How Educated Customers Raise the Bar on Retail Experience

Customer Dissatisfaction - how educated customers are raising the bar on retail experience The Verde Group

Customers love the ability to shop anywhere — online, in the store, or over the phone. What they hate is the fact that often they feel they don’t have all the information they need to make an informed decision. Or worse, they feel they’ve been misled.

Retailers should consider that their customers usually aren’t wrong. Instead, they may have made a wrong choice because they’re unclear, and it’s often because the retailer didn’t give them all the information they needed.

Educating customers has never been easy, and it’s getting more difficult. The multi-channel shopping experience means customers may get a different experience depending on how they interact with a retailer.

Customer dissatisfaction – broken communication
For example, if the customer bought something online and decides to return it, can it be returned to a brick and mortar store? Is there a cost to return it via courier versus in-store? If the customer phones the store, will the person who answers be able to accurately describe their options and the implications of each?

To make matters more complex for retailers, customers are relying on a number of methods — both online and in-store — to educate themselves prior to purchasing.

A 2017 Canadian Consumer Retail Research Study conducted by WisePlum, Microsoft and the Retail Council of Canada determined that 68% of department store shoppers found that ‘comparing product details or specifications in-store’ was very useful. At the same time, 61% said that ‘comparing product details or specifications online’ was very useful, and 60% said the same about ‘browsing for information on their smartphone’.

Even as retailers struggle to provide complete and consistent information to customers across all channels as part of a true omnichannel experience, customers’ expectations continue to rise. They’re not just comparing retailers with their direct competition, but with every other recent customer interaction they’ve had.

So if they recently had a flawless return experience with Amazon, then a poor experience with another retailer, the former is the new benchmark, and the latter is viewed as a failure.

Customer dissatisfaction – problems pre-purchase
And, according to the 2017 WisePlum research, that shopping experience is often anything but flawless. For example, 39% of department store shoppers said they had at least one problem before purchasing, with the number rising to 47% for Gen Y and Gen X shoppers.

Shoppers encountered many of these problems while they attempted to educate themselves pre-purchase — determining online availability, slow and challenging website navigation, discrepancies between online and in-store pricing, and even a lack of information about delivery charges.

While it’s true that many retailers are making heroic efforts to proactively educate their customers and provide them with complete information, customers could be forgiven for thinking that things are getting worse, not better. Especially if they’re using a credit card or renewing their cable service.

Credit card companies don’t make it easy for consumers to understand their statements. From hidden fees to service charges to how interest is calculated, many customers are unable to untangle the information and make poor choices as a result.

The rules often change with credit card companies as well. Look no further than ever-shrinking payment grace periods. According to consumer advocacy site WiseBread, “Grace periods are getting shorter or being eliminated”.

While cable companies are also known for indecipherable statements, it’s their ‘secret negotiation’ tactics that make many customers’ blood boil. Come renewal time customers know there’s a good deal to be had, but they’re not given the basic information they need in order to make a decision. Instead, they’re forced to speak to a line-up of customer service reps and loyalty managers, repeating their story over and over and watching the clock until a deal is finally reached.

Bad actors aside, there is a lot that retailers can do to reverse customer perceptions and make sure their customers are well-informed. Here are three points to consider:

  1. Look outside your industry for best practices
    Savvy retailers know that they share their customer’s wallet with a wide range of suppliers, not just those in their own segment. Many companies are both creative and effective in how they educate and inform customers.  There is much retailers can learn from them.
  2. Understand how customers buy, and not just from you
    Retailers should use customer feedback and detailed interviews to learn how customers buy and consume from everywhere, and what they view as their most positive experiences. Once it’s understood how they buy and what they’re most receptive to, education efforts are much more likely to hit the mark.
  3. Fix the customer’s problem first, then fix your system
    When a customer has a problem, fix it. They don’t need (or want) to know why your back-end process won’t let them do something or the 12-step escalation chain of command they need to follow. Retailers need to create a culture that says, “Send the customer home happy, then work things out”.

As customers embrace the omnichannel shopping experience, keeping them informed and educated is more important than ever. And if they do have a problem, companies can’t let the customer’s lack of information or understanding get in the way — they need to just fix the problem.

Think of the Ritz-Carlton hotel chain, who authorizes employees to spend up to $2,000 per day to improve the guest experience. Who will be raising the customer experience bar even higher tomorrow?

Paula Courtney is Chief Executive Officer of The Verde Group and Product Founder at WisePlum.

