Why your customers will NOT recommend you? - Omni-channel NPS® Solution
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Why your customers will NOT recommend you?

 

Customers not recommending your brand in the face of ever increasing advertising costs?

It depends on the relationship you have built with them!

Well, in today’s world of price wars, competitions and what not, it is safe to equate business with warfare. Without further ado, let’s leap into the mired down world of customer valuing and gain bonus customer publicity- all this without any collateral damage.

Why are recommendations important in the first place?

Think about it. Do you wonder when you shell out the money for a 5 square centimetres of space on a newspaper, why don’t you invest that money to hire an employee in your customer success team? Before you gaffe at this statement, let’s delve a little deeper into the king’s mind (customer is still the King!)

Remember that restaurant you went to five years back?

If you do, there is a very high probability that the restaurant not only served excellent food and had a great ambience, but every frontline employee, from the waiters to the branch manager wore a beautiful smile, were available at your every beck and call and gave out the “please come back” vibe.

Now carefully scan the past 5 years, recall how many people you have recommended that restaurant to, and BINGO!

You have your answer served on a platter!

Log into Zomato and read the comments on any restaurant and you will notice invariably that restaurants with a high rating (4.0 and above on a scale of 5.0) have favourable comments not only about the food served there, but also the warmth of the employees. Every comment, whether positive or negative is personally replied to by the management, and it is this personal touch that makes a customer want to come back again and again.

Think this is overhyped? Think again.

Statistical research by NewsNPS, Omotoworks has claimed that newspaper advertising gets an average of 7% increase in sales, while a happy customer with a positive online review is likely to get you at least an 18% increase in sales (according to Reevoo).

Now, let us assume a disgruntled customer has not given any negative reviews (just an assumption, a detractor will likely spread his/her complaint and you know how rumours mutate),

products with positive ratings sell up to 200% better than products without reviews and amongst those sites that display reviews, 42% saw an increase in average order value (webrepublic.com).

NPS, Omoto

 

These statistics speak volumes about the modern siege warfare being fought between different brands to gain the favour of their customers.

Satisfaction vs Loyalty

To earn the right to ask your customer’s recommendation you should focus on building loyalty and not just satisfaction. This is your first step in building an army of raving fans.

A loyal customer is usually always satisfied, while a satisfied customer is not necessarily loyal. Customers are said to be satisfied when they have made a purchase or availed a service and are satisfied with the experience. Customer loyalty meanwhile would mean the customer is not only satisfied with the product or service, but is also making repeat purchases from the same seller.

An example to distinguish this would be Amazon and Flipkart. If I am satisfied with a product I purchase from Flipkart, that would mean I am a satisfied customer, however it does not imply my loyalty as I am equally willing to purchase the same product from Amazon if it has a better price or feature. Every satisfied customer that you gain will inadvertently recommend your brand and bring in a stream of new customers. That’s how this web works, one customer brings in 5, the 5 bring in another 5 each and this goes on and on till you can keep them all satisfied.

What is customer loyalty after all?

  • Focusing only on sales number and reward points as a measure of customer loyalty can correlated to dangling a carrot in front of a rabbit. The rabbit keeps coming to your snare if the carrot is there, the moment there is no carrot, the rabbit disappears along with the carrot and we lose the brownie points. To put this into context, if your store is keeping reward points to attract customers without really giving them a satisfying experience, it will fail to induce customer satisfaction. Once that promotion scheme is taken off, the customer will no longer be satisfied and will move on to a competitor.
  • If an organisation is more focused towards selling more units to earn more financial profits, it will focus more on aggressive pricing and advertising policies. This will reap profits in the short run, but alienates customers in the long run and thus fails to make the connect that is required to maintain a relationship. Customer loyalty should never be based on the units sold. If that is the case, salespeople will try to induce people to buy more units and/or more expensive products. This is not a healthy practice, as inevitably a competitor will come up with a better or cheaper product; and customer loyalty will show its true colours. With telephone companies racking up to 30% of their profits from hidden charges, this is no surprise.

Sometimes, statistics do speak for themselves. Forrester research has proven that retaining a loyal customer costs 4 to 5 times less than acquiring a new one.

