How to manage your customer service to have the biggest impact on your profits

by Lloyd MelnickSeptember 23, 2020August 30, 2020

I have spent the last few months studying how to provide an exceptional customer experience, largely as a way to help grow gaming businesses. This learning has helped me identify best practices in creating a WOW experience but my perception of the opportunity changed after reading The Effortless Experience by Matthew Dixon. Unlike many of the other customer service (CS) books that focus on how to provide exceptional experience, Dixon’s book is data driven and challenges some basic assumptions.

In particular, his work shows that exceptional service does not drive the KPIs that matter (revenue and loyalty). Instead, these engagement KPIs are actually most impacted by how much effort a customer has to expend to achieve their goals while high effort translates to disloyalty. As the ultimate goal is to increase lifetime value (LTV) of your customers, and retention is the biggest driver of LTV, limiting disloyalty will have a much bigger impact on your profitability than creating WOW experiences. Dixon writes, “[c]ustomer service drives disloyalty, not loyalty. The average service interaction is four times more likely to make a customer disloyal than to make them loyal…. While most companies have for decades been pouring time, energy, and resources into the singular pursuit of creating and replicating the delightful experience for their customers, they’ve ironically missed the very thing customers are actually looking for—a closer-in, more attainable, replicable, and affordable goal that’s been sitting right in front of them all this time: the effortless experience.”

The beauty of The Effortless Experience is that it is data driven, not anecdote driven. Dixon analyzed more than 97,000 customers and found that there is virtually no difference between the loyalty of those customers whose expectations are exceeded and those whose expectations are simply met. He defined loyalty by measuring three behaviors

Repurchase (customers continue to buy from your company)
Share of wallet (customers buy more from you over time)
Advocacy (customers say good things about your company to family, friends, coworkers, even to strangers).

When Dixon looked at data from the 97,000 customers, “rather than a ‘hockey stick effect’ — where loyalty skyrockets upward — loyalty actually plateaus once customer expectations are met.”

Why customer delight does not work

Since the data shows that great service is not going to create better loyalty, and thus improve your customer lifetime value (LTV), the next step of analysis is how customer service can improve LTV. What Dixon found is that a customer service interaction is four times more likely to drive disloyalty than to drive loyalty, so you want CS to avoid leading to churn.

This data driven insight resonated upon reflection with my personal experiences. I could think of many companies I stopped purchasing from due to a bad or disappointing CS experience (online retailers, restaurants, department stores and even a car company) but it is very hard to think of one I am loyal to because their service went above and beyond what I expected. Dixon writes,“you could probably fill up a list a mile long with companies you’ve stopped doing business with because of the bad service you’ve experienced: the cable company that makes you take a day off from work because they can’t do better than an all-day service window, the dry cleaner that ruined your favorite suit and refuses to reimburse you.”

What customers want

While customer service cannot make customers more loyal by providing incredible experiences generally, it can help retention by solving customers’ problems. Dixon’s data shows that when something goes wrong, “the overriding sentiment is: Help me fix it. No need to dazzle me, please just solve the problem and let me get back to what I was doing before.”

Reinforcing this finding, Dixon’s data shows that 94 percent of customers who had low-effort experiences reported that they would repurchase from the company, but only four percent of customers experiencing high-effort interactions planned to make another purchase. What is more, 88 percent of customers with low-effort experiences planned to increase spend with the company, while only four percent of customers with high-effort experiences were going to increase spend. This phenomenon extends to word of mouth, where only one percent of all customers with low-effort experiences said they would spread negative word of mouth about the company but 81 percent of customers with high-effort experiences said they would spread adverse sentiment.

A strategy focused on customer delight does not work because delighting customers is rare, and even when delight does occur, it does not make customers much more loyal than simply meeting their expectations does. It does not work because customer service interactions are four times more likely to drive disloyalty than loyalty. Operationally, since delight does not work you should focus your resources, investments, performance metrics, and incentives on reducing and eliminating the sources of customer effort that make customers disloyal.

Where to focus your customer service strategy

As the data shows customers are not looking to be delighted, you should focus your customer service on fixing things when they go wrong. Rather than trying to get customers to feel you exceeded their expectations, you should be getting customers to think you made it easy to resolve their issue and avoid follow-ups.