Beware Cross-Culture Comparisons In International Research

customer experience risk The Verde Group

The other day one of my clients forwarded to me a research report citing that 68% of Chinese shoppers were “happy or overjoyed” with their shopping experiences, versus only 48% of American shoppers. While this is an interesting factoid, the data point suggests a more important topic: how to manage the complexities and risks of CX comparisons across global regions.

As of this writing, Verde is conducting baseline and tracking research in 26 countries across 5 continents. Most of these programs are global in nature, meaning that our clients seek to understand and improve their CX in multiple regions. From this work, I’d offer the following considerations for those embarking international CX measurement initiatives.

 

Culture Influences Scale Response

When measuring customer CX attitudes on an international footprint, it is crucial to acknowledge that different cultures respond to scales differently. For example:

  • Latin American and Middle Eastern survey respondents are more likely to offer responses at the extreme poles of a scale, either positive or negative.
  • Asian survey respondents are more prone to “intermediacy”, with scalar scores clustering in the middle.
  • Verde recently was asked by a client to explore a curious situation in the Benelux region of Europe: customers who were “loyal” by most measures (order size, tenure, etc.) but who also were providing Willingness to Recommend scores of zero. We found that these customers were culturally inclined against brand recommendations of any sort, believing that others should make up their own minds with respect to the products they use and promote.

The reasons for cultural scale bias are many, and broad generalizations are obviously risky.  But the biases are definitely there, and they can impact scalar measures such as NPS. This is a key reason Verde supplements scalar measures with binary “ yes/no” assessment of what problems customers have and how those negative experiences impact NPS.

 

CX Maturity Influences Customer Expectations

A country’s CX culture and infrastructure “maturity” will influence a region’s overall expectation set with respect to product and service quality. I have to confess I don’t know much about Chinese shopping habits (Verde’s work in Asia is primarily in financial services, logistics and agribusiness) but I’d be willing to bet that they are appreciably different than those of the US or Britain. So does “overjoyed” mean the same to a shopper in Guangzhou as to a shopper in Nashville, Tennessee?  Probably not.

 

You Can’t Provide Identical Surveys in Two Different Languages

No matter how hard you try, it is impossible to fully preserve a question’s absolute meaning when translating from one language to another. While not a research example, consider KFC’s experience exporting their slogan “Finger Lickin’ Good” to China. As it turns out, when translated into Chinese the slogan becomes “We’ll eat your fingers off.” Hardly a trivial difference.

Shifts in meaning arising from translation may be important depending on which aspects of the customer experience are being measured and whether the questions of the survey have a high degree of nuance.

This is another reason Verde emphasizes experiential assessment of a customer’s loyalty: experiences are tangible and observable, which makes them easier than attitudes or beliefs to render uniformly across languages.

 

And Also…

These three areas are hardly the only complexities when conducting international CX research.  For example, increasingly stringent privacy regulations in certain regions (e.g. the EU’s General Data Protection Regulation overhaul) may make it more difficult for you to maintain comparable sample composition across countries.

Or you may contend with different countries having very different field interaction preferences (email vs. phone. vs. face-to-face) which can introduce modality bias to the findings.

But let’s not get too lost in the weeds.

Candidly, conducting good CX research with clear insights and actionable findings is hard to do anywhere.  It’s just harder to pull off internationally.  Keeping matters of culture, CX maturity and language in mind upfront during the design stage of your international programs will pay large dividends when it matters most: in interpreting the data and developing credible, defensible action plans to improve your global CX based on the insights arising from your data.

Jon Skinner is Executive Vice President at The Verde Group

The Problem With Not Fixing Customer Problems

customer research and not fixing customer problemsNobody likes to hear bad news, but successful companies recognize that negative feedback is a vital mechanism for improving their products and customer service.

So when they hear that there’s bad news that customers aren’t telling them, many companies assume it is product or service-related. They should be asking another question, though. Why aren’t customers sharing the negative feedback? The answer is critical to understanding the customer experience and potential loyalty risk.

Your customers won’t share feedback with you if they don’t believe you’ll take action.

Registering a complaint with a large company isn’t easy — often it involves wading through several phone menus, waiting on hold, then speaking with a customer service rep who may not be empowered to fix the issue.

As a result, many people just don’t go through the complaint process because it’s more of a headache to complain about the problem than the problem itself. And that’s how we end up with products that don’t work, services we don’t want, and ongoing charges that we don’t think we should be paying for.

If customers don’t think they’ll get a resolution to their issue, often they won’t bother to raise it.

