Making Customer Satisfaction PayGrowth Strategies — By Jim Lane on October 19, 2012 at 8:00 am
“Why should I take the time to survey my customers when they complain for free?”
This is a familiar refrain from owners who are struggling to make ends meet. Interestingly, we do not hear this much from the frontrunners. They tend to be a proactive bunch who seek external challenges to breakdown their preconceived notions. The lesson these firms have learned that the rest of us should take note of is that customers are the most powerful sources of new sales, innovation and continuous improvement ideas.
While some products and services are “sell only once” events, like heart transplants, most products and services are more like razor blades. Buy one now and sometime in the future, you will need more. Click here for a cool example.
For these situations it’s obvious why you should check on your customers’ actual experiences. They might buy more. However, there is a more powerful win associated with happy customers. They sell for you!
Happy customers tell friends and colleagues about their experience. This is why, among the S&P 500, firms with better customer satisfaction grow at 3.5 times the pace of the average.
Self-challenge question: what percentage of my sales comes from customer referrals?
A really great customer will call and ask, “Can I pay you more for this product?” But most don’t. In fact, none of my clients have ever had a call like that to my knowledge. However, customers can and will give honest feedback about the relationship between price and the value provided.
Here’s a secret: most firms underprice. The frontrunners know they are just a few customer calls away from having the information needed to improve price performance at any given time. The reason they are frontrunners, and not among the worried-about-making-ends-meet-crowd, is that a better price goes directly to the bottom line and grows profit. Pricing is the single most powerful lever of profitability.
Self-challenge question: what would one percent of sales do for my bottom line?
But wait; there’s more. Not only does it help sell and improve pricing, but customer satisfaction research, done properly, also can give insight into what makes customers love competitors. Companies can’t spy on their competitors. It’s not ethical and in many cases it’s illegal. But asking customers what competitors do well is practically expected, and totally legit.
Frontrunners learn about their products and services and those of competitors in two ways. First, they learn what customers like in the sales process, why customers buy the products and services they do in order to improve the sales process. Second, they learn what customers like about the products and services they and their competitors sell to improve their value delivery.
So why don’t all businesses do this? The answer is complicated, but many are challenged by the fact that you can’t do-it-yourself on customer research. It takes professionals to listen without bias, to draw customers out and get them talking, and to interpret the statistical results. The professional calling team needs to be active year round in order to call when customers don’t expect it.
The reason most unsolicited customer feedback is negative is because they only call when they are mad. This is called “bad day” bias (or at least it should be). Scientifically designed research is conducted at random, so a more balanced picture is formed about customer impressions.
That said, you need customer feedback if you are going to be as strong as you can be. The frontrunners are engaged in an ongoing customer dialog that feeds their continuous efforts to improve sales, pricing and value delivery.
If you would like to hear more about customer satisfaction and how it drives, sales, pricing and value delivery, please join us Fri., Nov. 30 for our executive breakfast on Driving Profitable Growth with Customer Satisfaction.
Jim Lane is the Founder and Director of GBQ Redbank Advisors, the profitable growth division of GBQ Partners LLC. With more than 30 years of experience in successful consulting project delivery, Jim has helped owners and investors drive improvements in every major area of business. By day, Jim helps clients grow and improve profitability, building revenue and improving margins on that revenue. By night, he is a husband, father, adventurer, blogger, ProMusica and Columbus Chamber Small Business Council board member. Click here to learn more about Jim, or contact him directly at 614-947-5257 or email@example.com.
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