GrowthANSWERS » It’s The Experience, Stupid (Part 1 of 5)

January 26, 2009

It’s The Experience, Stupid (Part 1 of 5)

Filed under: customer experience, Innovation, sales process optimization, branding/differentiation, marketing strategy —

BY STEVEN WINOKUR

I had the pleasure of speaking at the GrowthANSWERS Meet the Expert meeting this month on the topic of customer satisfaction. More specifically, the discussion focused on the concept of the customer experience. We talked about the benefits of focusing on the customer experience as well as why it’s so important. Once everyone understood how it impacts their business, we demonstrated 4 tactics to create a better experience.

We’ll be addressing those 4 thoughts over the next week or so, but for now, let’s take a look at why the experience a customer has with your organization is so important.

Before proceeding, let’s all get on the same page. Defining exactly what the customer experience means can be a challenge in and of itself. I’d like to define it this way:

“The perception of the sum of ALL interactions a customer has with a given provider.”

It’s crucial to notice the use of two words: perception and all. Perception is used because the experience is in the eye of the beholder. The perception has to deal with the actual experience and the expectations that lead up to that experience. All is used because that’s exactly what makes up the customer experience. Every interaction – not just the ones with customer support or during the use of the actual product or service. Every touch influences the perception, either positively or negatively.

Now that we have the definition sorted out, let’s move on.

Creating a better experience for your customers isn’t some altruistic belief that people should be treated nicely. It’s about hard and fast business results. Having a superior experience can lead to increased revenue, greater protection of premium pricing and increased brand loyalty. In fact, studies have shown that the single most important attribute of driving customer loyalty is the customer experience. Not price or some fancy loyalty program. It’s the experience.

With the economy the way it is, customer retention is priority #1 for many firms. And retention is not about slogans or trinkets or loyalty programs. And it’s certainly not about locking customers in contracts or using other tactics to force them to stay. Maybe it’s time to borrow an old campaign slogan here – “It’s the experience stupid.” That’s how to get them to stay.

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2 Comments »

You made some compelling points, thanks for sharing them. Customer satisfaction and loyalty should always be a major focus, even more so during economically challenging times.

Studies have shown that loyal customers:
Purchase your products and services again and again over time
Increase the volume of their purchases
Buy beyond traditional purchases, across product lines
Refer your company’s products and services to others
Become immune to the pull of the competition
Give your company the benefit of the doubt when something goes wrong
A few things to keep in mind:
It costs 7-10 times more to recruit a new customer than to keep an existing one
A gain in customer loyalty of only 5% can lift lifetime profits per customer by as much as 95%
An increase in loyalty of just 2% is, in some sectors, equivalent to a 10% cost reduction

Comment by ZoomerangBlog — January 28, 2009 @ 3:34 am
Great points, all of them. I couldn’t have said it better myself. Thanks for commenting!

One of the benefits I try to talk about the most if that one about getting the benefit of the doubt. If you’ve provided an excellent experience consistently, when that bad day appears (and it always does), the customer will give you the benefit of the doubt and give you another chance. If they don’t have that loyalty, they’ll be gone at the first sign of an issue.

Those are some compelling numbers, aren’t they? It’s funny how many companies don’t think about loyalty and focus all their energy on getting new customers. Certainly prospecting is important, but focusing on existing customers can be much more profitable - as your numbers demonstrate. Do you have studies you can reference that those numbers come from?

Comment by Steven Winokur — January 28, 2009 @ 8:32 am

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January 26, 2009

It’s The Experience, Stupid (Part 1 of 5)

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