A customer who does not bother to let a company know when they have a problem is a customer with serious loyalty risk.  In a 2017 Small Business services study, Verde found that customers who take the time to contact when they have a problem are 50% more loyal than non-contactors, assuming that they are fully satisfied with their problem resolution.  This is typical for nearly all customers across business verticals, both B2B and B2C

That’s good news for companies that make it easy for customers to register complaints and focus on positive resolution. If you are able to fix a customer’s problem and they’re happy with the result, generally they end up every bit as loyal as if they had never experienced an issue.

Citing the same 2017 SMB study, Small Businesses who experienced a problem were 80% less likely to be a Promoter of our client’s services.  But when their problem was fully resolved, all that lost loyalty was recovered.

So how can companies use this dynamic to their advantage?

Make it easy
Customers typically have many options when it comes to lodging a complaint — phone calls, online chat, email, web forms, and even social media. The instructions for each should be clear, and all options optimized for simplicity and speed of response. How many customers calling in for help have had to navigate multiple voice menus, then wait in an endless call queue?

Make an effort
When customers do take the time to reach out, your team needs to know that the objective is to understand and fix the problem. Train and empower everyone, particularly customer service, to focus on a positive outcome — when the customer hangs up they should be happy with the results and satisfied with the interaction.

Follow through and follow up
There’s nothing worse, from the customer’s point of view, than to think you have a problem resolved, only to find out it isn’t. Whether it’s a credit card charge that wasn’t reversed as promised or a missed service call, this event is often the final straw for even the best customers.

Companies need to ensure they’ve taken all the steps to fix the customer issue, then they need to take a final step. They should follow up with the customer to confirm everything is correct, and to make sure the customer is satisfied. This is what is known as a closed loop. Learn more about Verde’s full-service closed-loop tracking program.

Be honest and open
I’ve written about this in a previous post, but it bears repeating. An honest discussion with customers is often the best way to resolve their issues and retain their loyalty. Admitting that your company isn’t perfect, acknowledging your errors, and committing to fix them is a great beginning — just remember it’s all about the follow-through.

Michael Tropp is Vice President, Business Development of The Verde Group and WisePlum

 

 

 

 

Tomorrow is Fine. Free is Fine. What Else Can You Do?

The Verde Group Customer InsightCustomer Insight: How Logistics Raises the Bar on Customer Expectations

Ask any customer shopping online when they want their order delivered, and it’s a good bet they’ll answer ‘tomorrow’.

Thanks to masters of logistics like Amazon and Zappos, customers have come to expect 2-day or even 1-day shipping, sometimes at no cost. They want things NOW and will choose companies based on that expectation. If you can’t deliver, you risk losing customers — even if you have a great product and competitive pricing.

A case in point. Prior to a recent business trip, I needed a new laptop bag. It was Saturday, and I was flying on Wednesday. I found a nice leather case I liked and identified several online retailers who carried it. Whom did I choose? The one who could get it to me by Tuesday and didn’t charge a premium for fast shipping.

Evolving logistics capabilities have impacted the customer experience in other ways. Consumers now want to know ‘where’ their order is every step of the way. And these expectations have spread across industries. If Uber and Dominos can tell you the exact location of their driver, exactly where the driver is, consumers expect that their package delivery company should be able to do the same?

Companies who can meet these constantly rising expectations are being rewarded with increased sales and customer loyalty. Those who can’t may suffer the consequences. Faced with the customer challenge of ‘why drive to the store when I can double-click and two days later it’s at my door?’, Toys ‘R Us had no answers.


Fast and Free Delivery Is Not Enough
With delivery speed and accuracy quickly becoming the norm, how can companies further differentiate the delivery experience? For that, they’ll need to get creative. Going back to my recent laptop bag purchase — supposing the retailer had included a small sample of leather protector in the box? Unfortunately, they didn’t, but adding a small gift or discount coupon can further endear customers to a brand while also providing an opportunity to cross-sell.

Post-delivery follow-up provides another opportunity to differentiate from the competition and add value. This generally takes the form of a post-purchase survey or a request for a product review. Most customers appreciate the touchpoint, and the post-sale interaction typically promotes brand loyalty.

However, when companies master logistics, they can take the Customer Experience to even higher levels. They know exactly when you received the product, how long you’ve had it, and when that product is due for replacement. This mastery of logistics and “big data” gives these companies an edge on their competition – it enables them to be more than a “one and done” with the initial transaction.

