How many of your customers are so satisfied that they would recommend you to their own customers?

Is providing exceptional customer service a top priority at your company?  Do all customer-facing personnel work to exceed customer expectations and build customer loyalty?  Do you have a framework in place to ensure that everyone works to repeatedly satisfy customers to the point of long term loyalty?   

Many customer satisfaction surveys, from a wide range of industries, show a common pattern in terms of how customers react to situations when they are either "wowed” or dissatisfied:  

• An extremely satisfied customer will typically tell 2 to 5 other people about their positive experience. In other words, a "wowed” customer will provide unsolicited referrals of business for you. 
• An extremely dissatisfied customer will tell 5 to 20 other people about their negative experience,and encourage prospective customers not to use your company’s products and services. This creates bad word-of-mouth and damages your reputation in the marketplace. 
• The majority of extremely dissatisfied customers will stop doing business with your firm without telling you (as many as 90%)! If you don’t respond well to a service recovery situation you likely will lose the customer and that same customer will tell other prospective customers not to use your company or products. 

Can you honestly check all four items below in the Happy Customer Checklist?   

____ We have a great product/service

____ We deliver, as promised 

____ All touches with customer from order to delivery and beyond are provided with exceptional caring service

The Pinch Factor and Customer Retention

When working with several clients recently on how to improve customer retention and customer satisfaction levels, a repeat question we heard is: “How do we prevent customers from becoming dissatisfied in the first place?”

Here are two related and practical tips that can help you keep customers happy.

Tip #1: Be Watchful of the Pinch Factor
What is the Pinch Factor? The pinch factor pertains to situations where a customer has a mild amount of dissatisfaction, but it hasn’t become strong enough yet for them to say something like, “We’re unhappy and need you to fix a problem.”

We use the word ‘pinch’ to symbolize that the customer is feeling some mild disappointment that has not yet turned into a serious problem or ‘pain.’

Because the customer hasn’t yet expressed a serious problem, you have to be attentive for subtle clues that they feel a pinch. For example, during a telephone call, perhaps the tone of voice of the customer indicates to you that the customer isn’t completely happy. Or, perhaps you’re in the midst of a frequent email exchange with the customer and you can sense that the customer doesn’t feel that you are addressing their issue.

Be watchful of the Pinch Factor. Our advice - If you feel that a customer is dissatisfied, don’t ignore it!

Tip #2: Be pro-active when dealing with Pinch Factor situations
Do not ignore these pinch factor situations. The best customer-facing personnel are pro-active, whereas average performers ignore the potential problem. Whenever you sense that a customer is feeling a pinch, take some actions. The sooner you deal with the pinch, the better. Otherwise, you risk that the situation will worsen and become a serious pain for the customer, which is much harder to fix.

Following these three pro-active actions will help you turn a pinch factor situation into a successful customer retention story:

1. Clarify: Ask some clarifying questions to the customer to confirm whether or not this is a pinch situation. For example, you might say something like, “I want to make sure that we’ve completely answered your question. Have we missed anything?” or “This doesn’t sound like it provides you with what you want. Have we overlooked something?”
2. Fix it: If you confirm there is a pinch, fix it. Offer a solution or suggestion. If you need time to fix it, be clear about the actions that you are going to take to resolve the situation and when you will get back to the customer.
3. Follow up: This is the action that can have a dramatic effect on converting an unhappy customer to a satisfied one. At an appropriate future date, either call or email the customer to check in with them to see if the issue has been resolved.

For additional resources visit Essential Selling Skills. 

Managing Customer Expectations

Here are three related and practical tips that can help you to deal with customers who are making unrealistic expectations and demands.

1. Gather information from the customer but don’t commit or agree to the unrealistic expectation. For example, you might say something like, “This is something that we normally don’t do. Let me discuss with our technical service department (or management or another function), and then I will get back to you.” Make sure that you provide a realistic time frame for getting back to the customer, otherwise they will become unhappy.

2. Offer options and alternatives rather than just say no. Try to avoid simply saying no because it leaves the customer with no positive outcome. Say something like, “Here is something that we can do instead for you.”

3. Use the “good cop, bad cop” principle. The term “good cop, bad cop” refers to a two-person technique where one person in your organization is viewed as the positive person while a second person is the bearer of bad news. If the customer has to be told that your company cannot meet their expectation, discuss with your manager if another person may be better suited to deliver that message so that you can preserve the relationship. In other words, you remain as the “good cop” so that you don’t damage your relationship with the customer but someone else in your company acts as the “bad cop.”