To achieve this goal and reduce the effort (and perceived effort) your customer must exert, Dixon identified four best practices:

Low-effort companies minimize channel switching by boosting the “stickiness” of self-service channels, avoiding customers contacting CS in the first place.
When customers are forced to Live Chat or email or call, low-effort companies do not just resolve the current issue for a customer; but power their reps to head off the potential for subsequent calls. This is done through employing next issue avoidance practices. Low-effort companies understand that first contact resolution is not the goal —
it is only a step in the direction toward more holistic, event-based issue resolution.
Low-effort companies train their CS team to succeed on the soft side of the service interaction. Rather than soft skills that are about being nice and friendly, agents are trained to actively manage the customer interaction through experience engineering (I will elaborate later).
Companies that understand the Effortless Experience empower their agents to deliver a low-effort experience with incentive systems that value the quality of the experience over speed.

Even if you understand the value of a low-effort experience, many companies fail because they try to focus on everything, creating exceptional as well as delivering low-effort. As I have previously written, when there are multiple goals you fail to achieve any. Thus, you need to align your CS org on providing the effortless experience. If you are correctly optimizing for loyalty, you need to focus on finding ways to eliminate or reduce the hassles, hurdles and extra customer effort that leads to disloyalty.

KPIs, good and bad

To implement and optimize a successful strategy, you need to understand and track the KPIs that lead to the desired outcome. In the world of customer service, many of the commonly used KPIs and perceived best practices do not correlate with an effortless experience of increased loyalty. Dixon found virtually no statistical relationship between how a customer rates a company on a satisfaction survey and their future customer loyalty. He also looked at arguably the most common customer service KPI, CSAT score, and found that the data shows a strong CSAT score is not a very reliable predictor for whether customers will be loyal: whether they will repurchase, increase spend and say good things about your company to friends, family, and coworkers.

Dixon points out that it is unfair (and useless) to ask customers if their issue is fully resolved. They will not know that they need to start another ticket in a day or a week. Repeat contacts are by an order of magnitude the single biggest driver of customer effort. Having to contact a company again because an issue was not fully resolved is a customer experience killer and quite expensive.

To highlight how traditional CS measures fail, Dixon also uses an example of a customer whose problem was fully resolved by a rep who went above and beyond (that sounds great, but it tests relatively neutral for increased future loyalty). Unfortunately, this was the second time the customer called about that issue (a huge negative). If you were listening to this call, you would have to conclude, “We did a great job there.” But since it took the customer two tries to get to that moment, and knowing the huge negative impact that repeat contacts have on the customer experience, this person is still very likely to end up more disloyal. Thus it means there is less of a chance the customer will repurchase, less of a chance they will spend more, and a greater chance that they will say negative things to other people, despite the fact that the agent who eventually solved his problem went above and beyond. In this example, if you simply classify this experience as positive, that does not indicate whether it benefited or hurt your company.

The core metric to measure effectively whether your team is delivering an effortless experience is CES (customer experience score). When Dixon compared CES to CSAT, he found CES was 12 percent more predictive of customer loyalty. The most recent CES metric is based on a statement, “the company made it easy for me to handle my issue,” after which the customer is asked to answer (on a 1–7) whether they agree or disagree with that statement. You should then review CES against a normal distribution (10–20 percent of interactions would score as very high-or very low-effort, but most would be somewhere around the mean). Looking at the distribution to understand areas of opportunity can be far more helpful than just considering how your average CES compares to competitors.

While CES should be at the core of measuring your CS efforts, a robust customer effort measurement system includes three components. First, at the top of the pyramid, you want to understand the customer’s overall loyalty to you as a company, I am a big proponent of using NPS.

Following NPS you want to understand the amount of effort in the service transaction. As discussed above, CES is a good way to measure that. Dixon also recommends “that companies cross-check their CES results by looking at some of the operational data that underpin effort& #8212 for instance, number of contacts to resolve an issue.” CES provides a formidable indicator of transactional customer loyalty, clearly highlights friction points in the customer experience and helps you spot customers at risk of defection due to high-effort service interactions.

According to Dixon, “the next level down is to understand how the customer’s service journey unfolds — in other words, the number and type of touchpoints they used to resolve their issue, in what sequence those service touchpoints occured (e.g., did the customer just call the contact center or had they first visited the web site?), and the discrete customer experience within each channel (for example, assessing the clarity of information delivered by a service rep or the ease of finding information on the web site).”

