Appleton Greene – Customer Experience
Delivering compelling customer experiences is the best customer retention strategy
Appleton Greene Peter Drucker, the world famous business guru, once declared that the real business of a company is to acquire customers and retain their business. Strongly agree. But, there is an asymmetry between acquisition and retention, and the strategies and tactics that are effective in acquiring customers often don’t work in retaining them. For example, companies can always acquire customers on a promise – a promise to deliver value and meet their needs once money has changed hands. However, promises won’t help retain customers. The only way – in fact the best way – companies can retain customers and their business is by treating them right and fulfilling their promises. Treating customers right involves designing, delivering, and innovating memorable and compelling customer experiences. It is the best retention strategy, because when customers receive these relevant, meaningful, memorable, and compelling experiences, they hear the company saying, “Dear customer, your business matters to us.” Additionally, because customers who are treated right want to continue doing business with the company that’s treating them right, their value to the retaining company increases, and it becomes significantly more difficult and costly for competitors to steal their business.
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Compelling and memorable customer experiences deliver profitable sales growth
Every company wants to grow. And the surest way to grow is by acquiring and retaining a larger pool of profitable customers. But the two – acquisition and retention – don’t work identically in driving profitable sales growth. Dozens of studies by academics and practitioners have demonstrated unequivocally that “retained customers,” depending on how long they have been doing business with the company, are at least 60%-80% more profitable than “new customers.” Additionally, the same studies have shown that retained customers, on average, generate greater revenue for the company than new customers. Consequently, designing and delivering compelling and memorable customer experiences are an incomparable vehicle for generating profitable growth. Because, all things being equal, companies can always acquire customers on a promise – a promise to deliver value and meet their needs once money has changed hands. But, the only way – in fact the best way – companies can retain customers and their business is by treating them right, which involves designing, delivering, and innovating memorable and compelling customer experiences. And when customers receive these memorable, and compelling experiences, they hear the company saying, “Dear customer, your business matters to us,” which is a strong incentive for them to stay. Over time, this pool of retained customers becomes a valuable source of profitable sales growth for the company.
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Compelling and memorable customer experiences significantly boost customer acquisition
One of the key strategies companies use for fueling their growth is acquiring new customers. However, “customer acquisition,” is both labour intensive and costly. New customers are not easy to win over. It often takes several months of sustained pursuit before they may agree to do business with the company pursuing them. Several studies, by both thought leaders and practitioners, have identified important factors and risks why new customers resist acquisition efforts. The primary among them is the uncertainty concerning how they will be treated by the new company, and whether the new company will value them as customers, and value their business. Compelling and memorable customer experiences significantly boost customer acquisition results precisely because they ease customer fears and anxiety on this most important concern. When customers hear that other customers like them are receiving compelling and memorable experiences, they feel they too will be treated right, and it significantly lowers the primary source of perceived risk and anxiety in switching. It is for this reason that compelling and memorable experiences significantly boost customer acquisition. Because when companies treat their customers right, word spreads. New customers feel less anxious and become less resistant to acquisition efforts. In fact, they become keener to do business with companies that treat their customers right, thereby boosting the productivity of acquisition efforts.
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Compelling and memorable customer experiences significantly boost customer loyalty
For most companies, customer loyalty is a holy grail. There are several reasons for this, but the primary reason companies value customer loyalty is because it confers significant operational and strategic benefits on companies. A larger pool of loyal customers simplifies the task of serving customers, it makes day-to-day operations extremely efficient, and provides the company with a valuable source of future profits and growth. Which shines the spotlight on the all-important question – how best to foster, nurture, and promote customer loyalty, or in short how to boost it? While companies pursue dozens of different tactics and strategies to boost loyalty, the unrivaled champion is designing and delivering compelling and memorable customer experiences to existing customers. Here’s why. Before customers can become loyal they must want to stay and continue to do business with the company. And one of the key reasons customers “churn,” or, leave and switch to competitors, is because they are dissatisfied with the way the company treats them, and with their experiences with the company. Compelling and memorable customer experiences erase this perception. When customers receive compelling and memorable experiences, they feel they are being treated right, because they hear the company saying, “Dear customer, your business matters to us.” And when customers believe they are valued, and their business is valued, they are more likely to stay, and more likely to become long-term loyal customers of the company.
