Original Publication: Customer Management Insight - November/December 2008
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Most leaders know that keeping customers is more cost effective than gaining new ones: In some cases it costs an average of five times as much to attract a new customer than to keep an existing one. But what is customer loyalty? More importantly, how can a company earn it?
In many organizations, it’s all too common to think of customers only in terms of numbers — of what they mean to the bottom line. However, for businesses to understand what makes a customer loyal, they need to understand the person behind the number. They must not overlook the fact that a customer is a human being whose service experience can drive — or destroy — loyalty. Organizations begin to cultivate customer loyalty only when they recognize that those human experiences wield the power to positively or negatively affect the business. Organizations that want to make this shift should consider four keys for delivering stellar service and building customer loyalty:
1. Customer loyalty is the result of a series of defining moments.
2. Customers judge each defining moment based on their specific service expectations.
3. Customers experience each defining moment in three dimensions of service (the human, business, and hidden dimensions).
4. Creating positive defining moments in every personal interaction builds a culture of service.
These keys, taken in order, become increasingly complex, allowing an organization (or employee) to manage interactions with greater sophistication in each customer segment. The first key is the most basic — the heart of a customer’s service experience. Each customer interaction is a series of defining moments — points in time when the customer has the opportunity to form an impression about the service provided. A defining moment is not a full transaction — it’s only one of many moments that add up to one customer experience, which, in turn, affects loyalty. When customers interact with your enterprise, they form perceptions about their experience: Did they feel valued? Welcomed? Or did they feel pressured? One phone call can have dozens of defining moments; for example, when the customer:
• Hears the recorded choices
• Waits on hold
• Is greeted
• Is listened to
• Asks a question
• Receives an answer
Each of these defining moments can be positive, negative or neutral. Neutral defining moments register no response at all in the customer; positive moments leave the customer happy, pleased or affirmed; negative defining moments, of course, leave the customer feeling dissatisfied, disrespected or cheated. Because they affect the customer emotionally, positive or negative defining moments are much more memorable than the technical details of the interaction. The goal is to increase loyalty by creating as many positive defining moments as possible.
A single defining moment typically doesn’t make or break a customer’s loyalty. In an interaction with 20 defining moments, each may hold a different degree of importance for the customer. If you order a pizza, for example, how you’re greeted may not matter as much as how carefully the employee takes your order. This second defining moment determines how confident you are that the pizza will arrive with the correct toppings. It’s fortunate that all defining moments aren’t created equal because striving for perfection — for nothing but positive defining moments — rarely makes financial sense. To drive loyalty and profits at the same time, an organization needs to figure out which defining moments have the greatest impact on the overall customer experience, and invest accordingly.
It takes some analysis to find the most important defining moments in a given type of customer interaction (troubleshooting a cable TV problem, for example). Split the interaction into its separate moments, examine each moment, identify the most important defining moments, and take steps to shore up any weaknesses.
This map of the customer’s experience helps you in at least two ways:
First, you can redefine negative moments to soften their impact on the customer. What does the employee do, for example, when the pizza toppings in fact are incorrect? You can also plan ways to handle requests that you can’t fulfill — another type of negative moment — say, when a customer wants to place a hold on a check that the bank has already paid.
Second, this detailed map of the customer’s experience helps you identify the skills and related development that service people need to create positive defining moments, whether or not things don’t go as planned. Is it the employee’s fault that the toppings are wrong or that bank overdraft fees have gone up? Of course not, but in both cases the employee needs the human skills to make this moment as positive as possible for the customer.
Understanding Key No. 1, the importance of defining moments in the customer’s experience, is the foundation for customer loyalty and its many benefits. When customers feel good about the service they receive, they stick around, spend more, tell their friends, and drive more revenue. Whether you realize it or not, customers experience defining moments in every interaction with your organization. But, what exactly makes each moment positive or negative? I’ll address that question in the next installment.
Economic Challenges Create a Window of Opportunity
“This is a season of great opportunity! Customer contact services are more important than ever during economic downturns… and this cycle is certainly no exception. Organizations that provide easy access and competent services reassure customers and add to their confidence — in a crises of confidence, that directly contributes to the organization’s continued well-being,” writes Brad Cleveland, senior advisor for the International Customer Management Institute (ICMI), in a recent Industry Watch blog. He advises that contact centers focus on the following eight areas to make sure they’re running on “all eight cylinders” to help them power through the downturn:
1. Boosting customer satisfaction and loyalty. The call center ensures that the organization is "easy to do business with," which helps measurably bolster customer satisfaction and loyalty.
2. Improving quality and innovation across the organization. By capturing a constant stream of data from individual contacts, the call center can pinpoint quality problems early and capture customer input that can lead to significant product, service and customer-communication innovations.
3. Better leveraging marketing initiatives. By tracking buying trends, capturing customer feedback and analyzing demographic information, marketing campaigns can be focused around a better understanding of customers’ real needs and wants.
4. Enabling more focused products and services. By capturing and analyzing customer comments and input, the call center can help the organization to design products and services that resonate with them.
5. Delivering efficient services. This is a fundamental role of call centers, as they pool resources (people, processes and technologies) in order to provide on-demand assistance efficiently and effectively.
6. Encouraging the use of self service systems. Call centers not only provide support to customers who need help with Web or IVR services — they also capture information that can help improve the systems and are instrumental in giving customers the encouragement and confidence to use them.
7. Preventing further escalation. One of the unintended consequences of cutting call center services is that customers find alternative routes into the organization — ultimately burdening individuals and departments with distracting workloads and resulting in poor or inconsistent service.
8. Contributing to additional revenue and sales. By enabling customers to reach agents who are trained in relationship building skills, the call center can provide powerful upselling and cross-selling opportunities.
Sharon Daniels is the CEO of AchieveGlobal. www.achieveglobal.com
