We recently had a meeting with an experienced senior executive for a large financial services company. She told us that every year they gained 150,000 new customers and within that same 12-month period, they also lost 150,000 customers.
Organisations focus on acquiring new customers and committing large amounts of dollars and resources. And yet, despite all that effort, they often appear to accept that they will lose those very same customers they just recently spent a lot of money acquiring.
When we reflected after the meeting on those churn numbers, we couldn't help but calculate the "lost financial opportunity”.
150,000 customers x $200 revenue per customer in this category = $30,000,000 in Year 1.
150,000 customers x $1,000 (Average lifetime value) = $150,000,000 over 5 years.
Whether your business loses 150,000 or 1,500 customers, what would it take to have your customers want to stay rather than leave? What impact would holding onto that margin and profit have on your growth targets? And how much effort would it take to achieve?
We hear similar stories across lots of different businesses. Years ago, a company's digital marketing strategy was only focused on expanding its customer base. Attracting new customers is a good goal to have because more customers equate to more revenue. However, you don't want to do this at the expense of losing customer loyalty. The goal should be to provide existing customers with excellent customer service, in turn generating loyal customers who will likely recommend your service or product to others.
If you start by focusing on potential customers, you will be guessing what customer perceive to be pain points, their needs and their idea of a positive customer experience. If instead, you start by focusing on the existing customers you can use qualitative research methods to collect customer feedback, customer service tips, and attitudes towards specific touchpoints with your business. In turn, taking the guesswork out of your investment.
Why is customer service important?
Welcoming a new customer is the beginning of an important journey that can last a lifetime. The decisions you make now will determine how long and how fruitful this relationship will be. Get it right, and you’ll have a customer for life. Get it wrong, and they’ll take their business elsewhere. It really is that simple!
That’s why understanding your customer is critical to the success of your business. Only by understanding their needs, wants, and motivations will you be able to give them the excellent customer service they deserve – and that will keep them coming back for more.
Investing in good customer service is only beneficial if it's done correctly. There are multiple ways to keep your customers for longer, but we're sharing 3 tips that should always be included as part of your customer experience strategy:
1. Do Your Research
If you want to find out what it is that your customers really want, you need to do your research. This can be done in several ways, but we recommend conducting market research and using qualitative data to get an in-depth understanding of your customer base. This will help you to understand their needs, pain points, and how they perceive your brand.
2. Transform Your Customer Journey
Once you have a good understanding of your customers, it's time to start thinking about how you can transform their journey. This means looking at every touchpoint they have with your brand and making sure that it's providing a positive customer experience. It's also important to think about how you can use digital technology to improve the customer experience.
3. Focus on Customer Lifetime Value
Finally, it's important to focus on customer lifetime value. This is the total value that a customer will bring to your business over the course of their relationship with you. To calculate this, you need to think about things like how much they spend with you, how often they use your services, and how likely they are to recommend you to others.
Assessing your understanding of customer service
Having a customer experience strategy that is informed by qualitative research is crucial, but it is also important to have some checks and balances in place to make sure that your customer service team is delivering great customer service. One of the things we have found after working for over a decade with complex organisations, is that customer understanding can be broken down into three quite distinctive levels.
- Familiarity - "We sort of know what needs to be fixed"
- Understanding - “We have a greater sense of confidence of what is and isn’t working and why"
- Confidence - “We have absolute confidence in the decisions we need to take now, next, and later to grow our business”
Click the image below to download the worksheet.
Familiarity
For most organisations, there are often several problems with their customer service that are immediately visible. These customer service challenges are well known by many in the organisation and can be readily articulated.
Why haven't these issues been resolved yet? In many cases, it's because people can't agree on what needs to be done. Sometimes there are insufficient resources to fix the problem, and other times it's simply because everyone is overwhelmed with their BAU (business as usual) workloads and other projects.
Achieving change is more complicated than it may seem, and ensuring this transition does not alienate your customer base can be challenging.
Understanding
Below the waterline of an iceberg is not immediately visible. Challenges that sit in this layer, are either not well known or the customer service teams misunderstand how bad these problems are. Successful customer experience management means that the support team appreciates the scale and depth of the negative impact these issues are having on customers, staff and the business.
Even if some organisations do have a better appreciation of the detail around the issues, they find it hard to prioritise what is needed and then to action change.
Confidence
When you decide to build a house, most of us can imagine what our finished house will look and feel like. But nobody seriously embarks on any house build without first undertaking research, developing plans, and ensuring a rigorous and proven approach to design and construction. It’s the same with customer service understanding.
If you want to have a competitive advantage you need to truly understand your customers. This level of understanding is achieved through qualitative data collection which gauges the customer satisfaction score. To give you and your business absolute confidence you need to be clear about how your customers feel, what you need to do to support customers, and what pain points the customer support team needs to address.
What confidence in customer understanding can do for your business
The improvements to your customer relationship management can be transformational for your customers, your people, and your business.
Organisations that deliver great customer service are more likely to
- Increase their customer lifetime value
- Be recommended by customers
- Enjoy low staff turnover
When you have absolute confidence in your customer understanding, you can make decisions with certainty. This allows you to focus on other areas of the business and scale up quickly. When you harness the power of structured customer understanding, your business decisions become super-charged outcomes that allow you to carry the rest of the organisation with you through the process. You achieve success by moving from customer understanding to realising profound business outcomes.
Digital Transformation and Customer Service
Digital transformation is pivotal in understanding your customers. In today’s digital world, there are more ways than ever to connect with your customers and get to know them better. But with this abundance of data comes a new challenge: making sense of it all.
That’s where we come in. Our digital transformation services can help you turn data into insights and understand what your customers really want. We’ll work with you to create a customer-centric business that puts the customer at the heart of everything you do.
When our clients use Customer Thinking and apply some of the profound shifts in understanding that they’ve uncovered from their experiences, customer understanding becomes a superpower.
If you’re not sure how to take the next steps in your customer service journey, talk to us. Our digital transformation services can help you lay the foundations for a customer-centric business and give you the confidence to take your business to the next level.
Training and Programs for Positive Customer Service
If this sounds like something you would like to be involved with, we are offering a Group Consulting Masterclass (max 10 to a group) where you bring real live business challenges and we walk you through how to solve your most pressing business problem and help you achieve a meaningful business outcome in 4 weeks.
Along with the other 9 members from different industries, you will also gain their insights and processes as to how they have solved similar problems. Just click here and send me an email with Growth in the subject header and I will send you the information on our Masterclass.
It will help you gain clarity on what it is your customers truly value ...and don’t.
It will give you the confidence to start solving what we call the 4 P’s - People, Policy, Processes and Procedures.
Then you will have the opportunity to increase organisational commitment by hooking up your internal KPI's to support delivery - behaviour follows KPI's.
