A new client costs 10 times more than a regular one. But how does good customer engagement really change consumer behavior? As show exploredand I, 87% of the audience confirm that the customer service of the company they contacted influenced their buying behavior, ranging from recommending products or services of this company to other people (67%) to repeat purchases from this company (54%).
The cost of compensating for the churn of dissatisfied customers, guests, patients and their negative impact on the company's reputation significantly exceeds the cost of their retention, and therefore, the focus of marketing changes from acquisition to customer retention. The core of an effective strategy is a personalized service that complements the main service with competitive advantages, and the priority is to establish strong relationships with customers and stimulate their loyalty.
Relationship marketing companies are less sensitive to market changes, competitor promotions, and seasonal demand fluctuations.
How to stimulate loyalty
Relationship marketing is built on multiple levels of incentives to build loyalty. The first tier is based on price incentives, where business communication with customers is built on the promise of saving money. Service providers often reward repeat customers with special price offers, closed sales, and extra discounts. For example, a common tool is a loyalty card at your local café that gives every tenth coffee a free gift. This advantage works, but it is not sustainable, and customer communication based solely on financial gain will never generate true loyalty. There may always be an alternative, more advantageous offer from a competitor.
Relationship marketing practices at higher levels offer greater potential for sustainable competitive advantage. The second level is the social connection that maintains the client's status, emphasizing his privileges through increased attention and special services not always available elsewhere.
And the third, most important and organizationally complex level is structural communication, which ensures the solution of clients' problems as quickly and conveniently as possible. Loyalty depends on a large number of factors, but the determining factor is how the company communicates. Trust is the most important component of loyalty. It is the client's confidence and willingness to rely on you to address their specific needs.
Trust and formed bonds reduce the uncertainty and vulnerability of the customer who values a relationship with a trusted company that does not need to be controlled. This bond is the psychological, emotional, economic, or physical bond that ties the parties together. The strength of this connection can determine brand commitment and customer loyalty.
Targeting profitable customers
Some clients will be more beneficial to the business than others. Some people tend to be loyal if they receive good service and are happy to use one brand. While others are prone to one-time purchases, they are always looking for alternative and discount offers.
These two types of clients can be characterized as adherents and rationalists. Committees have the potential to create life-long value as their motivation is to optimize efforts to find options to meet needs and reuse proven suppliers to simplify the process and reduce risk. Rationals, on the other hand, do not show loyalty and prefer to choose from a wide range of relevant proposals each time in search of the most profitable option. Having systems to recognize these customer characteristics is important to help us target our customers who are more likely to stay.
Relationship marketing and service improvement go hand in hand. Companies must do their best to continue to improve their customer experience. This quality of service adds more value to the core product, which improves customer satisfaction by strengthening and cementing relationships. Benchmarking the level of performance you expect from your people and systems helps you maintain a high level of quality.
Use customer surveys to analyze your services and get results from your regular customers. Use this as an internal yardstick for customer service quality. This means setting a minimum standard for the quality of service. Keeping your business to a strict standard does not guarantee that every customer will return, but it will definitely increase loyalty. In addition, often dissatisfaction is caused by a negative customer experience rather than the product or service itself.
Customer satisfaction is one of the most important criteria for their loyalty. When the level is high, the potential for repeat sales is high; when satisfaction is low, there is a very low probability of customer retention.
What annoys customers?
Good customer service influences their buying choices. People interact with companies on a regular basis and sometimes things don't work out as expected. But what exactly is considered a negative customer experience from the point of view of the average person? Mostly customers are annoyed by only three factors of poor service:
- Unpleasant communication with a company representative;
- Waiting too long for an answer to their question;
- Complete lack of answer and solution.
On the other hand, their positive customer experience includes the same aspects:
- Interacting with nice people;
- Fast and efficient response to inquiries;
- No need to explain the situation over and over again and simple problem solving.
These factors are more than understandable, and they directly influence purchasing decisions and, in turn, lifetime value (CLV) and business metrics.
Companies use a variety of technologies to successfully meet customers' needs for prompt, personalized attention. With the introduction of channels such as online chat, social media, mobile apps, sms, self-service solutions, etc., companies are ready to communicate with customers according to their preferences.
But how important is this in terms of buying behavior? How long does the effect last? What are the expectations of customers regarding the channels they use to contact support? What do they value? And does good service have the same long-term impact on customer experience as negative experience?
The client should feel comfortable, and he should believe that you will always be there if he has any questions or difficulties. High-quality service in the understanding of the consumer is the speed of solving his problems and the freedom to choose comfortable communication channels.
Research data from Zendesk, one of the leading CRM companies, shows a direct link between customer experience and their CLV. 98% of the audience consider it convenient to have various online resources for self-service, since it gives them freedom of choice, and 67% use chats, social networks or other online services equally.
The important thing is that customer preferences for communication channels with support will change depending on how complex and important issues are being resolved.
For example, 36% of buzzers and 5% of boomers only use social media to communicate with service providers. But, what is very important, they have different motivations: it is more convenient for buzzers (81%) to exchange photos of a problem product with the support service, and for boomers (69%) it is important to share a problem with other buyers, thus informing others about possible difficulties with the product.
Customer perception of a good service is changing not only in terms of the choice of communication channels, but also in expectations regarding the speed of the company's response. Millennials are especially striking in their changing buying behavior, 65% of whom expect faster service than they demanded five years ago. So, for example, 51% of millennials who do not receive a response from the company within 60 minutes and 10% within five minutes will start using alternative methods of contacting the company through other channels.
When customers seek help from a different channel of communication, it can create confusion for the organization of support, as requests with the same problem will go to several representatives of different service providers at once. This trend obliges companies with long-term income to ensure high coordination of service channels.
What should a company interested in CLV growth and trend do? First, offer more self-service options. Second, look for opportunities to optimize your internal processes to make it easier for employees to communicate with customers: they hate having to call, write and remind them of their needs several times. This is especially true for millennials, who, being one of the most experienced generations in the field of digital technology, require that the solution of any task be pleasant and convenient. They don't want to wait.
Thus, clients are changing the rules of service and demand from companies a prompt, multi-channel and convenient approach to solving any issues. They do not forgive mistakes, do not remain silent and actively share their negative experiences with others. The future sales of your company directly depend on how quickly and conveniently you helped your today's clients with the solution of their small and big questions.
Be always in touch, friendly in communication and responsible towards everyone. And remember that for 97%, poor service can be a reason for rejecting your service.