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Customers who receive compelling experiences buy more, more frequently
Over the years, a significant amount of research has been conducted by academics and practitioners to demonstrate the beneficial effects of customers receiving compelling and memorable experiences, such as significantly higher rates of retention, sales growth, profitability, and customer loyalty. Recent studies though have added another dimension to this impressive list of benefits. Global and country-specific research conducted recently shows that customers who are treated right, meaning those who receive compelling and memorable customer experiences, also buy more. Not only do their volume of purchases increase, but so does their frequency of purchase. In short, they buy more, more frequently, which all adds up to greater levels of sales and profitability. Purchasing more, more frequently, also has a beneficial unintended side-effect; competitors find it extremely difficult – and costly – to poach these customers. To sum it up, when customers receive compelling and memorable experiences from a company, they perceive the company making a commitment to retaining them and their business. And customers reciprocate this commitment by buying more, more frequently.
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Compelling and memorable customer experiences generate positive referrals
Over the years, research conducted by academics and practitioners alike has demonstrated beneficial effects of customers receiving compelling and memorable experiences, such as significantly higher rates of retention, sales growth, profitability, customer loyalty, and positive word-of-mouth recommendations and referrals. The last benefit is particularly noteworthy, because one of the strongest growth engines for a company is when its customers become strong advocates and living advertisements for the company. Positive referrals are a potent acquisition and reputation platform. In today’s interconnected, digitally engaged world, customers who receive compelling and memorable experiences are significantly more likely to share their experiences with others, not only through direct word-of-mouth communication, but more importantly through social media reviews, comments, and evaluations. Consequently, companies providing these memorable and compelling experiences see a surge in positive referrals, which plays a key role in helping the company acquire new customers at a faster rate, and at a lower cost. The reason being that now the new customers don’t need the same level of selling and convincing as in the past, as positive referrals have already pre-sold and convinced the non-customers to switch their business to the company providing compelling and memorable customer experiences.
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Compelling and memorable customer experiences significantly increase customer trust
Trust is a vital element for business relationships to flourish. But trust is also a very scarce commodity in today’s world. The Edelman Trust Barometer, a longitudinal global study conducted annually, reports the steady decline and erosion of trust in all sections of society, including business. Customers don’t trust companies as much as they did in the past because they believe that companies will always give priority to their own self-interests of sales and profits, over customers’ interests. The best way to reverse this damaging negative perception is not through PR and advertising campaigns, but by treating customers right, or in other words, by designing and delivering compelling and memorable customer experiences. Recent country-specific and global studies demonstrate unequivocally that when companies design and deliver memorable and compelling experiences customers sit up and take notice. And when customers repeatedly see and experience a side to the company that says louder than any words, “Dear customer, we care about your business, and are willing to invest in your wellbeing and prosperity,” their trust in the company increases significantly. Growing customer trust also opens the doors to a number of other benefits, such as greater customer loyalty, higher retention, higher sales and profit growth, also follow. All because the company decided – wisely – to invest in designing and delivering memorable and compelling customer experiences.
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Compelling and memorable customer experiences produce enviable corporate reputations
Every company wants to be admired and enjoy an enviable image and reputation. While there are several pathways to achieve this goal, one of the surest, and with the highest visibility, is the willingness of companies to invest in customer service and to treat their customers right. The reason is simple. Most everyday customers have suffered and endured poor and slovenly customer service. And they narrate these horror stories through social media and interpersonal conversations. Stories concerning bad and frustrating experiences with utility companies, airlines, hotels, and other customer-facing businesses. It’s no surprise then that the general public is rarely taken in by claims companies make concerning how important their customers are, or how their customers take priority over everything else. Their experience has taught them that these claims are no more than slogans. So when a company shows up that doesn’t just say that customers are a priority, but it treats them as if they were a top priority, the world sits up and takes notice. These companies experience a significant boost in image and reputation. Their willingness to walk the extra mile for the customer, and their sincere desire to invest in designing and delivering compelling and memorable customer experiences, makes them media darlings and the envy of their competitors.
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Compelling and memorable customer experiences generate favorable media coverage
Favorable earned media coverage – news stories in print, broadcast, and social media that companies don’t pay for – produce significant benefits for companies. Several corporate reputation and corporate image studies have demonstrated that favorable media coverage causes favorable spikes in a company’s stock price, sales, and profits. Companies that earn favorable media coverage get valuable recognition, such as “Best Places to Work,” and attract top talent, both experienced and fresh out of college. While there are a number of factors that lead to favorable media coverage, treating customers right and walking the extra mile for them are among the most important. The reason is simple. For most companies, “customer-first thinking,” or “customers are an important priority,” are mere slogans. Even corporate chieftains, like Lou Gerstner and A.G. Lafley (former CEOs of IBM and P&G respectively) have criticized corporations for not putting customers first. Consequently, companies that are serious and honest about treating their customers right, and back that intent by designing and delivering compelling and memorable customer experiences, immediately stand out of the pack. A cursory review of media darlings, such as, Zappos, The Ritz-Carlton, Four Seasons Hotel, Tesco, and Infosys, supports the assertion that even small investments in designing and delivering compelling and memorable customer experiences generate significant amounts of favorable media coverage, more than any PR and advertising campaigns launched by the company can generate.