 

Where Do We Go From Here?
Customers now expect to get anything and everything to their front door FAST. This has created industries that didn’t exist just a few years ago — think of meal preparation companies such as Hello Fresh and Blue Apron.

The continued growth of online sales and the globalization of supply chains will keep driving logistics innovation. We’re already seeing trials of drones and driverless long-haul trucks. The automatic re-ordering and shipment of products based on a pre-set delivery cycle is certain to disrupt some industries — just ask Gillette, who late last year introduced cheaper razor blades to fend off competitors Dollar Shave Club and Harry’s.

And of course, there’s Amazon, ever the leader in logistics innovation. Amazon continues to surprise consumers with their innovations. In April 2018, they partnered with GM and Volvo to offer product delivery to the trunk of your vehicle rather than your front steps by remotely unlocking your vehicle through the car’s internet connection.   Granted, not all Amazon customers may want to take advantage of this offering, at least initially.  But for those who do (perhaps those with “front porch security concerns”), this is a potentially high value-add service.

Most companies now understand that there is a direct correlation between their logistics ability and their customer loyalty (NPS score). The challenge for these companies will be to develop and deliver innovations to their customers that represent relevant, timely and meaningful improvements.  Understanding which delivery innovations will materially shift customer spend and brand affinity will become a competitive advantage, particularly in those categories where product quality and price are weakly differentiated.

Want to learn more about the link between logistics, innovation and the customer experience? Check out a few of my favorite customer insight articles on the topic:

How Innovations in Logistics Fulfill the Experience Demand

The Amazon Supply Chain: The Most Innovative in the World?

Lori Childers is Vice President, Client Solutions at The Verde Group

Why Do We Lose Customers?

The Verde Group Customer Research

Every business knows the value of keeping their customers.

Yet despite companies’ best efforts customers still leave, and the reason often feels like a mystery. Why do they go?

They experience a problem
This is by far the biggest reason customers move on. 68% to 73% of customers stop doing business with companies because they experience a problem according to Forum, Bain, Verde customer research.

Many companies place a huge focus on fixing the problems they hear about from their customers. It’s a logical action, yet it misses the mark. In fact, more customers will leave for problems companies never hear about — the ‘silent killers’.

You have become irrelevant
This happens when you’ve stopped delivering a product or service that the customer feels is appropriate. Either another company has taken your place, or you’re no longer communicating with the customer in a way that’s meaningful to them.

This last point takes on more significance in the era of data-sharing and personalized social media. Customers assume that when companies take their data, they’ll use it to customize and improve the customer’s experience.

Companies continue to ignore this at their peril. For example, if a customer doesn’t have children but a company promotes online offers at them for diapers, soon the customer may begin to question that company’s relevance in their life.

They don’t need your product or service
Perhaps the customer no longer uses that type of product. More likely, however, they no longer view you as competitive — with your price, your customer service, or the freshness of your product offering.

Reading The Signs
There are clear signs that customers may be headed for the exit. Shopping frequency declines. Share of customer spend drops off. Surveys show a spike in customer problem experiences. Separately or together, these signs all point to a significant risk to the business.

What actions should companies take? They need to engage with their customers and relate to them in a meaningful way, invest in what the customer wants, and understand what those customers are buying from other companies.

Companies should understand that from a customer experience perspective, they’re not just competing with others in their segment. The last, best experience a customer has will become their new benchmark — their expectation for a buying and service experience they now demand from everyone. Fair? Maybe, maybe not. But is it the reality? Yes.

Companies cannot afford to simply react to systemic customer problems. Even if the company recovers, there’s still a permanent dent in customer loyalty.

Recovery systems aren’t enough. With today’s multi-channel businesses and mobile, online and in-store customer interactions, it’s almost impossible to build and maintain a consistent, flawless recovery system. Companies can’t rely on them alone — they must also identify and understand potential ‘iceberg issues’ and do their best to steer clear.

The Uber Effect
Many companies are looking at more radical approaches to transform the customer experience and maintain or increase relevance with their customers. They look to Uber as an example where a technological innovation (in this instance, one that dynamically matches consumer demand to driver supply) has transformed the customer experience, disrupted an industry and allowed Uber to take huge market share from traditional taxi companies.

Companies going down this path will want to look outside of their existing businesses to incubate and innovate. If a transformation is attempted in-house and within the trappings of their industry, the most likely result would be a cycle of continuous improvement, not innovation.