For additional resources, including some free online training visit Essential Selling Skills.  

The Service Recovery Paradox

In a recent blog on Customer Churn, we touched on the subject of the Service Recovery Paradox. The service recovery paradox is when the customer thinks even higher of a company after they’ve experienced a problem that you’ve fixed for them as compared to how they felt about your company before they experienced the problem.

This means that if you fix a problem, and fix it fast, you can actually strengthen the customer’s satisfaction and improve retention. On the other hand, most reasonable people are forgiving, but if a mistake is made and not fixed then the damage can be too big to repair.

We happen to have a perfect example to share of our own that illustrates the power of the Service Recovery Paradox. Our print vendor we’ve used for many years has a record of superior service in all categories. Well, the mistake came with a brand new client of ours where our vendor needed to ship 5 cartons of training materials. One day prior to the due date we realized that only 4 cartons had been received. We raised the issue with our print vendor and they quickly apologized, reprinted the missing materials and since it was too late to ship the materials, they actually had a courier drive the carton to our client’s location.

They came through for us and in the end we became an even happier customer. As a customer we were very impressed with their willingness to have a courier physically drive the carton to ensure that all the materials were delivered by the date promised. They apologized profusely and made sure to communicate how important we are to them as a customer. As “compensation” for our trouble they refunded our bill for the entire shipment which we would not have expected. They went above and beyond to “wow” us as a customer. This type of service policy and attitude is what every company should implement so that everyone who interacts with customers provides this level of service.  

This is a textbook example of the Service Recovery Paradox – they turned their customer who experienced a service problem into an even bigger fan after the problem was resolved. The biggest take-away lesson to learn here is that the steps you take when a customer is experiencing a problem can be a pivotal moment for your relationship with that customer.

Visit our Customer Service and Support workshops and blog pages for additional information.

Do You Know What Your Customer Churn Rate Is?

Customer churn is the loss of customers. Also known as customer attrition, customer defection, or customer turnover – they all mean the same thing to your bottom line.

Companies have always paid great emphasis on customer acquisition, but are more recently realizing that customer retention should have equal or higher importance in the overall business strategy for customer relationship management.

Measuring your customer churn rate is something you should be doing. Your customer churn rate is the percentage of customers who leave you in any given time period. Various methods are used to calculate customer churn rates. Some methods involve revenue, but the simplest churn rate calculation method measures the number of customers compared to customers lost in a given period. A simple example is 100 existing customers at the beginning of the month, 3 customers left during the month which equates to a 3% churn rate.

There is plenty of research to support how critically important it is for every company to thoroughly understand why your customers decide to leave you. Superior customer retention strategies will involve watching out for which customers may be at risk of defection and what steps should be taken to reduce or eliminate that risk.

Identify reasons why customers leave so you can change your service strategy in order to:

1) Identify customers who are at risk before they leave
2) Prevent customers from departing by implementing changes
3) Implement service recovery strategies
4) And, ultimately “wow” your customers and reduce customer churn

On the other side of the customer churn story is the customer retention story. What makes your customers stick to you? Analyzing your best customer success stories, why the client loves you and what makes the relationship so successful for both parties. Another piece of the customer retention story is the service recovery paradox. How you handle a problem or a mistake made with a customer can turn the customer into a huge fan. In other words a service failure can be turned into a customer retention story when handled correctly.

Wow your customers regularly! Read more of our blogs on customer service, visit our workshops page for our traditional live Sales Support workshops.

The Customer is Always First

• As soon as a customer contacts you (in person, phone, email, etc.), it becomes your first priority.  
• When planning your day/week/month, reserve time first for contacting customers. 
• When speaking with a customer, listen attentively and ask questions because the customer's needs, expectations, issues, feelings are the first thing that you need to identify.

• The Customer Experience Journey (Forrester Research) This report refers to a "blueprint for customer experience excellence” that recommends developing a "customer-centric DNA.”  The report suggests that companies need to "treat customer experience as a competence not a function” requiring buy-in from everyone.
• 2011 Customer Service Impact Report (Oracle)  This customer service survey cites that 86% of consumers claim they will pay more for a better experience.  Another interesting data point cited claims that 89% of consumers said they began doing business with a competitor following a poor customer experience.   

