By Nigel Shanahan, managing director of Rapide Communication.
‘A bird in the hand is worth two in the bush’ might sound like a dusty old truism, but when it comes to a choice between customer retention and acquisition, it is something of an understatement.
Businesses the world over invest huge sums of money in customer research precisely because retaining loyal customers is so much more cost effective than acquiring new ones.
After all, common sense tells us that once customers have returned to a business more than once, they are likely to come back again and again (provided the experience remains positive and the products remain competitive of course).
Remember that most customer research is carried out in an ‘artificial’ context
Nothing earth shattering so far. But for me this is where it gets interesting. That is, most customer research is carried out in a rather artificial context.
Be it a focus group or a regularly conducted survey, the chances are that the majority of respondents will not have interacted with the business particularly recently, so will be basing their feedback on vague recollection of previous interactions, which will have been mentally edited, amplified, mixed up and muddled over time.
That’s not to say that this kind of research is not useful. It is, as long as you accept that the feedback will be driven by those who shout the loudest – usually some combination of the vocally positive and the vocally negative, with the passive majority all but drowned out.
There are three problems with this traditional approach: it allows negative experiences to harden over time; it is abased on the business driving and shaping the conversation; it misses out on possibly the most valuable feedback - that of the 'passives'.
Collect feedback at the point of purchase
So what is the solution? Well, actually, it is disarmingly simple – collect feedback and ideas from customers at the point of purchase, when the experience is fresh in the mind (As Gartner recently pointed out that, feedback collected immediately after an experience is 40% more accurate than feedback collected after 24 hours).
Using SMS and some rather clever software it is possible to gather, analyse and share this feedback right across the business instantly – and it will demand no more than 30 seconds of a customer’s time.
The beauty of this approach is that it is based almost entirely on free text responses to questions like ‘How did we do?’, so the customer gets to shape the conversation.
Add incentives to encourage feedback
Add a little incentive in there, like a discount voucher, and it’s amazing just how willing people are to share their ideas, praise and complaints – those complaints that previously might have been muttered under the breath on the way out of the store, only to be shared later with friends and family and then ripple out from there.
In my experience, this instant feedback approach elicits three times the response rates you might expect from traditional after sales surveys – and make no mistake, it is the silent majority making up the numbers.
And it does not tend to be a litany of complaint either – typically, 70% of the comments are positive. The other 30% will be suggestions as to how you might address an unsatisfactory detail of the experience (which is incredibly valuable in its own right) combined with purely negative comment from the genuinely disaffected customer.
So straight away, this approach has got those passive customers engaged – doubly so if you act on their feedback and tell them what you plan to do – and it has allowed the customer to drive the conversation.
Give customers a ‘genuine’ voice – and act on their feedback
I can’t stress enough the importance of these two points in terms of customer loyalty. What better way to persuade customers to keep coming back, even to convert them into advocates, than to give them a voice and a genuine sense that their input is valued?
The issue of allowing negative experiences to harden into downright dislike is slightly more complicated. Of course, allowing customers to unload their grievances immediately is a bonus in its own right, but the onus is then on the customer service team to get its strategy right.
That means responding positively and quickly – there is no reason why very low scoring feedback cannot be automatically and immediately escalated, allowing senior management to step in before frustration mounts and the customer is lost.
Indeed, dealing with these situations quickly and effectively might even prompt a total U-turn in that customer’s perception of the business (“There were some problems, but I was amazed at how quickly they resolved them...”).
Well I did say the solution was disarmingly simple.
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