Paula Courtney is Chief Executive Officer at The Verde Group and Product Founder at WisePlum

 

The Four Biggest Mistakes Companies Make When Implementing a Customer Measurement Program

Transform your customer insights by avoiding these common errors 
Technology and analytics have provided companies the means to understand their customers in ways they couldn’t have imagined even a few years ago. Almost every large organization invests heavily in customer measurement programs, yet many don’t achieve the customer insight they’re looking for.

Why?

It turns out that a handful of common missteps are responsible for the unsatisfactory results:

#1. Unclear Measurement Goals
What are the reasons for undertaking the measurement program? Is it a desire to improve your customer’s experience? Are you trying to gauge the success of a recently launched product or service, or understand how you stack up against a competitor?

Companies need to establish clear objectives for measurement programs and ensure there is alignment across the entire organization. Extensive planning and engagement with key stakeholders are critical, as is a clear strategy for the use of the data captured. What decisions will be driven by that data, and who is accountable to take action?

 

#2. Not Enough Time Spent Establishing Ownership
Building alignment within the organization is fundamental to the success of any measurement program. But it’s not enough to just inform stakeholders, collecting their input into the objectives of the program, how it will be structured, and how findings can positively impact their specific business metrics — these are all are critical to the success of the program. And all require a lot of work upfront to get it right.

The most important step is to establish a link between the findings of the measurement program and business issues those findings promise to address. Stakeholders need to know how the program findings may help improve or transform their business.

 

#3. Measuring Customer Loyalty or Satisfaction in a Vacuum
Customer surveys only provide a single data set in any customer measurement program. A single data source provides an incomplete picture, and sometimes a very misleading one.

To truly gain customer insight, you need to establish multiple listening posts across the entire organization. This means gathering information from your sales team, the call center, your service teams, and your complaint management system.

All of this information should be reviewed and packaged holistically. The different data sources may corroborate some findings and create different perspectives for others. This provides a much broader understanding of your customer’s experience.

 

#4 Thinking You Know What Customers Want
Preconceptions can ruin a customer measurement program. Often programs are built in isolation and structured based on what is perceived as important to stakeholders.

Good programs need to be constructed outside-in. Speak to customers before building a survey. These upfront discussions provide customers with the opportunity to tell you their full stories, and many times it’s the qualitative insight you gather that proves most valuable.

This feedback also helps you understand and adopt the language your customers use to discuss your business, which may not align with your internal company vocabulary. For example, if your survey poses questions about the effectiveness of your claims department, but your customer refers to it as your customer service department, your findings will almost certainly be skewed or incomplete.

 

My Challenge to You
Customer measurement programs can provide you with critical customer insight that helps improve your business metrics and shape your company strategy. For these programs to be effective, however, you need to establish clear goals, cultivate alignment and ownership across your organization, and most critically, ask for your customers’ input as you’re building the program.

Paula Courtney is Chief Executive Officer of The Verde Group and a lecturer at The Wharton School

Making Your Customer Experience Research Matter

customer experience research The Verde Group

Find the difference between interesting and actionable insights

By now, the notion that customer experience matters to market success is nearly universal.

A 2016 Gartner survey found that 89% of companies expect to compete primarily on the basis of customer experience — up from 36% in 2012.

Most companies make significant investments in customer research to shape their customer strategies, seeking to understand gaps in customer satisfaction and to develop remedial actions based on research findings.

Yet many companies still struggle to establish a clear link between research findings and meaningful, sustained improvements in business fundamentals.

For some, after many quarters of customer analysis, Net Promoter Score (NPS) – the metric that most companies use to gauge the loyalty of their customer relationships – remains stubbornly static.  For others, changes in customer satisfaction show little relationship to customer revenue growth.

Why would this be the case?  The Verde Group has been analyzing customer experiences for over 20 years, and we’ve arrived at this conclusion: for nearly all categories, customer experience is a rich, complex and dynamic phenomenon that is easy to describe generally using traditional satisfaction research analysis, but is quite difficult to diagnose actionably using those same techniques.

This is why we focus our clients on a different analytic filter for understanding customer experience: the filter of dissatisfaction analysis.

As my colleague Michael Tropp discusses, customer dissatisfaction can be very powerful for interpreting customer experiences.  Rooted in human evolutionary psychology, the concepts are simple:

  • Events that cause us pain are far more influential on what we do than events that cause us pleasure.
  • When a customer says “No, I won’t” (as in “you made my interaction so hard that I won’t buy from you again”) they are far more likely to follow through on that statement than when they say “Yes, I will.” This makes dissatisfaction analysis highly predictive of future customer behaviors.
  • Because problem experiences so strongly correlate to market action, they can be financially prioritized in terms of damage to customer loyalty, revenue or brand equity.

