Tips for retailers

Are YOUR customers happy?

Every entrepreneur knows that happy customers are essential to keeping a business afloat. But, while one can safely assume that the customer slamming the door with the words "you’ll never see me again" is NOT a happy customer, it is less easy to predict which of your other customers will recommend you to all their friends – and why.

Customer management and customer commitment can not be measured in terms of profits or losses — until it is too late and the business goes bust because too many customers defected to the opposition.

How does a company therefore measure how happy their customers are?

In a report, State of the Nation IV:2005, compiled after one of the largest worldwide studies ever done in this field, Reap Consulting (business consultants also represented in SA) and QCi Assessment, examine the factors that correlate competent customer management and business performance.

But do they love you?

Customers who don’t like a brand won’t buy their products, even if they are cheap. A customer’s commitment to a company or brand depends almost entirely on how a customer emotionally relates to it. Successful brands have made their customers feel good, by doing the following:

» Delivering the basics consistently across all touch points in line with customer expectations (accurate statements, meeting promises etc);
» Resolving problems/queries positively on first contact;
» Making a personal connection at the point of contact;
» Delighting customers with low cost factors e.g. gas company employees removing shoes when entering a home;
» Delivering a distinct experience that is unmistakably from that brand;
» Delighting through ‘random acts of kindness or fun’;
» Involving customers in the category and making them care;
» Leading the industry and re-inventing the service delivery model;
» Having committed staff who care and are aligned to the organisation’s objectives, purpose and brand values.

Points not guesses

There are several models to measure competent customer management. For instance, The CMAT™ Model breaks customer management down into a number of elements and measures a company’s performance in each area according to a point system. They need to:

» Develop and deliver a proposition (from the ‘brand experience’ to the direct ‘personal experience’);
» Develop the infrastructure to deliver the proposition (e.g. policy, people, process, data and IT);
» Actually deliver it (customer management activity — acquisition, retention, penetration and cost of customer management);
» Measure from an internal and external (customer) perspective.

The result is a score which reflects the reality of the way the company actually manages customers, not the result of an assessment questionnaire that could be misleading. "Senior managers often overestimate how good they are at managing customers," the research team found.

It is difficult to predict which aspects of customer management are most important. For instance, how much value do you attach to customer satisfaction questionnaires? Over 90% of companies surveyed collect customer feedback and measure customer satisfaction. However, the data is often misleading, as most models do not, for instance, predict repeat purchase or loyalty.

Many companies also use customer satisfaction data as a senior management hygiene measure, lumping all figures together to get an overall satisfaction index to make management look good. This does not reflect problem areas or valuable detailed feedback that customers provided. It is not only meaningless, but a wasted opportunity to improve service.

The opinions of the most valued customers should also be weighted — typically, the top 10% of customers will be responsible for around 50% of profit. Their opinion will be different from the other 90% and should count more. They have more interactions with the company and more experience in dealing with staff.

Research showed that 63% of companies do not know how many high value customers they lose.

Most companies will say that the customer’s experience is important to them, but they rarely place the cost of customer management before the costs or financial returns.

Their attitude is often: "We will encourage customers to call the contact centre (usually a cost reason for this anyway), then we will reduce the cost to ourselves by putting them on to an operator who is trained to ‘smile’ — whatever the customer’s reason for calling."

The fact that the call to the customer center could lead to even more frustration and dissatisfaction, is never recorded — especially not if customer feedback forms merely ask customers to indicate if a particular service was provided, without an option to indicate how they felt about the service.

This is why companies are confounded when faced with facts that 65–85% of the people who defected from their company or brand, had indicated that they were satisfied or very satisfied with their former supplier.

It can be very valuable to canvas a customer’s opinion just after they have had some sort of interaction or experience with a firm. Ask follow-up questions such as: "Mr Smith, I understand the recent complaint you had has been sorted out now — is that correct? How did you find the complaints process? Did we handle it well?

Happy employees

It is equally important to give staff feedback on the customer experiences – but research shows that only 50% of companies do that.

Employee satisfaction is an area that probably has the most impact on profits. Research results show that better performance occurred if:

» A company has taken the trouble to encourage employee behaviour according to brand values;
» It has used employees in the process of the development of appropriate behaviours;
» It understands key interactions or customer moments of truth — when the customer is emotionally involved, for instance, during complaints;
» Employees are satisfied at work, and feel their views are being listened to;
» The employee can describe why a customer should buy from the company.

Developing staff competencies is crucial because it will improve the experience when a customer faces staff. Yet, staff that can influence the customer’s experience of the company are recruited and managed to perform certain job-related skills… rather than improving competency in doing it.

"If competency is defined as a combination of knowledge, attitude and skill, then all three are needed to manage customer interaction," the report states. "There is no point in employing someone who has the skill to work an order entry system if: their attitude to doing it is all wrong (e.g. poor attitude resulting in slow, inaccurate data entry, treating the customer poorly) and they do not know why the customer wants the product."