Short term strategies to try and meet monthly KPIs are severely affecting the longer term performance of many businesses.This approach according to Chris Bell New Zealand’s leading customer experience advisor and developer, fails to recognise that these have a significant impact on business growth and profitability.
Customer loyalty is on the decline, New Zealand’s productivity is near the bottom of the OECD rankings, customer word of mouth has become more powerful than any other form of advertising driven by the internet and social media. Due to increasing commoditisation business is finding it increasingly difficult to develop a sustainable competitive advantage.
All this according to Bell is driving an increasing focus on price with the resulting negative impact on margins and profitability.
If businesses started to capture numbers on the impact of these vital areas of business performance (customer loyalty, employee disengagement, cost of staff turnover, negative word of mouth), we believe there would be a much greater focus on improving these areas. This would result in the development of strategies designed to build a more holistic approach to improving business growth and profitability.
The examples below illustrate the importance of focusing on non financial drivers for business success.The value of customer loyalty
50% of satisfied customers and 25% of very satisfied customers are doing business with a competitor. A satisfied customer is no longer the goal. Just meeting customers’ expectations does not grow loyalty or advocacy. The bar has been raised; exceeding customer expectations is now the goal.
Loyal customers are 50% more likely to recommend than satisfied customers. Customer loyalty true customer loyalty is not about gimmicks like Fly buys and Air points. Real loyalty is a result of building real relationship with customers.
The value of positive word of mouth
83% will act on a recommendation before any other form of advertising. Increasingly those recommendations will impact potential customers that don’t even know the people who are recommending the business.
The damage of negative word of mouth
Businesses that have not met customer expectations will tell on average 8-10 other people – Colmar Brunton.
Negative word of mouth can come both from customers and disengaged employees.
It takes 5 positive experiences to counter 1 poor customer experiences – Colmar Brunton
The value of capitalising on your creativity
The most important leadership quality was “creativity” – survey by IBMs Institute of Business Value 2010
Creativity is sadly lacking in most business cultures not because we aren’t creative we all have that ability no it’s because we are not being encouraged to develop our creative thinking.
The value of increased employee engagement
Top trend- employee/employer relationship changing to a partnership
Acquiring and keeping key talent a priority
People have become the primary source of competitive advantage
80% of market value today comes from the intangible
You can copy products & services but you can’t copy people
High engagement = high growth
Higher sales goals
The savings from low staff turnover
Lost productivity costs
Towers Perrin published research –
Income improved 19.2% from high engagement
Income declined 32.7% from low engagement – over same sales period
The value of a sustainable competitive advantage
Competitors don’t have it
A customer experience is difficult for competitors’ to copy almost everything else you do can and will be if it is seen as a competitive advantage
Competitors don’t know how to get it
Most businesses lack the knowledge and expertise to develop a customer experience strategy
An investment to develop it/not a cost
Developing a customer experience strategy is very much an investment. As part of the development process measurements are put in place to capture increased financial performance
Good marketing investment
In an increasingly crowded marketing environment maximising marketing returns is increasingly difficult
Customers do the work for you
Increasing customer advocacy not only delivers greater results it reduces marketing costs.
The development of a customer experience is a journey. Your people will be continually looking at how they can add greater value via the experience they deliver.
In 2012 business must realise that in a world of excess, uniformity and repetition, people buy experiences, not products or services. When people feel good about their experiences, they will not only return but will tell their friends and many others via social media.
Chris Bell is the Managing Director of Customer Experiences, a company committed to building successful businesses through the development of high quality customer experiences and co-founder of cemNZ www.cemnz.org.nz email@example.com www.customerexperiences.co.nz 027 2792360