That last point is particularly important.  The objective of dissatisfaction analysis is not to tell companies their customers have problems; they already know that.

And they probably have an overall sense of what those problems are because if they didn’t they’d be out of business.  But what most companies don’t know is which problems are most damaging to customer value and relationship equity.

Now, executives in the C-suite will have their opinions.  But that’s the issue: generally, a company’s problem prioritization is based on partial data, limited analysis and a priori biases.  What’s worse, those opinions vary greatly depending on which executive holds them.

The sales department thinks customers suffer most from one set of problems, but Operations targets a different set.  Marketing focuses on the pain points they think are most crucial, but the Service function has a wholly different point of view.

What happens?  Executive team CX debates don’t resolve, strategies don’t align, and tactics step on each other and undermine overall improvement efforts.

This is why a statistically rigorous, financially based prioritization of the customer experience is so valuable.  It moves the debate from bias to objective facts: which problems are costing us the most in terms of customer revenue and loyalty?  Such a ranking aligns a company’s functions with respect to experience strategy and provides a powerful way to link C-suite strategy to front-line execution.

Maybe dissatisfaction analysis validates what the company already suspected.  That’s a win; validation means the team can move from debate to action.  Or maybe the analysis slays a few “sacred cows”: customer issues that the team firmly believed were highly damaging to customer equity, but turned out to be relatively inconsequential compared to other customer issues.  That’s an even bigger win since now the team can redirect resources to solving what really matters.

And the biggest win of all: identifying problems that the company didn’t even realize they had.  These “silent killers” are the most powerful output of dissatisfaction analysis.

Quietly eating away at customer retention and revenue growth, undiagnosed they represent a serious drag on loyalty and earnings.  But brought into the light, they can be addressed and controlled.

Most companies want the same thing: to serve their customers well, to innovate for the future, and to grow their customer relationships profitably and for the long term.

But few companies truly succeed at analyzing the customer experiences on which those objectives depend.  Those that are willing to go beyond traditional satisfaction analysis to look hard at the dissatisfaction of their customers will find great returns in customer loyalty, customer value and competitive stance.

Jon Skinner is Executive Vice President of The Verde Group

 

The Problem With the Customer Satisfaction Survey

customer satisfaction survey The Verde Group

“Customers who had the best past experiences spend 140% more compared to those who had the poorest past experiences”
                                             — Peter Kriss, Harvard Business Review

Many companies conduct regular customer satisfaction research with the belief that there’s a direct link between customer satisfaction and revenue — improving the first will drive an increase in the second.

Many also rely heavily on the results of the customer satisfaction survey to build and execute action plans to drive future customer satisfaction. And so the cycle repeats.

It turns out that these companies could be making a very costly error. Customer satisfaction is a very poor predictor of future customer behaviors. Just because a customer says they’re satisfied doesn’t mean they’ll come back to buy a company’s products or use their services.

A different (and counter-intuitive) approach bears more fruit. Satisfaction is an attitude, and attitudes depend on what a customer experiences with a company or brand.  It is these customer experiences – especially negative ones – that are most influential on customer loyalty and value.

Consequently, customer experiences are much more useful for predicting future customer actions. If you want to know what your customers will do in the future, it’s not enough to ask them how satisfied or unhappy they are — you need to dig deep into their experiences that are shaping their attitudes.

Why are negative experiences (or problem experiences, as The Verde Group considers them) so influential?  It’s evolutionary: as human beings, we’ve evolved to respond more strongly to negative experiences than positive ones, which makes negativity a much more powerful motivator than happiness.

This is a significant consideration in evaluating the customer experience. When customers have a problem experience, they’re more likely to take action (they will shop somewhere else) and much more likely to tell others about their experience than if they’ve had a positive experience.

Simply put, it’s at that moment when companies are upsetting their customers the most that it’s easiest to predict what those customers will do in the future.

Traditional customer satisfaction surveys are simply not designed to gather the level of detailed feedback required to understand negative customer experiences.

For example, imagine a customer is asked to comment on something they’re not satisfied with, and their reply is ‘clerk friendliness’. The meaning is directionally clear but specifically ambiguous.

That ambiguity will make it difficult (if not impossible) for a company to create an action plan to effectively fix the problem. What exactly needs to change for the clerk to be more friendly?