Key tactics to achieving an effortless experience

While Dixon provides compelling evidence in in the value of creating an effortless experience and there are KPIs that can deliver an understanding of how well you are doing, the key to success (in everything) is execution. To create an effortless experience, you need to minimize channel switching, avoid repeat contacts, appropriately “engineer” the customer service interaction experience, build the control quotient, create the right culture and optimize the purchase experience.

The danger of channel switching

Channel switching is when a customer initially attempts to resolve an issue through self-service, only to have to then send an email or pick up the phone and call, and it has a disastrous impact on customer loyalty. Each time a customer switches channels, it has a significant negative impact on customer loyalty.

One of the core issues leading to channel switching is that many companies, mistakenly, believe they know how customers want to be served, but they are wrong. Customers do not prefer high touch interactions (Live Chat or phone), they see just as much value in self-service as they do in phone interactions. Dixon found that executives, however, expected customers to prefer phone: a 2.5-to-1 margin in favor of phone service.

Customers who attempt to self-serve but are forced to pick up the phone are ten percent more disloyal than customers who can resolve their issue in their channel of first choice. 58 percent of customers who are forced to switch from web to phone and fall into the “lose-lose” scenario costing companies more to serve and end up being less loyal as a result.

To avoid channel switching, you need to create a robust self service system. Dixon writes, “the more controllable drivers of channel switching (47 percent in B2C settings and 37 percent in B2B) can be categorized into three groups: The customer couldn’t find the information they needed. The customer found the information, but it was unclear. The customer was simply using the web site to find the phone number to call the company.”

As I have written frequently, more choices often results in lower satisfaction or performance (choice overload) and it is also a problem when designing customer service. Based on Dixon’s review of CS data, it “became clear that the variety of options to resolve an issue — all of which were presumably added in an attempt to improve the customer experience — were actually detracting from it. It’s an illustration of what’s known as “the paradox of choice”….[C]hoice is not nearly as powerful as we might have expected. Instead, guiding customers to the pathway that will require the least amount of effort is much more likely to mitigate disloyalty and create the best experience.”

Another cause of channel switching is when customers do not understand the self-service information. The goal is not simply to get customers to try self-service, it is about getting them to stay in self-service. Dixon suggests several ways to mitigate this problem:

Simplify language. Rather than being creative or trying to show how sophisticated your company is, write copy in a way that is very simple and easy to understand. A good way to check your copy is the Gunning Fog Index, your text should score an 8 or 9.
Eliminate null search results. Look for customer searches that yielded no responses as well as low-relevance searches. You will probably find that customers often use different words than what you used
Chunk related information. Chunking is condensing related information and spacing it apart from other text, allowing readers to scan content easily.
Avoid jargon. Many companies use phrases and words common to the company or industry but unknown to the customer (in the casino space, a word like “hold”). Scan your web site pages and FAQs carefully for internal jargon, industry lingo, and terms that would generally confuse the average customer.
Eliminate what is not vital. Most service sites fail not because they lack functionality and content, but because they have too much of it. Dixon argues, “the key to mitigating channel switching is simplifying the self-service experience.”

Avoid repeat contacts

The second key to creating an effortless customer experience is helping your customers avoid repeated contact with customer service. Repeat contacts are the single biggest driver of customer effort (and it is not even close). Needing to call a company back or send another email or start a new live chat because an issue was not fully resolved is a customer experience killer and hugely costly.

In Dixon’s research, he found a huge disconnect from what companies were judging as resolved and what customers experienced. Customers reported, on average, that only 40 percent of their issues are resolved in the first contact, which meant that an additional 30–40 percent of issues in which customers would disagree with the companies’ assessment that the problem was solved. This disconnect is driven by the company fixing the explicit issue but leaving implicit issues.

There are two main types of implicit issues driving these repeat contacts that companies are missing. The first are adjacent issues, which according to Dixon’s data account for 22 percent of all callbacks. These are downstream issues that might initially seem unrelated, but are ultimately connected to the first thing the customer called about. The second major source of repeat contacts is experience issues, which constitute 24 percent of all repeat contacts. These are primarily emotional triggers that cause a customer to second-guess the answer they were given, or double-check to see if another answer exists.

