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Calculating Financial Benefits of Customer Experience

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Forbes defines customer experience as the “cumulative impact of multiple touchpoints” over the course of a customer’s interaction with an organization. Positive customer experience is a must have if you truly want to grow revenue.

There’s a widely reported argument that it costs less to retain existing customers than to acquire new ones. Quality customer experience plays a part in retaining customers, but do the financial benefits of customer experience go beyond that? Is it possible to calculate the wider financial benefits of customer experience?

An article in the August 2014 Harvard Business Review, “The Value of Customer Experience, Quantified” by Peter Kriss, quotes information from a study that compared the revenue and loyalty gains from customers with different levels of satisfaction with their customer experience.

Experience and revenue – a meaningful relationship

The figures indicate that there is a direct and measurable relationship between the quality of customer experience and future spending. That probably comes as no surprise, but there has been comparatively little hard evidence of that relationship and the financial value of customer experience. Gathering and presenting data like this can help if you are trying to demonstrate the return on investment of improving the quality of customer experience.

Kriss quoted results from a study of two different types of company – one selling its products and services by a subscription model, and one selling its products in a store or on a website, a transactional model.

Major gains from satisfied customers

The study used recorded customer feedback and purchasing histories, and discounted other factors that might influence results. Researchers found that customers of the transactional company with the best reported experience spent around 140 percent more than those with the worst experience.

For the subscription-based business, the study found that customers with the worst recorded experience were only 40 percent likely to renew, while customers with the highest levels of satisfaction with their experience had a 74 percent chance of remaining members.

Adding value to relationships

These figures highlight the potential benefits of good customer experience. When customers keep returning to stores or websites and buy, that opens up many other revenue opportunities. It gives companies the chance to introduce new products, gain additional business through referrals or increase the lifetime value of individual customers.

Take a long view

But, does all this come at a price? If feedback indicates that customer experience is mediocre or poor, it’s time to invest in training or better customer service infrastructure. With increasing costs, the potential revenue gains may not yield such a good return, in the short term, that is.

That’s why it’s important to take a long-term perspective. The figures in the study highlight future revenue or renewal levels resulting from a positive customer experience, and that makes investment in an improvement program a strategic priority to retain customers for life.

 
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What Does Customer Loyalty Have to Do with a Conference

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RSA Conference is an annual event aimed at information technology (IT) security professionals from countries around the world. The organizers hold events in North America, Asia, the Middle East and Europe, attracting over 30,000 participants a year, with many returning year after year. The key to attracting customers for life for this event is the quality of content and the collegiate atmosphere during the conference, according to the organizers.

Quality content represents value to the customer

For busy IT security professionals, a visit to a conference like this can take almost a week of their time away from work. The conference itself lasts three days and delegates must add on additional time for travelling to and from the venue. To justify the time and cost of participation, the event must represent excellent value for money particularly when corporate travelling budgets are tight.

RSA Conference positions itself as a unique learning experience and a one-stop shop for all IT security information needs. This positioning is important because the conference competes for the same audience against online learning resources and other IT security events. It wants to be recognized as a not-to-be-missed event.

To deliver the promise, the conference offers delegates a choice of 100 keynote presentations with high-caliber speakers, sessions on different learning tracks and sessions for special interest groups, as well as an exhibition that attracts leading vendors to the IT security industry. The wide choice of quality content gives delegates the opportunity to create their own tailor-made agenda to cover the areas of security that are most important to their organization.

A collegiate atmosphere builds relationships and loyalty

RSA Conference attracts a wide range of IT security professionals from senior executives to IT managers, developers and consultants. Some work for large corporations in internal IT departments, while others are independent specialists or members of IT or security consultancies. There is also a broad range of interests, including people responsible for compliance, security policy or implementing security systems.

The organizers build on this community of knowledge by encouraging networking and collaboration during the conference. They organize social events before the conference starts for returning delegates and set up special interest groups to share information and experience. This approach helps to build what the organizers describe as a “collegiate atmosphere” that provides a welcoming environment for delegates. Communications before and after the conference help to reinforce this perception and build delegates’ commitment to return to future events.

