Dr. Zimmerman’s TUESDAY TIP:
“Good will is the one and only asset that the competition cannot undersell or destroy.”
Marshall Field
Dr. Alan Zimmerman’s Personal Commentary:
When it comes to starting a business or growing a business, nothing … and I do mean NOTHING … is more important than your customers and the service you give them. According to an article in “US News and World Report,” of all the customers you lose, 82% of them will stop doing business with you because of a customer service issue. Indeed, they said, price may be the least of your worries when it comes to keeping your customers.
And keeping your customers is a big deal … A REALLY BIG DEAL. According to the “Harvard Business Review,” if you could retain a mere 5% of your lost customers, your profits would increase by 25%.
To keep your customers and to keep them happy, I’ve discovered several strategies … all of which I discuss in my new book, “The Service Payoff: How Customer Service Champions Outserve And Outlast The Competition.” For starters, let me suggest the following.
1. You must understand WHO your competitors are.
Of course, you may think that’s a rather silly strategy. You may think your competitors are more than obvious. But I beg to differ. Most people have no idea who their competitors are.
For example, if you’re a manager who reads management publications, and if only read articles describing practices in organizations similar to your own, you DON’T understand WHO your competitors are. If you think you’re wasting your time reading articles describing different kinds of businesses and what works for them, you DON’T understand WHO your competitors are.
Your competitors are NOT limited to companies in your industry, of a similar size, in your geographic area. Actually, YOU’RE COMPETING WITH EVERY SINGLE COMPANY OUT THERE.
Yes, Disney, L.L. Bean, State Farm, your state government, the Mayo Clinic, FedEx, Southwest Airlines, GE, and every other organization are your competitors.
“How can that be?” you wonder. Simple. Your competition is ANYONE WHO RAISES YOUR CUSTOMERS’ OR YOUR EMPLOYEES’ EXPECTATIONS. Any organization that satisfies its customers or employees better than you do, no matter what type of business it’s in, MAKES YOU LOOK BAD BY COMPARISON.
For example, customers who call Land’s End to order a shirt just before they call you expect your company to react with equal courtesy and efficiency. And employees who learn how Levi’s Inc. treats its staff expect you to provide the same type of opportunities for them.
The fundamental nature of competition is changing. It’s no longer limited to the other bank in your neighborhood or a comparable store in the next town. Your competition is ANYONE YOUR CUSTOMERS OR EMPLOYEES COMPARES YOU WITH.
In today’s global economy, information is being exchanged at a very rapid speed. Your present customers and your potential customers can obtain access to a wide variety of competing products and services with the click of a button. And many times these goods can be delivered faster and cheaper than your business can offer. The only way to compete in this kind of marketplace is through excellent service that is coupled with a unique and positive EXPERIENCE.
So…
2. You must give your customers an EXPERIENCE.
In their book on “Authenticity,” Gilmore and Pine write, “Goods and services are no longer enough; what consumers want today are experiences — memorable events that engage them in an inherently personal way.”
That being the case, it is critically important that you and your company are always looking for new ways to enhance your customer’s experience in doing business with you. In fact, the better the experience you provide, the more loyal your customer will become.
Forrester proved that when he asked customers to rate their experiences with various companies. He asked them if their experiences were: 1) Useful … they got their needs met, 2) Easy … they did not experience any hassles in the interaction, and 3) Enjoyable … they did not feel frustrated or disappointed in the interaction. Forrester concluded … that regardless of the industry … customers buy more and stay more loyal when they scored higher on his customer experience index.
Starbucks seems to be one organization that has mastered these three elements of a great customer experience … Useful, Easy, and Enjoyable. That’s why so many customers purchase their coffee at a Starbucks store rather than the gas station across the street. The result is an extraordinary buying experience that customers cannot get at the gas station. So they don’t mind paying a much higher price just as long as they get the Starbucks experience along with their coffee.
Starbucks takes pride in creating an amazing buying experience for their customers. Sometimes, this experience comes in the form of new product offerings … encouraging their patrons to sample some of the new items instead of their regular orders. However, their employees are also quick to detect when customers do not enjoy a new item and are very comfortable in allowing them to exchange the unfamiliar product – even before their customers express their dislike of it.
Starbucks’ dedication to exemplary customer service … and providing a unique and positive buying experience … has, without a doubt, been a leading cause for their growth and profitability. Their service is also part of the reason why Starbucks has single-handedly changed the way coffee is served around the world, and it’s part of the overall business concept that has been duplicated by many other coffee shops and businesses in various sectors.
But even in the best of businesses offering the best in customer service, there will be complaints.
3. Don’t trivialize complaints.
Many companies do. They’ll say, “We don’t get that many complaints.” Well, of course not. The research has well established that only 2% of your unhappy customers will actually tell you about their complaint. The other 98% simply slip off to the competition.
And is that a big deal? You bet. Take a big company with 4 million customers, for example, where each customer spends $100 per year, giving the company a projected revenue of $4 billion. Industry standards show that approximately 30% of a company’s customers (or more) have poor experiences, and many of them will defect to the competition. In conservative terms, that means that company will lose hundreds of millions of dollars each year in revenue that they will have to make up somewhere else.
You can prevent many of those defections if you DON’T trivialize customer complaints. Etiquette expert Miss Manners (a.k.a. Judith Martin) says this phrase should be written and mounted by every cash register, every telephone, and every internet connection in the business world. Miss Manners says there are two reactions customer service reps can give to any complaint they hear. “The first is, ‘This is an outrage. I can’t understand how this could happen. I want something done about it right away.’ The second is, ‘There, there. Mistakes happen. It’s really quite all right.’”
As Miss Manners goes on to say, “If a business says the first thing, the customer will say the second. But if a business takes role number 2, the customer will take role number 1.” In essence, customers take complaints in stride when a business reacts strongly. They become outraged when a business trivializes their complaints.
Of course, every business is bound to have its share of bleak moments where they have fallen short in the area of customer service. However, the great companies embrace the criticism and change accordingly.
Joseph Michelli tells of some of these moments in his book “The Starbucks Experience.” During the terrorist attacks on the World Trade Center on September 11, 2001, a Starbucks store in the area took a payment of $130 for three cases of bottled water that an ambulance worker was trying to get for the survivors of the attack. An e-mail circulated shortly thereafter, criticizing the store for taking payment in such debilitating circumstances.
When the e-mail reached Orin Smith, the Starbucks president and CEO, he immediately issued a $130 check to the ambulance worker and called the ambulance company to personally apologize. Independently, Starbucks stores in the Ground Zero vicinity operated around the clock providing free beverages and pastries to the Ground Zero volunteers and rescue workers.
The company could have made an excuse by highlighting the fact that it had already made millions of dollars’ worth of donations at the corporate level towards the September 11th catastrophe. Or it could have made a scapegoat out of the employee who rang up the register transaction for the $130 worth of bottled water. Instead, Starbucks owned the mistake and was determined to fix it in the most positive way imaginable.
One final thought: As the quality of products and services becomes more and more standardized by customer demands, as price points inch toward an even balance between competitors, customer service becomes one of the few things that is still left to set you ahead of the competition.
How can you make your customer service a TRUE EXPERIENCE?
Make every day your payoff day!
Dr. Alan Zimmerman
Tel: 800-621-7881
E-mail: Alan@DrZimmerman.com
on 13 September 2010