To mitigate this issue, you should focus on next issue avoidance. Next issue avoidance starts with a totally different mind-set than simply asking a customer if you resolved their issue. Agents are trained and coached to ask themselves, “How can I make sure this customer doesn’t have to call us back?” Simply letting a customer know that you are trying to save them from having to call back later and deal with another related issue goes a remarkably long way.

The fundamental difference when applying this tactic is you are not looking to simply solve the current issue, but also head off the next issue. According to Dixon, “the best companies think of issues as events, not one-offs, and teach their reps to forward-resolve issues that are related to the original issue but typically go unnoticed by the customer until later.”

Experience engineering

The third element of creating an effortless customer experience is “experience engineering.” Experience engineering refers to managing a conversation with carefully selected language designed to improve how the customer interprets what they’re being told. At its core, experience engineering reflects the importance of perception.

Dixon found “that the customer’s perception of the experience actually counts for fully two-thirds of the overall ‘effort equation.’ Put differently, how the customer feels about the interaction matters about twice as much as what they actually have to do during the interaction.” The exertion required from the customer makes up only 34.6 percent of how they evaluate customer effort. But the interpretation side — the softer, more subjective elements based entirely on human emotions and reactions — make up a shocking 65.4 percent of the total impact.

Many customer interactions that do not require a lot of exertion still feel like a lot of effort to customers. Also, most companies have been strategizing about how to reduce customer effort without focusing on the customer’s perception of the experience. Instead, Dixon proposes a three step process to engineer successfully the customer experience so they do not perceive high effort:

First, experience engineering is purposeful. It’s about actively guiding the customer and taking control over the interaction through a series of deliberate actions.
Second, experience engineering is designed to anticipate the emotional response of the customer. Agents who engage in experience engineering are trying preemptively to offer solutions that the customer will find agreeable.
Third, an experience engineering approach is focused on finding a mutually beneficial resolution to customer issues. This means matching the customer’s actual and often unstated needs with what the company can offer.

Following these steps a can significantly change outcomes, by preempting a high-effort interpretation and getting the customer to feel like it was very little effort. Dixon writes that, “reducing the interpretation of effort, particularly in situations where there’s nothing else that can be done to reduce exertion, is the ultimate win-win-win—best for the customer, best for the company, and best for the individual reps who are in the hot seat delivering bad news on a daily basis….Reps need to find a way to both be truthful (because the answer in many cases is, unfortunately, still no), but in a way that doesn’t trigger the negative emotional reaction and all the bad outcomes that come along with it.”

Delivering this bad news can be alleviated with the use of positive language. Dixon writes, “In their first attempt at positive language, many people struggle: ‘Uhhhhh, the park closes whenever the magic stops.’ (No, the park actually closes at 8 p.m.) ‘The park closes whenever you leave.’ (No, if you’re still here at 8: 01, you’ll probably get some Disney version of the bum’s rush.) Ultimately, the most correct answer is some version of, ‘The park remains open right up until 8 p.m. Then we reopen for even more fun tomorrow morning at 9 a.m. Hope you can join us then!’ How could a customer possibly have a negative reaction to that?”

To drive experience engineering, you should start by analyzing your highest-volume incoming customer requests and see how your agents responded if the customer was not going to get what they wanted. You want to train the agent so they act as the customer’s advocate, the person who’s on the customer’s side and doing everything to make it an easy, low-effort experience. An example Dixon uses is a restaurant server being trained to respond to a customer who wants a Coke while the restaurant does not serve it, responding, “I’m happy to get you a Pepsi.”

The salient point is for the agent not to be fast with the saying no. Suggesting an alternative is better than immediately sharing what is not available.

Another element of successful experience engineering is learning more about your customer so you can “engineer” their experience. Rather than putting a customer on hold or asking the customer to wait during a Live Chat while they look for the answers to the customers questions, agents can strategically use those moments when looking at their screen for information as an opportunity to learn something about that customer and their needs that could become useful later in the conversation.

By listening to the customer, agents can categorize them. For example, you may segment your CS requesters into four categories: The Feeler, who leads with their emotional needs. The Entertainer, who loves to talk and show off their personality. The Thinker, who needs to analyze and understand. The Controller, who just wants what they want, when they want it. When a customer feels that the agent they are interacting with understands them, a lower-effort experience is much more likely.

