Tuesday, April 3rd, 2012

Retaining Customers in a Digital World

This Valentine’s Day I sent my wife flowers, bought her a small gift from Tiffany’s and took her away for the weekend—all things well deserved for a loving soul mate and mother, who tolerates my continual travel, demanding work schedule and me in general.

On Feb. 27, I received a handwritten thank you note from the Tiffany’s sales associates who assisted me with my purchase. It’s not uncommon to receive a thank you from Tiffany’s given its reputation for service, but in the same pile of mail was a handwritten thank you from my florist. The florist’s note was the first I’d received after years of doing business with them.

Minutes later, I received a phone call from Pete, the manager of the Lorien Hotel and Spa, inviting my wife and me for a return trip—free of charge—as a result of some service issues we had experienced during our stay. Pete realized that those misfires disrupted an important customer experience (see my note above about “continual travel” and “well deserved”) and offered to make it right.

Significantly impressed with the three simultaneous acts of kindness, I thought to myself that maybe there is a silver lining to the recession. Maybe companies have been reminded that customers are, in fact, important to their success.

A customer is defined as an individual, not a segment that scores the highest on a propensity model or an occupation with a “desirable socioeconomic profile.” A person with feelings and beliefs who has had an experience with a brand, a company representative, a product or service, might be most likely to decide to buy it again, or tell a friend, or both, if that experience was a good one.

In a new study published by Accenture titled The New Realties of “Dating” in the Digital Age, 85 percent of consumers who posted a comment about a negative online experience switched providers. And these consumers are getting harder to please. Customer service expectations have been increasing consistently over the last four years, with 44 percent of consumers saying their expectations are slightly or much higher than the previous year, compared to only 31 percent in 2008.

The study also identifies five potential blind spots over the course of the provider-customer relationship that could predispose customers to switch providers:

*Nice to Meet You – Missing the chance to set the right expectations at the onset of the relationship.
*You Don’t Know Me Anymore – Missing subtler changes that matter in customers’ need for special treatment or reward.
*Cheating Heart – Overlooking signs customers are itching to switch.
*Are You Listening – Failure to offer consumers opportunities to engage with a provider.
*Trinkets Won’t Save Me – Relying on point solutions to satisfy and keep customers.

The “cheating heart” effect points to companies over emphasis on retention, which may cause them to miss important shifts in buying behavior that could signal a future switch in vendors. Thankfully, my florist carefully monitors my purchase patterns and reminds me of purchases I make at certain times of the year (birthdays, anniversaries, etc.), creating a win-win for both of us.

As the researchers note, failure to notice these subtle changes in behavior puts the company at risk for eventually losing the customer. For example, 27 percent of respondents mentioned that they had stayed with their bank/financial services provider but have added another provider (a partial switch), a foot out the door that eventually leads to customer attrition.

So remember to treat your customer as you would a loved one, with respect, kindness and an occasional gift to smooth over any misgivings. If you don’t, that cheating heart might just leave you.

Mark Johnson, CEO of Loyalty 360, in an interview identifying the top loyalty trends for 2011 stated, “Loyalty will focus more on emotions than on rational, incentive-based initiatives. Behavioral economists tell us that economic decision-making is 70 percent emotional and 30 percent rational, which is why incentive-based loyalty programs that tend to be rational do not work well. It’s the emotional side of the decision-making process that creates connected, passionate, engaged customers.“

The thank you cards and the phone call I received were specific to me and my experience. They weren’t form letters generated by a transactional or CRM system, based on my purchase. The notes were handwritten by the people who assisted me and mentioned the specific purchases I made with them.

They were relevant to me, left an impression and got me talking about the experience. I didn’t receive bonus points or special discounts. Instead, I got a response from someone who appreciated my business and cared enough about my experience to reach out to me on a personal and emotional level, which is how you can create connected, engaged customers and prevent “a cheating heart.”

 

Scott Gillum leads gyro’s Channel Marketing practice and is president of gyro Washington, D.C.

Follow Scott on Twitter @SGillum.

Originally published at Ignite Something on the Forbes CMO Network

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