Consumers Are Willing to Pay For Exceptional Customer Experiences Even In Tough Economic Times

A Strativity Group Customer Experience Study revealed:
"In contrast to the popular perception that consumers focus on price only, our study demonstrates that consumers are paying attention to customer experience they receive and are willing to reward exceptional experiences with larger purchases, longer relationships and premium price."

Key Findings:

• Share of Wallet
  More than 70% of consumers surveyed indicate that they are willing to spend 10% or more with businesses if those businesses exceed their expectations.
• Customer Retention
  Loyal customers are almost three times as likely to expect to continue doing business with companies for another ten years or more than dissatisfied customers.
  Dissatisfied customers are ten times more likely to expect to attrite in the next twelve months than their loyal counterparts.
• Premium Pricing
  40% of loyal customers said that they are willing to pay 10% or more to continue purchasing from companies delivering great experiences, in contrast with 9% of dissatisfied customers.
  52% of dissatisfied customers expect discounts of 5% or more to continue doing business with a company while no loyal customers expect discounts.
  

Consumers are very clear about what they are seeking from the experiences companies deliver:

• Quick and effective issue resolution
• Common Sense and Discretion
• Employees who Exceed Expectations
• Ease and simplicity
  

Study Overview
1994 consumers from North America
The study was done in collaboration with Customer Service Experts Inc.
Study was web-based questionnaire following the customer strategy phases
The survey was conducted from April 13, 2009 through May 4, 2009.

Legendary customer service comes from Company DNA and not from a program

Matt Heinz posted a blog entry which is spot-on in my view.


Going the extra mile for customers is a hallmark of great brands worldwide. The Ritz Carlton has become famous for it. More recently, so has Zappos.com.

Last week, Hyatt Hotels announced they'd really like to be known for doing extraordinary things for their customers as well. CEO Mark Hoplamazian announced a program called "random acts of generosity", in which the hotel chain will randomly pick up the tab for various amenities and services during your stay.

The concept is good, but Hyatt's trying a bit too hard. And it probably won't work.

Why is the Ritz Carlton known worldwide for exceptional, above-and-beyond service? Because it's core to their brand DNA, it's something they practice daily with every single employee, and it's something they've been doing for years.

Zappos.com has less of a history, but is equally committed to an organization-wide customer focus. Read anything from their CEO (or even their employees) and it's clear this is not a random or new initiative. It's just how they do business.

These are enviable positions, but they didn't come easy. They were earned.

Hyatt's not there. This program, ironically, could work the opposite of how they intended. Say you're sitting at a Hyatt bar, and the guy next to you has his tab picked up by the hotel as part of the program. You, however, are still paying. How does that make you feel? What are you going to tell your friends?

Even the guy who had his tab picked up can't guarantee his friends the same service when they next visit a Hyatt.

Stay at the Ritz, or buy shoes from Zappos, and the same high bar for customer service applies to everyone.

Source: Matt on Marketing

Use the Customer Experience to Create "Soft" Customer Value

Customers today are more likely to be willing to leave to get better value elsewhere; don't give them a reason to take their business to a competitor.

• They are likely to be more edgy and anxious in the sense that they will leave for reasons that might not have been serious enough to have caused them to leave just a year or more ago.
• They are less forgiving today simply because they have less money to waste.
• They want better value and we have to deliver it if we are to persuade them to stay.

Everyone in the organization has the potential to cause customers to leave. The people who we put in front of them, the design of telephone and web systems, the time we leave them waiting on hold, the stupid rules that cause them to solve their own problems—all contribute to creating an experience that might just turn a customer into a former customer.

On the other hand, of course, turning these customer interactions into positive experiences will go a long way to creating a softer form of value that customers will notice and that will impress them in a climate where many of your competitors are cutting back.

Four Softer Forms of Value

Canadian author and consultant Jim Barnes suggests that companies should look at how well they are delivering four types of experiential value:

1. Make it easier for customers to deal with us. Reduce the effort that customers have to expend; get rid of rules that make them jump through hoops; reduce wait times; reduce the work they have to do. Customers don't need any more frustration in their lives at the moment. Their collective fuse is shorter and they'll leave at the drop of a hat if we put them through complex processes. So, answer the call more quickly, avoid handing them off to colleagues who will have them tell their story all over again, don't make them answer 15 questions when five will do.
2. Treat them better than ever before. Put your best foot forward, impress them with service. Now is the time for impressive service to occupy its rightful place in the value proposition. I see far too many companies cutting back on service to reduce costs. Despite widespread advice to the contrary, they opt for a short-term solution that serves to reduce the level of service at precisely the time when it is most needed.
3. Help them get things done. Offer good advice; impress them with new ideas; deliver "I'll-look-after-that-for-you" moments. This will require that we make a greater effort to identify what the customer is trying to accomplish, what he or she needs to get done, and then looking for ways to make it happen. Anything you can do to facilitate that will be appreciated. Create that "one-less-thing-I-have-to-worry-about" response.
4. Surprise them occasionally. Now is the time to offer more, not less. But, this does not necessarily mean offering more product or giving away things that the customer may not even appreciate. Instead, think about the analogy of a retailer who offers to carry things to the car, drops that item off at your house so you don't have to make a trip down here, or sews the hole in the pocket when the pants are in for dry cleaning. These may be viewed as little things, but they have the potential to make a big impression, especially when competitors aren't offering them.

What can you do to provide softer value?

Manage your Moments of Truth or be mediocre

In 1981, Jan Carlzon became CEO of the problem-ridden Scandinavian Airlines. By 1994, he had turned the airline around by focusing on what he later called "moments of truth," the various points at which people with the airline came in contact with airline customers.

These days, the term used is Customer Experience Management (CEM), because every hot trend needs a three letter acronym! CEM has filled in some of gaps in conventional CRM thinking, which often is too internally focused on managing customer data and revenue.
Meanwhile, it's the customers' perception of all their interactions with your (company) brand that drives much of the value they receive.


FYI: My proven Customer Experience Workshop helps comapnies take stock of their Moments of Truth and identify improvement opportunies as well as internal barriers to success. Email me for a service brochure.