I recently read an article about a recent Forrester Report titled “Banks and Retailers: You Cannot Price Your Way Out of Bad Customer Experiences.” It was quite fascinating but there was one part that really resonated with me.
In every instance, when a customer is making a decision on whether to be loyal to your business or not, any question they ask themselves can be boiled down to one simple question.
“Is this company making my life easier or harder?”
If the answer to that question is “easier”, they’ll continue to do business with you. If not, they will start looking for your replacement.
We are constantly analyzing data to try to solve the formula for customer retention. We’ve asked many questions and had many different results. However, boiling the overall question down into something that simple is something a manager can intuitively understand and apply.
Sure, there are still a lot of process changes, analysis, employee reviews and customer surveying to be done. However, if all of this is done with the goal of making the customer answer that your company is making their life easier, you’re already ahead of the game.
The Forrester report mentions that companies can no longer compete with each other on price. This is because, in the age of technology, consumers have access to real-time alternative pricing while standing in your store. While not completely discounting the power of low prices (it works for Wal-Mart, right?), car dealers don’t have 20,000 products on shelves and stay open 24 hours per day. Even if you did, a low price may win you customers, but it won’t win you loyalty. If your customer is only your customer because you have the best price, then they will only be your customer until a better price comes along.
The report instead recommends that businesses compete for business based on experience, not just price. Of course your prices need to be competitive but they don’t have to be the lowest to win loyalty. That being said, the customer experience you offer better justify your prices and, ultimately, make the customer leave feeling as if you’ve made their life easier.
We’re fortunate that we have technology available in our industry to help facilitate better customer experiences. Many dealers go out of their way to ensure that the customer experience is top-notch, done quickly and provide every convenience possible for the customer. Dealers are constantly working on ways to quantify and stop (or reverse) defection, reward loyal customers through loyalty programs, and incentivize employees for great customer service. And all of this is while trying to win new customers through marketing efforts, word-of-mouth or new sales customers.
Just keep in mind that, consciously or not, the customer is asking: “Is this company giving me what I need, on fair or great terms, and making the interaction easy and enjoyable?”
Help the customer answer yes to that question every time, and you’ll have a loyal customer.
How is your business making your customers’ lives easier?
How are you rewarding your customers?
In what ways do you incentivize employees?