Why do organizations put such little value on loyal customers? Why do we not look at the lifetime value of a customer and see the profit they provide? Why do organizations treat existing customers so poorly?
Surely the economics shows us all the error of our ways. We all know it costs less to keep a customer than it does to acquire a new customer. According to the author of The Fusion Marketing Bible Lon Safko, few companies even know how much they spend on marketing for new customers—or the price per point to acquire one. According to an excerpt from his book on Entrepreneur.com, here are some typical costs for different industries:
- Travel: Priceline.com: $7
- Telecom: Mobile Phone: $315
- Retail: Barnesandnoble.com: $10
- Financial: TD Waterhouse: $175
(Source: “How Much Did That New Customer Cost You?” entrepreneur.com.)
Suffice it to say, it’s always going to be cheaper to keep a customer than get a customer.
My Cable Company Doesn’t Get it
I’ve just had an interesting conversation with our cable company, Brighthouse. It didn’t go well. But on the positive side, they provided an excellent example of what not to do. Here’s the backstory:
Over the last year, we’ve been having problems with our Internet and Wi-Fi connection. My business is comprised of a virtual team all over the world, so my connectivity and bandwidth is an issue about which I feel quite strongly.
Bright House sent a technician on at least four or five occasions to get this fixed. They often decide the best solution is to supply a new modem. They tell me, “Yes we found the last one didn’t work that well.” However, I frequently have to reboot my modem, no matter which one they send.
On the last occasion they delivered another modem to me (and in my agitated state it might best be described as the “final modem”). Two days later, you guessed it! It wasn’t working.
I had just about had enough so I decided to ask them for compensation for all the time and effort on my part to troubleshoot their service, as well as the productivity lost due to lack of availability of their service.
So what happened?
I explained to the agent my predicament. I gave them a detailed history of my problems. Then, I made my request for a refund/compensation/bid for a demonstration of my value to their organization.
They have given me $23.29 off my bill.
For all of the interruption of work I experienced, all the sitting on the phone with them for hours trying to sort things out over the last 18 months, and staying in the house to accommodate their service call schedule…all of this and the loyalty we demonstrated for the last six years (for which we paid approximately $8,600) came to a nice round figure of $23.29.
To add insult to injury, I then received this flyer.
The hypocrisy of this makes me angry as:
1.They have not respected my time.
2. They don’t have quality products, otherwise I wouldn’t have had the problem I have had.
3. Paying me $ 23.29 compensation shows they are taking me for granted.
What can we learn from this?
Emotions are a huge part of any customer experience; over 50% of them by my estimation. They drive what we remember about a brand and what we expect from them in return for our loyalty. Some emotions cause us to form an emotional bond with our brand (like happy and pleased). They drive value for the customer and the organization.
However, there are negative emotions that break a loyal bond with a company, too. These tend to be disappointed and frustrated. Consider our Hierarchy of Emotional Value that we developed during research for our Emotional Signature® Tool:
It’s clear that I felt disappointed and frustrated by my ISP’s service, two emotions in the Destroying Cluster (at the bottom). So I did what any customer in this emotional state would do: I called their Customer Service. (Poor bloke.)
Each of us has moments that make or break our experience with a brand. Some of these moments are subconscious, meaning they don’t necessarily register with our conscious mind, but they drive our emotions nonetheless.
The subconscious signal of offering a loyal customer $23.29 for their trouble says, “We don’t care.” The effect is you feel neglected (also at the bottom of the hierarchy). This same effect was realized in a Twitter exchange with their Customer Care. It was transactional. In fact, they quoted policy at me. Moreover, they failed to say even that they were sorry for my trouble. You can add Unsatisfied to the list of Destroying Cluster emotions I felt after my experience.
Most importantly, they failed to address my real emotions of being frustrated and undervalued after being a loyal customer to them.
What Should Have Happened?
As an organization that wants to retain their customers, it’s important to address these moments properly. It starts with empathy for the customer’s problem. Then, it should work to come up with a satisfactory solution that provides a more positive outcome. This type of resolution is the product of proper employee training on soft skills and a deep understanding of the emotional influence on how a customer feels about their experience with you.
These subconscious moments can go either way, positive or negative, but they affect our impression of the brand and also what we remember about the experience. When it’s good, you come back. When it’s not, you don’t.
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Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s leading Customer experience consultancy & training organizations. Colin is an international author of five bestselling books and an engaging keynote speaker.
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