A CEO from one of Europe’s largest manufacturers once said to me, “The relationship begins the first time I let you down.” Through the years, the wisdom of that insight still resonates with me. In a business, engineering and product development teams create elegant and useful goods and services. Along comes marketing, which creates compelling content, messaging, pricing, and positioning. Sales goes to work, and adds that subtle alchemy of charisma to surface the value for a specific customer. Customer support and care is there to answer any questions and solve any customer problems.
This virtuous circle of customer success is intended to lead to subsequent purchases and create lifetime customers. Still, things fall apart. The key word is intended. Somehow, despite efforts to satisfy and retain customers, customer churn rates fluctuate between 5% and 12% per year on average across all industries and across geographic boundaries. Somewhere, somehow, we let the customer down.
A certain amount of customer defection will happen naturally despite any attempt to provide a superior experience, whether the business is selling to consumers (B2C) or to other businesses (B2B). People move up (and down) financially, change locations, or no longer require certain products and services. Businesses thrive or dive, merge with others or are acquired. Some customers will never be profitable, and you want to part company. However, those circumstances account for, perhaps just 3% churn out of the 5 to 12%.
Any way that you approach it, there is enormous room - between 40% - 75% - to improve your churn rate, which can translate into delivering more profits, and lower operating margins. Customers who defect because of a negative experience with a brand don’t just take their business from you, they also tell another ten people about that poor experience. It’s like a twist on the opening of Tolstoy’s Anna Karenina: “All happy families are alike; each unhappy family is unhappy in its own way.” In this case, you can phrase it as: each happy customer will tell no one about their satisfaction with a brand, unless you solicit a response from them; unhappy customers, however, are quick to share their unhappiness with a million of their best friends on social media without needing a prompt.
The starting point, even for veterans at creating customer experiences, is an audit of what customers and non-customers alike actually experience when they visit your brand. That only happens when the CEO is attuned to the central role that customer success plays in the success of their company. Were you to sit down with any employee (not just the C-Suite) at companies and institutions like Apple, Disney, FedEx, Netflix, USAA, and Vanderbilt University, you would hear that they share something in common: a focus from the top down puts themselves in the customer’s shoes and uses those insights to create and provide a great customer experience.
The customer experience audit, which I’ll discuss in more detail in subsequent posts, exposes the true health of the relationship that brands have with their customer.s The companies that do this best are usually the ones where the CEO believes getting the customer experience right is urgent — much in the same way that rock climbers, during a free climb high above a valley, calmly look for flaws in the hard surface that they can hold onto and advance their climb. That same degree of urgency and ‘failure is not an option,’ harnessed to a calm approach, will win.
We all have to ask ourselves, “When the day comes that we let our customers down, are we confident that we will know when it happens exactly where the fracture took place, and then how, when, and where to reach out to make amends?”
Here is a final thought as to why knowing every facet of the customer experience you offer is a must and not an option: across the globe, there is an indisputable shift in customer expectations — from great service to great experiences. It’s why we hear the concept of the “experience economy.” The companies that provide the best experiences are also, on average, the clear winners in their industry and market. And their success is growing by ever-widening margins. Being number two might be good; being number one is great. The difference comes down to excellence at translating a customer-centric business transformation vision into a well-defined strategy — and then develop relevant tactics to support that strategy.
In this ongoing series of posts, I plan to talk about how businesses, government agencies, educational institutions, and philanthropic organizations can better connect with their customers and truly understand what they are experiencing from an enterprise level. I’ll also look at the strategies and tactics needed to improve the customer experience as well as provide insight into where and when different stakeholders – C-Suite, direct reports, and all employees — must play an active role in driving those experiences forward. The next post in this series will be all about understanding the experience customers have with your brand. Check back here soon.
If you have specific questions that you want addressed or are interested in having specific topics covered, send me an email and we will add them to our list!
Michael Maoz is Senior Vice President of Innovation Strategy at Salesforce. He joined Salesforce from Gartner, Inc., where he was a founder of the CRM practice. See more about Michael, and read is other blog posts.