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What is the final objective of any business? To make financial profits, right?

WRONG.

The conventional understanding of profits has long expired and in today’s world of caveat venditor it is of prime importance to keep the customers in the loop without suffocating them. No more can managers afford to categorise all profits under the same head in a profit and loss statement.

Profits are of 2 types, good and bad. Yes, both are financial surpluses over expenses; yet they both leave behind a completely distinct footprint.

  • Good profits

    are financial profits which are earned with customer satisfaction and loyalty. A good example would be Amazon. com could easily afford to advertise more than it does; instead, it channels its investments into free shipping, lower prices, and service enhancements. Founder and CEO Jeff Bezos has said, “If you do build a great experience, customers tell each other about that.”

  • Bad profits

    are usually one time purchases and are earned at the expense of a disgruntled customer. The Ultimate Question 2.0, which is considered the gospel of customer centricity, says that up to 42% of AOL’s profits at their peak came from hidden surcharges and other expenses. That is one of the hundreds of examples of bad profits. If your business is expanding financially, yet your customers are not referring you, it is a potential warning sign of bad profits.

Finally, to earn the right to your customer recommendations, you need to build a relationship with your customers which is responsive

Responsive relationship

A responsive relationship is the one every organisation should strive to achieve. That relationship is what makes you make repeat purchases at your local grocery store.

Imagine walking into a store and being greeted by friendly and warm staff and having all your needs attended to. Such a relationship throws open the barrage for suggestions and such organisations usually take suggestions seriously and observe and act upon them. These are coveted organisations that every customer loves, after all who doesn’t love some personal attention?

Resistive relationship

A resistive organisation meanwhile is one which is not open to suggestions in practice. Customer feedback involves ALOA (ask, listen, observe and act), these organisations do the first function and fail at the other.

A classic example would be the video rental company, Blockbuster. They just could not adapt to the rapid change in the business environment and did not keep up with the advent of online streaming. They resisted changes and subsequently filed for bankruptcy merely years after gaining top market share in the video rental market in the United States.

Remember that restaurant we fantasised about some paragraphs back? What made you refer that place to dozens or maybe scores of people? Other than the food, ambience and staff behaviour, it was definitely the fact that you had a responsive relationship with that organisation. You were just in awe with that place, and thus voluntarily marketed them for free.

This leads us to the vital question of, what should you do to build a responsive relationship?

  • Focus on good profits. Good profits make your customers yearn for more; bad profits merely represent a growth financially.
  • Understand your customers and their needs. See how you can bridge the gap from where your customers are to where do they envision themselves. Help them uncover the need and understand how your product/service can help them realise the vision.
  • Do the basics first. A discount falls flat if there are hidden charges which you customers will ultimately come to know of. Deliver the promise made before going over and beyond.
  • Most importantly – Ask for it. Make it easy for customers to give you referrals. See if you can meet them face to face help them understand how their support will help you achieve your business goal and impact lives and ask for the referral.

Net Promoter Score®

NPS® is a powerful tool to help you measure your customer experience and provides actionable insights to build a healthy and responsive relationship with your customers. It is based on single question –Based on your recent experience with [YOUR BRAND NAME] how likely is someone to recommend us to your friends and family? The response is captured on a rating scale of 0 to 10, with the classification being:-

  • Score 1-6: Detractors. They cost you money, bad mouth you and in general consider your organisation an absolute waste of time and money.
  • Scores 7 and 8: Passives. They are satisfied, but not loyal. If a competitor provides a better feature or product, no prizes for guessing where they will leap to.
  • Scores 9 and 10: Promoters. Call them goals, for this is what you must yearn to score. They not only remain loyal, but also recommend your brand and are responsible for the good vibe surrounding your organisation.

NPS is calculated by subtracting the % of Detractors from the % of Promoters. The merit of the question is in the follow up question which is the “why”. The reason for the score.

This financial services company has used NPS® effectively to take their customer experience to the next level. See how

Net Promoter System®, Net Promoter Score®, and NPS® are trademarks of Satmetrix Systems Inc., Bain & Company, and Fred Reichheld

 

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