Making happy customers more profitable

While the key to business success is creating happy and loyal customers, you still need to get them to generate more revenue. A good NPS score and low churn rate shows your customers are satisfied but you only benefit when these customers act on their positive feelings. An article in Harvard Business Review, Make it Easier for Customers to Buy More by Bain Capital’s Rob Markey, shows how to convert this satisfaction into profits.

Learn more about your most loyal customers

The first key to generate more profits from your loyal customers is to understand them better. Markey makes the point that companies focus on learning why detractors, or unhappy customers, are dissatisfied but they do not put the same effort in understanding why the happy customers are happy. As Markey writes, “Converting feelings into action requires knowing exactly what you did to earn their loyalty, so you can replicate the action and extend it. To maintain that kind of intimate relationship with your most loyal customers, you have to create effective mechanisms for staying in close touch.”

Add to all of your communication channels feedback loops to ascertain why they love your company. Have your account or customer service reps ask customers why they first became enthusiastic. When sending out NPS surveys, make sure you ask those providing high scores the reason they gave such a score. Have customers post stories on social media on why they like your offering. Have events for your top customers and ensure part of the agenda is having customers discuss how they fell in love with your brand. Use all of your channels not only to help your customers but to learn from them.

Tune your offerings to meet their needs

When communicating with your best customers, you will learn both what they like and do not like about your offering. You will also understand if your competitors are offering something they want that you do not offer. Markey writes, “ideally, your offerings should be so attractive to your loyalists that they have no reason to look elsewhere for additional products or services.”

Once you understand your customers needs, then adjust your product to meet these needs. It may be by providing additional features or more support services. It could also entail offering your product through new distribution channels or in another format. The key is understanding what your best customers want from your product but are not getting, then adjusting your product to fill this need so they do not move to competitors.

Help them spread the word

Since your most loyal customers by definition love your offering, you want to harness this positive vibe by getting them to promote you to their friends. As people communicate best via stories, you need to provide them with stories that they can share. These stories can range from great interaction with your staff (maybe customer service, VIP management or on Facebook), a great experience with your game or product or even a little bonus you got via email. Once they have the stories, you need to facilitate them sharing the stories. This sharing often is by social media but it can be video testimonials on your website or even quotes in your game.

Loyal customers drive profits

While it is critical to create incredibly satisfied customers, that is not the end of the battle. You need to learn from them, use this knowledge to make your products even more suited to them and then turn them into advocates.

Key takeaways

The first key to generate higher profits is learning from your most loyal customers why they love your product.
The second key is taking this knowledge and further tweaking your product to meet your loyal customers’ needs.
The final key is getting these loyal customers to advocate for you by sharing stories that show their friends why your product or company is great.

How to calm irate customers on social media

I came across a great post recently how to mollify a negative situation on social media. We have all seen, hopefully not experienced, an incensed customer or player venting their anger on Facebook, Twitter or other social media. These customers have a disproportionate impact, as many and potentially thousands see their rants if it goes viral. The negative posts also often turn up in searches of your company or product. These customers can have a long-term damaging impact on your brand.

The aforementioned post, “5 steps to diffuse an angry customer on social media,” lays out five keys to dealing with customers who are posting negatively on social media:

Timeliness. It is critical to respond quickly to the issue. The longer you wait the more the disgruntled customer’s side of the story will be visible unopposed and the more upset they will probably become. If you deal with it quickly, the issue is much less likely to spread.
Deal with all social media channels. If you respond to the disgruntled customer on one social media channel, make sure you address any posts on other social media. For example, if they post on Facebook and you respond there, also respond to any of their tweets or if they mention you in their blog.
Take the complaint to the right place. Make sure the appropriate department or office deals with the concern. When I had a problem with the Extended Stay and posted about the, rather than the local property responding it would have been more powerful if the corporate headquarters addressed my issues.
Be patient. It is easy to get worked up by an angry customer, especially if you feel their issue is not as bad as they claim, but put your emotion aside and be tolerant with your customer. They may continue to rant and rather than being drawn into a negative loop, continue to be positive until you have won them over.
Produce. It is always the results that matter and when dealing with an angry customer, these results are even more important. Make sure you deliver what you promise the customer to resolve the situation.

When you have unhappy customers expressing their discontent on social media, rather than ignoring it and hoping it goes away follow the above five steps and you are most likely to see positive results.

Key takeaways

Customers who are unhappy with your company or product can cause serious damage on social media as their complaints may be seen by thousands or even millions.
Rather than hoping the customer goes away, you should proactively address the irate customer.
By responding to their negative posts quickly, dealing with their outbursts on every social media channel they are suing, taking the complaint to the right part of your business, being patient with the user and delivering a solution you are most likely to defuse the situation.

It’s about the customer journey, not the touchpoints

There was a great article in the Harvard Business Review, “The Truth About Customer Experience,” that shows more importantly than focusing on providing the customer with good discrete interactions you should focus on the entire journey. Interestingly, even if you have great metrics at each touch point (e.g., people are satisfied with onboarding, customer services call are resolved positively), overall customer satisfaction may be negative because of the holistic customer journey.

The article uses the example of new customer onboarding for a pay TV provider to show how the journey can be negative even when each touchpoint gets positive feedback. As the article describes, “Take new-customer onboarding, a journey that typically spans about three months and involves six or so phone calls, a home visit from a technician, and numerous web and mail exchanges. Each interaction with this provider had a high likelihood of going well. But in key customer segments, average satisfaction fell almost 40% over the course of the journey. It wasn’t the touchpoints that needed to be improved—it was the onboarding process as a whole. Most service encounters were positive in a narrow sense—employees resolved the issues at hand—but the underlying problems were avoidable, the fundamental causes went unaddressed, and the cumulative effect on the customer was decidedly negative.”