If companies dig deeper, however, and truly understand the customer experiences that led to that attitude, it would provide the insight necessary to hire the right personnel and create training programs.

Embracing this paradigm means organizations need to take a completely different approach when evaluating their customer experiences.

An honest dialogue with customers is the most effective way to expose problems and the root causes behind them. Acknowledging that your company is not perfect — that you know you make mistakes and are committed to fixing them — is a great start.

But a link can be made between improving the customer experience and increasing revenue, with much more certainty than the link between customer satisfaction and revenue.

Retailers, in particular, are blessed with a wealth of customer data that can be integrated with experiential survey responses to establish which problems are driving loss of share and perhaps outright defection.

Armed with a much more predictive view of future customer behavior based on evaluating the customer experience, companies can create a clear picture of how taking particular actions to improve that experience will impact the bottom line.

Today’s shoppers still remain loyal to their favorite brands, but they are increasingly cost and experience conscious.

In order to maintain loyalty and share of wallet, retailers not only need to know what makes their customers happy but, more importantly, pro-actively address – and reduce – the critical problems customers face.

A problem-free shopping experience is the best way to create and keep a loyal customer.

Michael Tropp is Vice President – Business Development at The Verde Group

 

 

To Change or Not to Change? That is the Question

iStock_000018873957_Full

Consumers are creatures of habit, often seeking out their favorite restaurant, hotel or store, because they know they’ll have a positive experience. These positive experiences make them loyal — whether it’s a perfectly grilled steak, a service associate who helps you find that perfect gift, or the ease of pre-selecting your hotel room in advance of check-in.

However, if a consumer’s go-to business never changes, the experience might seem stale. Once-loyal customers might consider switching.

This point was driven home when I watched the movie Chef, about a chef who wants to transform the time-tested menu to impress a food critic. The owner disagrees, saying, “Look, if you bought Stones tickets and Jagger didn’t play Satisfaction, how would you feel? Would you be happy?”

The chef sticks with his 1990s-style menu and gets scorched by a terrible review from the food critic.

The Business Dilemma

So the question is: when is it time to change and when should you keep things the same? Can you do a little of both?

The same dilemma is faced by many businesses. To change or not to change? When is the right time? When sales decline? When complaints increase? When stock prices fall?

If you act too quickly, customers may be upset. If you wait too long, customers—and their money—could walk out the door. But how do you know when the timing is right to introduce change? And, should it be a completely new product/servicing offering or just a modification?

Many companies come to mind when thinking about waiting too long to change. Consider Motorola which, according to Forbes, once had nearly 50% of the cell-phone handset market. In 1995, they passed up chances to enter the digital market early, sticking with more primitive analog designs, because it felt sure that analog’s 43 million customers couldn’t be wrong. Within four years, Motorola’s market share had slumped to 17%.

In deciding whether it’s time for change, companies need to understand a multitude of factors but key inputs to this decision are:

  • Knowing where they are in the product life cycle curve
  • Understanding the current state (baseline)

Product Life Cycle

Lori BlogTheodore Levitts classic Product Life Cycle has been around since 1965. Understanding which stage a product is in provides information about expected future sales growth, and the kinds of strategies that should be implemented to protect sales. The product life cycle of many modern products is shrinking, as Tom Spencer found, while the operating life for many of these products is lengthening.

As explained in Using Market Research in Product Development, many companies recognize the importance of offering something new. For this reason, they allocate substantial sums to research and development to help them determine when it’s time for a change. Most companies spend between 2% and 5% of sales on R&D.

However, as stated by Paul Hague in the third edition of Market Research, not all products/services necessarily completely die and need to be replaced with something new. There are often opportunities for modifications and improvements which can result in a rejuvenation of the product life cycle. In fact, per B2B International, 90% of new product research is focused on product additions and modifications rather than on new concepts.

Product improvements by their nature are less drastic and are much more easily accepted than conceptually new products. As with our restaurant example, an entirely new menu was perhaps unnecessary but rather, some innovations and changes to existing items while keeping some old favorites breathing new life into the restaurant while still keeping the brand intact.

Baseline Measurement

In parallel with a product life cycle assessment, organizations should have a baseline measurement of areas of satisfaction and dissatisfaction. As my colleague Jon Skinner wrote , by knowing what issues upset customers the most (causing dissatisfaction and disloyalty) and by understanding what makes loyal customers return and recommend a business, organizations have better insight into whether it is time to pursue the introduction of something new (where “new” is adding/changing/or removing a product/servicing offering). It is important to remember that the issues that upset customers the most aren’t necessarily the most prevalent problems but rather, the ones that have the biggest impact on customer loyalty.