LoyaltyPlus members who have attended for many years receive special treatment and privileges at the conference, including fast-track registration and access to sessions, use of a hospitality lounge and the services of a conference representative.

Satisfied customers return

The organizers aim to give delegates the information and motivation they need to implement change when they return to their own business. This can help them enhance their own career prospects and creates high levels of customer satisfaction, giving RSA Conference the opportunity to create customers for life.

 
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Lifecycle services help banks build customers for life

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Customers can now switch easily

In the UK, legislation in September 2013 has made the switching process even easier. UK banks must now complete the transfer within seven days, instead of the former process, which could take 30 days or more.

That change has encouraged many customers to overcome the inertia caused by a complex, lengthy switching process. In the twelve months following the legislation, the UK Payments Council reported that 1.2 million customers switched current accounts, an increase of 22 percent over the previous year.

New rivals emerging

Banks don’t just face competition for footloose customers from their traditional rivals. The news that Walmart was entering the US banking scene in 2014 gave established banks an unwelcome challenge. The continuing growth of telephone, Internet and mobile banking services mean banks can no longer rely on personal contact with customers visiting a branch for their transactions.

Recognizing customers’ changing needs

So, how can banks retain customers for life, when it’s now so easy to move? One approach is lifecycle based – a portfolio of services that align with customers’ changing needs through their life.

In the personal banking sector, the relationship might begin with a checking account when the customer gets their first pay check. The customer might need a mortgage for their first home, loans for car purchase, family vacations or home improvements. Later, banks can target empty nesters who are looking for advice on investments or retirement plans. With high net worth customers, banks can add an additional level of value by offering the services of a personal banker of investment advisor.

By using customer relationship management (CRM) systems to track their customers’ circumstances and preferences, banks can identify opportunities to offer the next level of services and meet their customers’ changing needs.

Building stronger long-term business relationships

There are similar opportunities in business banking. Small businesses and startups may require a small range of basic services, including loans, credit lines, payment and deposit services as well as insurance.

As the business grows, the range of services could change to include business development loans, invoice factoring, leasing, investment financing, electronic banking, treasury services and international financial services.

Personal relationships are more important in the business sector and banks appoint business managers to meet their customers, find out more about their operations and recommend financial services in line with changing needs.

Focus on customers for life

Products linked to customers’ lifecycles give banks the opportunity to grow revenue and strengthen relationships with customers. However, unless the banks treat their customers as “customers for life” and look at their business with a degree of continuity, they will lose the incremental opportunities to other financial institutions.

 
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Improve customer experience in the contact center

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Five ways to improve customer experience

The contact center plays an important role in building and retaining customers for life. It is one of the first points of contact for customers looking for information, support or advice and that makes a quality customer experience essential every time a customer gets in touch.

Here are five ways you can ensure a quality experience:

  1. Deal with customers over their preferred channel
  2. Give agents time to deal effectively with calls
  3. Manage call transfers to minimize inconvenience for customers
  4. Provide video sharing to enhance the customer experience
  5. Integrate contact center records with other customer data

Deal with customers over their preferred channel

It’s clear that customers are now using many different sources outside the traditional voice–based contact center to obtain information. You need to extend the reach of the contact center and proactively support other channels.

  • Your contact center must be able to interact with customers through email, text, chat, instant messaging web conferencing, and voice.
  • Mobile customers are using apps, text and other tools to interact with organizations. You must respond to the way your customers want to be supported by providing knowledge, resources, email, chat and community site access via mobile.

Give agents time to deal effectively with calls

Traditional contact center metrics focused on minimizing the time agents spent on each call. The aim was to control costs and reduce the number of people needed to staff the center. However, experience indicated that agents under pressure to close the call within a specified time limit were failing to resolve queries. As a result, customers were calling back and satisfaction levels were falling. By giving agents the discretion to spend longer on a call and resolve issues first time, companies found satisfaction levels rising.