Looking for a New Sales Meeting Activity? Try This Customer Zone Activity

• What can each of you on the sales team be doing to WOW your customers so that they migrate upward to the Service Surprises zone?

• How successfully and how quickly have you responded to difficult customer situations that may fall in the Service Recovery Zone?

• Overall, how can you demonstrate to customers that you will consistently meet their needs and address their concerns?

Customer Service and the Carpenter

"Do what you do so well that they will want to see it again and bring their friends."

 -Walt Disney

This month’s newsletter continues the series on providing exceptional customer service and support.  I often conclude the teaching of our "Exceptional Customer Service” workshop with this real-life story, and would like to feature it for this month’s newsletter. 

When I was a young boy, I spent many afternoons after school at my grandfather’s carpentry shop. He never had a formal education but was a highly skilled tradesman. His finished work and services, such as handcrafted furniture and home improvement projects, were much in demand. He never advertised but was the beneficiary of word-of-mouth recommendations from satisfied customers. 

In retrospect, it was fascinating to see how he interacted with customers. He always thanked customers for their business, both initially when an order was placed and also when the furniture or project was completed. Whenever possible, he gave each customer more than he or she had requested. I recall him building a beautiful bookshelf and using some of the leftover scrap wood to make some bookends for the same customer. Because the wood was of the identical type and grain, the bookends matched perfectly with the bookshelf. 

Now that I am older, I spend much time advising and teaching clients about subjects such as how to provide exceptional customer service. If you’ve had the opportunity to read the prior two STAR newsletters, we have highlighted several points such as: 

Are you wowing your customers? Customers who receive a superior product or service will recommend your organization to others, just as my grandfather benefited from word of mouth referrals.

 Are you treating your customers with respect? It can be as simple as a thank you. 

Are you exceeding your customer’s expectations? It doesn’t necessarily have to cost you a lot to give a customer more than he or she expected, such as the bookends mentioned above. 

In closing, if you want to provide exceptional customer service, learn from the carpenter. I know that I did. 

How Satisfied Are Your Customers?

"Your customers are only satisfied because their expectations are so low and because no one else is doing better."

 -Ken Blanchard (from Raving Fans: A Revolutionary Approach to Customer Service)

So why is customer service so important? Because outstanding customer service builds loyalty and customer retention, and will improve your bottom line.

The Service Expectations Zone

The backbone of your customer service strategy and culture consists of three zones, namely the Service Surprises, Service Expectations and Service Recovery zones. Last month’s newsletter focused on the Service Surprise Zone, and summarized tips and techniques on how to "wow” your customers. This month we will focus on the Service Expectations Zone, with emphasis on ensuring that your customer’s expectations are being met and the importance of doing a better job than your competition. The Service Expectations Zone is when you meet your customer’s expectations. At a minimum, your organization needs to identify and then meet the critical needs and expectations of your customers. As such, the ability to ask questions and listen for the customer’s concerns and issues are critical skills.

What Do Customers Expect (the "Three R’s”)?

Let’s start with the obvious. Customers decide to buy from your organization because they have a need for your particular product or service, and they have assessed that your company provides them the best value for that particular product or service. This can mean many things, depending on the industry that you are in, such as: willingness to customize, reasonable price, highest quality, increased productivity, convenience, improved ROI, and so on. 

Based on STAR’s experience with a wide range of clients from diverse industries, customers expect more than just the product or service by itself.  To take an extreme example: Suppose that you provide a widget that contains all the technical features that the customer is looking for, but the customer is treated rudely during each interaction with your firm. Or, the customer calls post-sale with a problem or question about your widget, and is transferred several times without a resolution to his or her problem. Would you say that you have met your customer’s expectations in these two situations? 

How you sell and service a customer is often more important than what you sell. All customers expect Responsiveness, Respect, and Reliability — we call this the "Three R’s”, for short:

• Responsiveness: answer the phone promptly and/or greet the customer immediately if in-person; don’t leave the customer on hold too long; take ownership of the problem and be solution-oriented.
• Respect: use the customer’s name instead of treating him or her as a number; be attentive; be personable.
• Reliability: if you cannot fix the situation immediately, give the customer a specific and realistic completion date and then be sure to follow through on the promise. It infuriates customers to be told that a problem will be fixed and then find out on that date that nothing has been done.  

