Delivering customer loyalty
How to bounce back from a bad experience
Customer loyalty is arguably the single best indicator of the future value of your business.
According to Frederick Reichheld’s research for Bain & Co., a 5% increase in customer loyalty can drive a 25% increase in net profit, and the reverse is equally true. Why? Because depending on your industry, new business from new customers will cost you between five and twenty-five times more to win, than new business from existing customers.
Think about it this way: you win customers by making them a promise, either tacitly or explicitly; a promise that’s better and more trustworthy than the one they get elsewhere. You win their loyalty by delivering on that promise, time after time after time. And you lose their loyalty, and all the hard-earned value that goes with it, when you break it. That is, unless you’re extremely skilled at relationship recovery; at picking things up when they go wrong.
For example, after a hectic Saturday of Christmas trees and decorations, wrapping presents and visiting relatives, the family Drake decided en-masse that a take-away was in order, prior to settling down in front of a Christmas film. I’d normally nip to the Pizza Express half a mile down the road, but they recently teamed up with Uber-style delivery partner Deliveroo, and for an extra two pounds, I could have it brought to me. Result, I thought.
So the pizzas were ordered for 6pm, and just before six my phone duly pinged me that they’d been collected. Then we waited and watched the app, as they spiralled their way around the locality, arriving very late and very cold 27 minutes later, having travelled a distance I can walk in twelve. I’d used Deliveroo twice before without issue, so I sent them a note. This was their chance to address the three big concerns any customer who’s been let down has in their head: Will you take this as seriously as I do? Will you put it right? Am I confident this won’t happen again?
To recover the customer, you have to do two things. First, ensure that whoever is going to speak to a disappointed customer can nail all three concerns, particularly the last one. Customer complaints are the single best way to improve your service. A mistake that damages the experience shouldn’t be allowed to happen again; certainly not for the same customer.
The second thing is this: you can’t ever let it feel like you’re following a process. That sends an unmissable signal: “this sort of thing happens a lot”; destroying at a stroke, all confidence in you and potential loyalty in the customer.
As it happens, Deliveroo missed on all three concerns. A perfunctory call to ascertain whether it was one pizza or all four that were cold, and a follow-up note informing me of a 25% credit for my next order. No mention of the lateness, no idea what would be done with my feedback, no comfort in it not happening next time.
I emailed back that it wasn’t about the money; if they couldn’t give me confidence that it was a one-off, I wouldn’t need a credit anyhow. That was when I struck customer service gold. “I can understand your frustration, however, our internal procedures are very thorough and I am bound to adhere to them” came the response. The UK MD has yet to reply to my email, which perhaps should come as no surprise.
Every business needs a process to handle complaints; one that addresses incredibly well all three concerns that a disappointed customer has. But the minute it feels like a process, is the minute you lose their loyalty for good.
|Changing customer behaviourRead more...|
|Delivering customer loyaltyRead more...|
|Finding the clear blue waterRead more...|
|Finding your WhyRead more...|
|Winning a lifetime of loyaltyRead more...|
|How CRM kills relationshipsRead more...|
|Three keys to operational excellenceRead more...|
|Finding the gap in your marketRead more...|
|The odd truth about “choice”Read more...|
|Avoiding the race to the bottomRead more...|
|How much should you charge?Read more...|
|Six steps to a truly special businessRead more...|
|The John Lewis loyalty gambleRead more...|
|How to become "the perfect choice"Read more...|
|The real basis of rational pricingRead more...|
|Improve your value proposition - it's about more than just priceRead more...|
|Five steps for turning loyalty cards into cashRead more...|
|Why Best Buy failed and what we can learnRead more...|
|Winning in Retail: how to position your business for successRead more...|