However, a baseline is not enough. Businesses need to take regular temperature checks and compare their results to the baseline. More formal, data-driven Voice of the Customer (VOC) research will reveal even more about customer experiences and expectations. This could include short surveys after every interaction, more detailed monthly, quarterly or annual surveys and staying on top of ongoing social media chatter.

By using an experienced research partner for product life cycle assessments, baseline studies, and temperatures checks against the baseline, businesses can make informed decisions about when it’s time to change, what should change, and what must stay the same.

Being true to your brand or what sets you apart from the competition is great. But when you risk driving your customer to choose another business, it’s time to change.

Don’t lose your customers because they’re tired of the same old menu. Know when it’s time for change and get ahead of the curve!

Lori Childers
Vice President, Client Solutions

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Customer Experience Is Not Our Responsibility

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Recently a client asked me how to engage Human Resources, Legal/Risk and Finance in their customer experience journey.

When my client had approached these groups about their contributions to the customer experience, the response was essentially: “We are very in favor of focusing on the customer experience and are glad that our sales and customer service departments are doing so much in this area. However, this is not something we have any control over, so it is not on our priority list.”

This response is very common in organizations that are in the early stages of true customer experience transformation. Ironically, these departments may have more to contribute to the customer experience journey than most others.

Here are some ways these departments can put the customer at the center of everything they do, to build a more customer-centric organization.

Human Resources rewards the right people

By hiring, rewarding and setting clear expectations, Human Resources can engage people who contribute through their attitudes, strategies and day-to-day actions.

This goes beyond the “employee of the month” awards. This is about national awards on center stage that recognizes individuals from every department who have made a true difference to the customer experience.

What’s more, it means ensuring that every individual clearly understands their contribution to the customer experience and setting customer experience goals to achieve each year

Human Resources can

  • hire people who will make customer needs a priority
  • set personal goals and assess employees on their ability to develop and execute customer-focused business strategies
  • recognize and reward employees for succeeding in these objectives, through bonuses, high-profile awards and promotions (and make the difficult decisions with employees who do not perform well in this area)
  • add a customer experience element to your employee surveys

Legal/Risk balances customer ease

Legal and Risk departments have a long-lasting effect on how customer-centric an organization will be. As the watchdogs of an organization, they ensure that the company is not exposed to lawsuits and financial risk in the course of doing business. To achieve this, they create policies that sales, customer service and operations groups must adhere to when bringing on new customers and managing existing customer relationships.

Sometimes these policies unintentionally create problems and unnecessary effort for customers when doing business with your organization, as I stated in a previous blog. For example, policies such as requiring a receipt, original packaging and returns in 30 days may prevent a few from taking advantage, but also make it more difficult for many customers to do business with you.

Legal/Risk can

  • create policies for bringing on new customers and managing existing customer relationships that don’t create problems or require unnecessary effort by customers
  • shadow front- line sales, customer service and operations stakeholders to understand how these policies affect their workflow and the customer experience
  • enhance the customer experience by investigating the effect of their policies on the customer experience journey
  • incorporate feedback from sales and customer service in their review of policies
  • regularly update policies to make them more customer-centric

Finance empowers relationship owners

Because they tend to own the purse strings across all lines of business, the Finance team has a great deal of influence over the customer experience in every organization.

However, they need to balance the critical requirements for cash flow and cost control with the need to deliver a great customer experience. For example, the need to ensure reliable payments must be balanced against particularly arduous onboarding requirements for new customers.

They also need to provide flexibility with customer relationship owners to “make things right” when problems arise, as I wrote in a recent blog on how this can reduce churn and build long-term loyalty.

In addition, the Finance team must also work with HR to recognize and reward those in the organization that make an impact on the customer experience.

In short, they should

  • work closely with sales and customer service teams, to ensure policies don’t have negative effects, for example arduous onboarding requirements for new customers
  • financially empower customer relationship owners to effectively solve customer problems
  • work with HR to recognize and financially reward those in the organization who make an impact to the customer experience.

While almost every department plays a role in the customer experience, Human Resources, Legal/Risk and Finance have more influence over the customer experience than they might think.

One department, one improvement

If each of these departments made one significant improvement to the customer experience each quarter, there would be measurable improvements in customer loyalty, employee engagement and shareholder value.

What’s more, by communicating their progress to the entire organization, they can inspire others to focus on what they can do to deliver the ultimate customer experience.

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