Manage call transfers to minimize inconvenience for customers
Improving the quality of call transfers can lower costs, reduce churn and increase lifetime customer value. Unnecessary call transfers frustrate customers, increase costs and tie up contact center resources. An agent is unable to answer a caller’s query; the caller cannot get a suitable response from a self-service facility; or the IVR system directs the caller to an unsuitable agent.

A good transfer can increase satisfaction levels when it puts the caller in contact with a skilled agent competent to deal with the caller’s issue. It can increase revenue when the call is transferred to another agent when there is an opportunity to upsell by meeting the caller’s needs more effectively.

Offer video collaboration to enhance the experience

By enabling video in your contact center, you can move high-value customers to the highest level of interaction and personal contact. Agents and callers can discuss products or support issues via web conferencing, enabling agents to illustrate product information or support processes that would be difficult to explain by voice alone.

Integrate contact center records with other customer data

By integrating contact center records with data in other departments, such as sales, marketing or technical support, you can be confident that anyone who contacts a customer has up-to-date information on all customer issues. Integration with a helpdesk system, for example, means helpdesk teams can check customer records to see if there any open support issues before contacting clients. Integrating sales and marketing records with contact center records gives marketing, sales and contact center teams a single view of all activity with specific clients so they can coordinate activities to improve customer satisfaction.

Evolution pays dividends

The contact center must evolve to stay in line with changing customer preferences. By dealing with customers in the way they want and offering a quality experience on every call, you can help to retain customers for life.

 
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Why Collaboration with Customers Matters

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A great way to keep customers for life is to make them dependent on you. Collaborating on product development projects, arranging customized training programs for their people or setting up dedicated services can help build strong, long-tem relationships that competitors will find hard to break.

There’s more than a loyalty bonus in collaboration. Getting closer to your customers can reduce your sales and supply chain costs, help you plan future inventory, product developments and give you greater account control.

Get to know your customers’ goals

So where does collaboration begin? Do you know why customers keep coming back to you? It could be quality, price, convenience, delivery or a combination of those factors. Do you understand their challenges, their business plans and their perception of you? If they just view you as a supplier, chances are that key account might soon defect to a better offer from a competitor.

But, if they see you as a trusted business partner, essential to their success, you’re looking at a strong, long-term relationship. Here’s an example.

Collaborating to reduce a customer’s costs

A company supplying fuel charge cards to fleet operators faced tricky annual contract negotiations with a major customer that represented a big slice of its turnover and profit. Negotiations were traditionally based around the charge for managing the card program and that made the company vulnerable to lower cost competitors.

The company recognized through discussions with senior executives that the fleet operator faced increasing administration costs in controlling their fleet expenditure. By integrating their information systems with the customer and developing a customized reporting package, the supplier was able to demonstrate a reduction in the fleet operators’ administration costs.

This initiative moved negotiations away from price to business benefits by enabling the fleet operator to improve efficiency and reduce costs. The company transformed its perception from supplier to strategic business partner – a strong basis for a customer for life.

Becoming a product development partner

Collaborating on product development is another great way to build lifetime relationships. The pressure to get quality products to market continues to intensify and that gives suppliers an opportunity to build strong outsourcing relationships based on collaboration.

A components supplier, for example, can take on the design and development of an engineering component that is critical to the performance of the customer’s product. If the customer does not have the skills or resources to handle that work inhouse, the supplier becomes an essential partner.

As the customer gains confidence in the partner, they can plan future product development projects utilizing the supplier’s skills and expertise to add value to products and reduce development times.  It’s a win-win situation for both parties and a good basis for customers for life.

Strategy for success

Collaboration gets you in deep with your customers. It builds relationships based on trust and mutual benefit. And, it puts up big barriers for your competitors to overcome. This is a sure-fire strategy for success in the battle for customers for life. Put your sales and marketing team on the case, find out everything you can about your customers’ goals and challenges and demonstrate how you can become their strategic partner.

 
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