The root of the problem is that many customer focused functions (sales, CS, community management) are siloed in different organizations that have individual and insular cultures. These groups shape how the company interacts with consumers but although they may aim to optimize their contributions they lose focus of the customers desires.

The article describes four ways that companies can overcome this problem, effectively embedding the customer journey into your operational process. It is not about removing the functions but building an internal system that looks at customers holistically. Continue reading →

Why free stuff or lower prices don’t keep customers happy

One lazy and ineffective way to keep customers happy is to lower prices or give them more things for free. Companies that do not know their customers well, or do not want to, often respond to the question of how to increase customer satisfaction or retention by lowering prices. In free-to-play products, this tactic involves giving users more virtual currency.

The lazy answer

This response is often a knee-jerk reaction to the question of “How do we improve our customer relationships?” It demonstrates that the person/company does not want to address the true dynamics of the relationships. Everybody would rather pay less for a product or get bigger free bonuses and rewards. It does not reflect any understanding of your users, their motivations or why they use your product.

The reality of customer satisfaction

The reality is that users and players are motivated by many factors and rarely is cost the primary reason they use a product. The exception is companies that are focused solely on being a low cost provider, the Walmarts and Aldis, and for them price is the greatest lever to increase user satisfaction. In other cases people are driven by unique features or experiences that builds a bond with the product.

Does not create competitive advantage

The biggest mistake in throwing free stuff at users or players (or lowering prices) is that it does not create competitive advantage. Your competitors can easily match or beat what you are doing. If you are giving away five dollars worth of product daily and they want to steal your customers, they can give away $10. You end up with a race to the bottom in terms of pricing, and when you reach the bottom nobody has a particularly good business other than the companies built to compete on price (again, the Walmarts and Aldis).

Determining what creates satisfaction for your users

The first step is understanding what about your product or game motivates people to use it. There are several ways to build this understanding (listed in my order of preference): Continue reading →

Use smart CRM to avoid being dumb

I recently read an interesting book, Smart Customers Stupid Companies by Michael Hinshaw and Bruce Kasanoff, that made an excellent case on why you should make your CRM (customer retention management) systems more sophisticated. The underlying idea is that customers, players, users, etc., are very connected, they regularly use mobile devices and tablets, have easy access to a computers and thus can find almost any data quickly (ever hear of Google?). As customers have and take advantage of instant access to information, they thus expect the companies they deal with to be equally sophisticated.

Consumers and businesses alike research, connect, and purchase online and over their phones. As Hinshaw and Kasanoff write, “[w]ith these tools come radically higher customer expectations. Higher expectations of experience. Greater demands for personalization and customization. Lower tolerance for mistakes, for running through inane hoops, or for interactions that require mindless repetition.”

What are smart customers?

Customers these days have immediate access to almost all information, with Google, Wikipedia, Angie’s List, etc., literally in the palm of their hands. Customers can outwit salespeople, easily spot misstatements by customer service reps, and have near-instant access to the accumulated knowledge of human civilization. The trend is continuing to accelerate; with each new generation of devices people have access to more information.

Customers are also getting less patient, and younger customers never had much patience to begin with. Anyone 20 or younger has never known a world without the Web. The oldest of this generation are now adults, soon to graduate from college and start households of their own. Continue reading →

Turning unhappy customers

I have always said the best measure of a company and its customer relationships is not how they avoid unhappy customers but how they deal with unpleasant situations. Inevitably, you will do something that some customers do not like. Rather than focusing on avoiding the inevitable, there is more value in building a strong plan to react to these unhappy people and turning them into a resource. In fact, if they are engaged enough to complain to you rather than just go to a competitor, unhappy customers have the potential to be VIPs if you handle them appropriately.

A recent KISSmetrics blog post by Josh Brown, “5 Ways to Turn Your Unhappy Customer Into A Valuable Resource,” provides strong tactical advice on addressing unhappy customers. By applying these tactics, you not only improve the word of mouth the users generate, but also increase lifetime value by building customers (or players) who will continue to purchase your product.

Make your customers feel heard

The most effective way to be liked and admired is by listening to other people, a philosophy around which Dale Carnegie built a career. It is no different when dealing with your customers. An unhappy customer often cares more about being heard and understood than having their issue resolved. This means you need to listen to them and acknowledge their problem, not simply fix it.

As the Brown writes, “if you respond to an unhappy customer by immediately trying to get to a solution, it can possibly backfire and make the customer even more upset. Being unhappy or angry with a company or product puts the customer in a highly emotional state, so the first thing you should try to do is get them into a more agreeable frame of mind.”

Social media is often an opportunity to leverage this principle. You may see multiple Facebook posts about a problem and immediately fix it. While that sounds great, if you do not acknowledge the posts and communicate with the active community, they may not be satisfied and can negate the impact of the fix. Continue reading →

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The Business of Social Media

How to succeed on mobile and social platforms by Lloyd Melnick

customer service

Learn more about your most loyal customers

Tune your offerings to meet their needs

Help them spread the word

Loyal customers drive profits

Key takeaways

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Key takeaways

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The lazy answer

The reality of customer satisfaction

Does not create competitive advantage

Determining what creates satisfaction for your users

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What is the Net Promoter Score?

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The Ace Rent-A-Car story

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Do not surprise your customers

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What are smart customers?

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Make your customers feel heard

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