advertising and other promotions from the company.

So that’s where the circle comes round on itself. Not only does a great customer experience help retain customers and increase revenue and profits, but it makes acquiring new customers much easier and less expensive, too.

How do you go about providing this much needed, superior customer experience?

The first step is to listen to your customers. And an important process is to map all of the interactions your company has with customers, determine which are most important, and work to innovate and optimize those important ones.

While listening to customers may seem obvious in some businesses, especially those in services where you’re hearing from customers every day, many product companies are not nearly so close to their customers. A few years ago when I had my own SaaS (Software as a Service) company I attended a panel of CEOs at a conference on SaaS. They described how as they moved from selling boxes of “shrink-wrapped” software to the hosted SaaS model (such as Gmail, Salesforce.com, and Blackboard) the big change for them was how much closer they now were to their customers. This was surprising and memorable because my company had transitioned from a marketing communications services agency into a SaaS provider, so we had always been close to our customers.

On the other hand, I once had the CEO of a small company, after we had performed  a Net Promoter Score® exercise for them, say to me, “We shouldn’t ask our unhappy customers what they think of us. We know they’re unhappy. It just reminds them that they’re unhappy.” Several years later that company, although in a fast-growing industry, is still the same size.

Your customer touchpoints are all of the times in which a prospect or customer interacts with your company, including your website, social media properties, ads, telephone, events, sales people, support, your products and services themselves, of course, and much more. Not all touchpoints are equally important, and the customer journey is far more important than any individual touchpoint. Remember: customers want consistency, not wildly different experiences at individual touchpoints.

Ironically, by being customer focused, rather than company or profit focused, you can actually end up with a far more successful, profitable company.

Tools:

Net Promoter Score® is a tool used by many companies to measure the degree to which they’re satisfying customers, and they can track year to year improvements with a consistent measure. It’s a simple measure in which one question is asked of customers: “How likely is it that you would recommend [company] to a friend or colleague?” People are asked to respond on a scale of 1-10. If the customer answers with a 9 or 10 they’re counted as a Promoter (+1), with a 7 or 8 they’re Passives (0), and 6 or less they’re a Detractor (-1). Companies with the highest scores have been found to grow faster.

The Harvard Business Review article, “The One Number You Need to Grow”, is one a description of the NPS® method.

There are many online survey tools available ranging from low-cost of freemium providers such as SurveyMonkey, Zoomerang, and SurveyGizmo up to high-end providers such as Qualtrics, QuestionPro and Key Survey.

Voice of the Customer (VoC) programs include Confirmit, Allegiance, Communispace and many others.

Resources:

Forrester Customer Experience Blog

Customer Experience Matters Blog

Delight Blog

Capgemini Customer Experience Blog

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