John DiJulius | Customer Experience Blog


When the Brand’s Message Contradicts the Customer’s Experience

It is a fact that nearly every market leader across many industries has the highest satisfied customer base, and usually advertises the least. Yet most executives have a difficult time investing revenue in customer service and training. Leaders who rose through customer-facing functions, are more likely to act with reference to customer experience than those who have not. In contrast, executives who rose through finance, engineering, or manufacturing often regard managing customer experience as the responsibility of sales, marketing, or customer service.29 They will throw millions of dollars at marketing, advertising, and branding campaigns that promote a message that is contradictory to what the customer actually experiences. By investing 50 percent of your marketing budget into dramatically improving the level of your organization’s customer service, you will see a significantly greater return on investment (ROI) than you were getting on your marketing and advertising dollars. Your customer base will turn into an unpaid salesforce.

Costco wholesale club, a leader in their industry in customer satisfaction, has grown to over 45 million members despite spending little on advertising or marketing. Between 1994 and 2004 Chick-fil-A grew nearly 15 percent annually, in spite of the fact they had one of the lowest advertising expense percentages to revenue in their industry. Chick-fil-A sets the bar for customer satisfaction companies in the quick service restaurant industry.

The level of a company’s satisfaction can typically be an excellent forecaster of their future success. Author Joe Calloway sums it up best, “If you want to see how a company is doing now, look at their current sales; if you want to know how a company will perform in the future, look at their current customer satisfaction scores.” Every company measures performance by “comp sales,” or same store sales comparing current year to previous year. Rightfully so, it is one of the most important benchmarks of a company’s success in their market. Service Management Group, of Kansas City, who conducts over 28 million customer surveys a year, has discovered that businesses with higher customer satisfaction have higher comp sales growth. Having a loyal customer base drives top-line growth. Their countless research illustrates the effect customer satisfaction has on comp sales. Stores with the lowest “recommend scores” average comp store sales growth of 0.3 percent compared to those at the highest end of the range, which grow at an average of 4.0 percent.

Customer satisfaction also has a huge impact on employee loyalty and turnover, further study reveals the higher the employee turnover, the lower the customer service satisfaction levels. A Harvard Business Review article titled Why Satisfied Customers Defect, explains that attempts to create a complete customer satisfaction in commodity industry will often raise the product or service out of the commodity category, for example, Starbucks.

As pointed out in Authenticity (Harvard Business School Press, 2008):Starbucks earns several dollars for every cup of coffee, over and above the few cents the beans are worth, precisely because it has learned to stage a distinctive coffee drinking experience centered on the ambience of each place and the theatre of making each cup. Perhaps no other company in the world more earnestly and steadfastly seeks to render authenticity—resolutely shaping how consumers perceive it to be.

Conclusion

Business has never been tougher than it is today . . . the only businesses that are surviving with long term sustainability are fanatical about differentiating themselves through the customer experience they deliver.

There is conclusive proof that with the necessary investment to improve your company’s customer service an organization can incur the following benefits:

• Higher customer retention

• Higher customer satisfaction

• Increased sales

• Higher comp sales

• Higher profit

• Increased cash flow

• Higher stock prices

• More shareholder earnings and value

• Lower employee turnover

• Increase in future earnings

• Reduced risk

• Less affected by the fluctuations in the economy and third-party conditions

It Is Time to Either Get on, Get off, or Get Run over

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