Ensuring Customer’s Expectations are Met

There are several skills and techniques to ensure that your customer’s expectations are being met:

1. Follow the "Three R’s” mentioned above. Managers should set clear expectations that every employee who interacts with customers should treat all customers with respect, and be responsive and reliable. Your performance appraisal, hiring and compensation systems should be designed to include these desired behaviors. 
2. Ask questions and listen for the customer’s needs and critical expectations. If we were limited to teaching one set of skills in our Exceptional Customer Service and Support workshop, we would select questioning and listening skills. After all, you cannot meet or exceed the customer’s expectations if you don’t know what is most important to each customer.
3. Follow-up with the customer, especially if he or she doesn’t expect you to do so. The follow-up action can be a telephone call, an email, or sometimes a special activity such as a thank you note. Rather than waiting for the customer to call you if he or she has a question or problem, be pro-active and contact the customer yourself. This can be especially valuable with new customers, or when existing customers purchase a new product.
4. Use a team approach to customer service. This is the most recent trend that STAR has observed with many clients. Selling has become a team sport for many of our clients. Who else besides your sales and customer service team comes into contact with your customers? Every person who interacts with customers needs to adopt a customer service-oriented approach. A common mistake is to overlook the potential contribution of your technical service, back-office and production personnel to making the overall customer experience a positive one. 

The Wow Customer Service Factor

"Just having satisfied customers isn't good enough anymore.  If you really want a booming business, you have to go beyond satisfied customers and create 

raving fans.”  -Ken Blanchard (Raving Fans: A Revolutionary Approach to Customer Service)

Outstanding customer service builds loyalty and customer retention, and will improve your bottom line. It does little good to make a sale if your company or organization cannot service your current customers. Take an extreme example: Suppose that your sales force succeeds in bringing in new customers, but customer attrition equals the rate of customer acquisition due to poor customer service with existing clients. In spite of the sales successes, you are destined to lose money and eventually go out of business, unless you improve the level of customer satisfaction.    

Three Zones of Customer Satisfaction 

The backbone of your customer service strategy and culture consists of three zones:   

1. The Service Surprise Zone (what we call the "Wow Zone”) is when you exceed your customer’s expectations. You should strive to "wow” your customers, especially your key accounts and prospects.
2. The Service Expectations Zone is when you meet your customer’s expectations. At a minimum, your organization needs to identify and then meet the critical needs and expectations of your customers. As such, the ability to ask questions and to listen for the customer’s concerns and issues, are critical skills.
3. The Service Recovery Zone is when you don’t meet your customer’s expectations. This zone is a moment of truth. Handle it well and you can actually strengthen the customer allegiance. But, if this is handled poorly, you run the risk of losing customers.   

Customer Service Statistics

Many customer satisfaction surveys, from a wide range of industries, show a common pattern in terms of how customers react to situations when they are either "wowed” or dissatisfied:  

• An extremely satisfied customer will typically tell 2 to 5 other people or organizations about their positive experience. In other words, a "wowed” customer will provide unsolicited referrals of business for you. 
• An extremely dissatisfied customer will tell 5 to 20 other people or organizations about their negative experience,and encourage prospective customers not to use your company’s products and services. This creates bad word-of-mouth and damages your reputation in the marketplace. 
• The majority of extremely dissatisfied customers (as many as 90%) will stop doing business with your firm without letting you know that they are leaving. As such, it is a double negative if you don’t respond well to a Service Recovery situation. You likely will lose the customer and that same customer will tell other prospective customers not to use your company or products.  

Although the exact statistics listed above may not pertain to your company, the three general principles do.   

The "Wow" Customer Service Factor

There are many ways to "wow” your customers.  

• Be pro-active about communicating with customers, especially when you become aware that a problem (such as a delayed shipment) may occur; call the customer to advise them of the problem and offer some solutions or options.
• Follow-up with customers even when there aren’t any problems; for example, call or email a customer that you haven’t spoken with in awhile.  

You should strive to be in the Service Surprise Zone whenever possible. We realize that everyone has become increasingly busy, and it may not be practical to "wow” every customer. If you have to be selective about "wowing” customers, your customer service strategy should focus on "wowing” these three categories of customers: (1) Key accounts, because the loss of a key account can have a severe effect on profits and sales goals; (2) Growth accounts because of their longer-term sales potential; and, (3) New accounts, because you want their initial impression of your company to be favorable.