Eighty percent of CEOs believe they deliver superior customer experience.
Only 8 percent of their customers agreed.
So why the big gap in perception?
What would your customers think? Would they side with the 8 percent or the 80?
These numbers come from a survey done in 2005 by Bain & Company (pdf), which interviewed 362 business and their customers, led by Frederick F. Reichheld, inventor of the NPS concept.
And while progress has been made in the intervening years, the gap still exists.
A Reason to Lose Sleep?
CEOs have a tough role. Especially these days, when the average tenure of a CEO has dropped to around 20 months.
CEOs are expected to get results. So you'd better know why your customers are churning or grow the amount going into the top of the hopper.
What can you do to close the perception gap between what customers believe and what you believe?
Big businesses have big targets. They have large teams and shareholders to keep happy. It’s all part of the success outcomes.
However, somewhere in this success model one thing becomes obvious in many of these big businesses: in their drive for constant growth, they lose touch with what made their customers choose them in the first place. They become obsessed with figures like revenue per customer, margin percentage, cost of sale and operating margin.
This isn’t to say that these things are unimportant. But as a business gets bigger it becomes all too easy to focus on these elements and miss other opportunities.
Far too often I see a sales funnel that is like a leaking bucket, with customers falling out of love with the brand. Instead of taking care of this problem, businesses roll out big sales initiatives that focus on new business sales. "Look to lower cost per sale, improve margin & sell more products to the customer base.”
By ignoring the leaking bucket, the business lost out on the opportunity to build stronger advocacy and loyalty, reduced operating costs and sustainable growth.
It’s sometime easy to overlook these areas. But by pressing the pause button and developing a deeper understanding of your current customers, you can improve your success factors.
Customers with long-term tenure cost less to serve, less to attract and deliver more recommendations than any other customer type. Providing they are a profitable customer, you'd be mad not to focus on their retention.
If you need further convincing on the value of building sustainable relationships with your customers, consider this: a 2 percent increase in customer retention has the same effect as a 10 percent reduction in operating costs.
You can achieve those stretch targets in a sustainable way when you focus on improving your existing customers’ experience, rather than obsessing with extracting maximum revenue from them.
Customers only reward you with brand loyalty when they feel you value their loyalty. Otherwise they will leave for the next business that comes along that can deliver what they want faster, cheaper or easier. Building effective relationships is the only way to prove how important they are to you.
Big Business Scale, Small Business Feel
The hardest part of being a big business is behaving like a small one. That might sound strange given most businesses’ goal for growth. But often growth comes at the expense of offering that personal touch — the responsibility gets passed on to employees to deliver the experience. Hopefully they treat every customer in the way intended by the owner or the CEO. But it isn't an easy task.
You need to build relationships with customers and employees alike. Make sure that channels exist for both to give feedback — and listen to that feedback. But it doesn’t stop with listening. To show that their opinions count, take action. These freely given insights are more valuable than most businesses are aware of.
Businesses that don't know who their most valuable customer types are and what they deem as important surprise me. Customers do not lack for choices — you need a strong unique selling proposition that is backed up by a personalized offer to differentiate your business.
Otherwise you are the same as the next company.
The business leaders know what their customers value. They are obsessive about knowing them really well. They collect data and instigate conversations so they can listen and learn.
They know that the value of their data only shines through when it is turned into valuable insights. Ones that are put into action in continuous improvement programs.
These companies build relationships. They prioritize communications with customers and employees and personalize their service where possible.
The businesses who get this have reduced operating costs, increased customer and staff retention, more referrals and recommendations, less complaints and happier people.
Sounds like something you might want to explore ....