My wife and I had dinner the other night with some new friends who own a local business. The business is low-tech, in fact I guess it would be categorized as a service business. Something they said stuck with me – regardless of how things go with the service provided (many things are outside of their direct control) the way the customers are treated and situations handled make or break the business. That’s great insight that far too many business owners just don’t get.
When we ran OrcsWeb – a technology company that I started in 1996 and that was acquired by SherWeb in 2014 – we knew early on that the way we handled our customers was going to make or break us. Sure, we could compete on price, and maybe even a few features, but there are a LOT of really smart people out there who can write code to compete with you, and much of the underlying technology (computer servers in our business) can be different but it changes so rapidly that its hard to keep that as a competitive advantage. Sooner or later someone will always have a cheaper or faster or smaller or <whatever> solution. YES, keep innovating to stay ahead of the curve, but there is an additional great way to stand apart, and ahead of, your competition…
Customer satisfaction is worthless -?
I can’t find the exact statistic to reference but I read a few years back that a huge percentage of people who leave one business and switch to a competitor stated on their most recent customer survey that they were “satisfied”. This lead me to the book Customer Satisfaction is Worthless, Customer Loyalty is Priceless by Gitomer (a summary of this book might be where I originally read the statistic). It’s a great thought and one that I think few of us really consider. Just because you are “satisfied” with something doesn’t mean you aren’t one step away from changing products/vendors/etc. If you are satisfied with a product or service, that doesn’t mean you can’t also be satisfied by another vendor’s product or service – a customer might be one discount or coupon away from switching.
What’s that one question to ask?
I recommend another great book named The Ultimate Question by Reichheld. He talks about Net Promoter Scores, which is highly related to Gitomer’s comment on “satisfaction”. On a scale of 1-10 “satisfied” is somewhere in the middle. For NPS calculations those people don’t count. The only ones that count are the ones that rank you near the top of the scale. The ones that rank you in the bottom half of the scale actually lower the score and take away from the higher-end counts. Ones in the middle don’t matter at all. So when you use NPS scores to analyze your customers and their perception of your product or service, then goal is to have as many of them as possible rank you at the top end of the scale.
What do you call high-scorer customers?
Raving Fans. While we ran OrcsWeb, Karla managed most of the staff. Along the lines of making sure our customers weren’t just “satisfied”, and also working to maximize our NPS scores, she read a couple of books that she loved so much she made them required reading for every employee. The first is Raving Fans by Blanchard. The book builds upon the customer-satisfaction-is-worthless concept and states that, rather than satisfied customers, you want raving fans. These are the people at the top end of the scale when you ask them about your business. These are the customers who actively share their experiences and tell other people just how great you are. These are the people who can really help grow your business for you.
The second book Karla made required reading is The Fred Factor by Sanborn. The byline of “How passion in your work and life can turn the ordinary into the extraordinary” best describes the concept behind the book. It’s another great read that I highly recommend.
Both of these books are pretty short and easy to digest. They make great team studies – read a bit and discuss then figure out what changes to make based on the discussions.
As mentioned, we did these things and made customers a focus – building raving fan customers specifically. Did it help? Absolutely. Our number one source of new customers was referrals from existing customers. Our customer retention was off-the-charts – the average client engagement ran well over 7 years, which is extremely rare in a competitive, price-sensitive, highly-dynamic technology industry.
Regardless of the product or service you sell, I can’t over state how important these points are. If the importance isn’t clear to you – or it is but you don’t have a specific corporate process to nurture the points – then you should grab these books for help.
Of course Karla and I are also available for business coaching if you want to work with one or both of us to learn from our 19 years of running OrcsWeb, managing dozens of staff, and serving hundreds of clients in over 70 countries.