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Compelling customer experiences significantly boost employee morale and satisfaction
Employees and customers are two wings of a bird. Companies need both to prosper. Which is why the adage, “Happy customers make for happy employees.” There is nothing that pleases customers more than when companies treat them right. Customers like to feel valued, and they like to believe that the company values their business. Granted that no company has the resources to make all their customers happy, and satisfy their every need, but they do have the resources to be transparent in their interactions with customers. Consequently, when companies elevate their business models so that treating customers right is no longer a mere slogan, but a tangible business reality through the design and delivery of compelling and memorable experiences, the positive emotions experienced by customers on the outside spill over to those within the organization and significantly boost employee morale and satisfaction. Like customers, employees too want to be valued. They too want to know that the work they are doing is meaningful and relevant. Customers who receive compelling and memorable experiences typically let employees within the company know how happy and satisfied they are, which motivates employees to want to work even harder to make their customers happy. It’s a virtuous circle. When customers and employees feel valued and worthy, they nurture each other, and foster mutual wellbeing and prosperity, especially when related to morale and satisfaction.
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Compelling customer experiences build better B2B relationships and collaboration
In one of his famous poems, the great poet John Donne declared, “No man is an island.” Neither is a company an island. In today’s VUCA – Volatile, Uncertain, Complex, Ambiguous – world, no company has the resources, knowledge, or capability to go it alone. Today’s world is not about “value chains” – one company creating value for the customer from start to finish, it is about “value constellations” – several companies collaborating to create value for the customer. Consequently, when a company invests in designing and delivering compelling and memorable customer experiences for its key target customers, other companies in the ecosystem also benefit. Take the example of an auto seat manufacturer. This company is one of many involved in creating value for the car buyer. Since the customer is not buying car seats, but the whole car, if the car company treats the customer right, more customers will buy more of this company’s cars. Not only will the car company benefit, but all other businesses collaborating with it to create value for the car buying customer will also benefit. Compelling and memorable customer experiences create a ripple effect of benefits, and contribute significantly toward making B2B relationships and collaboration healthier and more effective.
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Companies that deliver memorable customer experiences attract better talent
Organizations are people. Which is why, no matter how sophisticated and complex a company’s technologies, one of the strongest sources of competitive advantage is still the quality of its employees. Not surprising, therefore, that “Talent Acquisition and Management” is one of the key priorities of all companies wishing to grow their businesses and prosper. But acquiring the right talent is not easy, and it is not just about hiring. Once the right talent is onboard, it’s important to keep them engaged and motivated. And there is no better way to do that than to have a legion of happy and satisfied customers. Companies that invest in designing and delivering compelling and memorable experiences are able to attract top talent because they can offer them compelling reasons to show up for work and stay engaged with it. And just like customers who feel valued and appreciated influence other customers, top talent that feels engaged and motivated speak about how much they enjoy working for their company at conferences, on college campuses, at networking events, and in every day social conversations. This enthusiasm is infectious and draws other top talent as well. However, none of this would have been possible if the company were not serious about designing and delivering compelling experiences to their customers, and if customers didn’t feel valued and appreciated.
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Dr Bhalla is an approved Senior Consultant at Appleton Greene and he has experience in marketing, customer service and globalization. He has achieved a Doctor of Philosophy, a Master of Business Administration and a Bachelor of Arts (Hons). He has industry experience within the following sectors: Technology; Digital; Banking & Financial Services; Consumer Goods and Healthcare. He has had commercial experience within the following countries: United States of America; India; Singapore and South Africa, or more specifically within the following cities: Washington DC; New York NY; Gurgaon; Singapore and Johannesburg. His personal achievements include: championing human-centric leadership; digital transformation of customer experience; delivering action-oriented corporate training; implementing product and service innovation and leading high-performance global teams. His service skills incorporate: human-centric leadership; digital transformation; customer experience; corporate training and product innovation.
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