Giving different experiences to different people based on what the agent has learned (or the company has learned previously) moves from the target from consistent service where the customer service management team defines what “good” is and then expects all frontline reps to conform to this standard, to consistently tailored service, where each individual customer is treated individually. Dixon writes, “it cannot be accomplished simply by telling employees what to do in every situation. It is readily apparent that this notion of consistently excellent service will require a serious rethink about how to manage customer service employees.”

Build the Control Quotient

Another element of creating an effortless experience is giving your agents control, what Dixon refers to as the Control Quotient (CQ). Judgment and control differentiate today’s best agents. With increasingly complex live service (phone, Live Chat, real time email, etc) and heightened customer expectations due to simple issues being resolved in self-service, the most important competency for reps to possess is CQ. CQ is the ability to exercise judgment and maintain control in a high-pressure, complex service environment.

Dixon three distinct keys to unlocking CQ that are within the control of customer service leadership to enable:

Trust in agent judgment
Agent understanding and alignment with company goals
A strong agent peer support network

According to Dixon, “these three factors — with all other things being equal — are the difference makers that transform average organizations into world-class low-effort service providers….Frontline reps are made to feel that they are free to do whatever is right to serve that one customer they are interacting with right now.

Having high CQ is necessary to achieve consistently excellent service because you cannot have great service by treating all customers the same. Standardized service cannot be great because all customers are not the same. Customers have different personalities, different needs and different expectations. Their ability to understand and verbalize their problems and issues is also very different. Dixon explains, “when a company mandates that every customer call include all the standard, company-imposed criteria, and takes away the rep’s ability to deal with the customer at a more natural, spontaneous, human level, the interaction is reduced to a mechanical, rote exchange.”

While CQ is the greatest differentiator of rep performance, the reality is that most agents have moderate to high CQ potential. Instead of training effort reduction, you can coach it. Although training is helpful for building awareness, effort reduction involves frontline behavior change that can only be delivered and sustained through effective frontline supervisor coaching.

One issue is that many companies inhibit reps from exercising CQ due to the environment of strict adherence they have created and reinforced historically. Judgment and control are not welcomed in these environments. Dixon suggests you “give control to get control of the front line. To allow reps to activate their latent CQ potential, companies need to demonstrate trust in rep judgment. Approaches include deemphasizing or eliminating handle time and the QA checklist, clarifying reps’ alignment between what they do and what the company is trying to achieve, and allowing reps to tap into the collective experience and knowledge of their peers to make smart decisions.”

Only by coaching and empowering your agents will you reduce the effort your customer experiences when dealing with customer service.

Create the right culture

Another key to improving customer service by creating an effortless experience is creating the appropriate culture. You need to create a clear contrast between old and new behavior. Then explain to your team how and why an effort reduction approach differs from the current service philosophy. Given the power of stories, use a change story to continually reinforce why teams need to focus on effort reduction, what’s at stake, and the nature of support they’ll be provided.

In my experience, transforming your customer service approach cannot be another flavor of the day project. You should not make effort reduction another ask. If you are just adding effort reduction to a long list of requirements, it will signal a lack of commitment and competing priorities. Instead, remove requirements such as handle time or strict QA forms to allow pilot teams truly to focus on reducing customer effort, helping your team determine the right ways to change behavior.

You also must make effort reduction easy. Dixon writes, “asking reps to ‘go out and reduce effort’ without a clear sense of where and how will surely be met with failure and confusion.” Instead, start with a pilot with clear tactics and goals. This may include forward resolving a specific type of service issue, or using positive language techniques for a small number of common issues. Finally, provide heightened support and coaching, as pilot teams get comfortable with these approaches.

Purchase experience

The final element of creating an effortless experience is around the purchase journey. Dixon’s research showed that reducing customer effort in pre-and post-sales customer touchpoints has a strong impact on loyalty. The ease that customers can learn about products or services, make a purchase, and obtain post-sales service and support provides a dramatic opportunity for brand differentiation.

An effortless experience is the recipe for increasing LTV

Reorienting your customer service from creating great experiences and cool stories to reducing customers’ effort feels counter-intuitive and is not easy but the data is impossible to argue with. Your goal should not be to have a customer service experience you can feel good about but one that improves loyalty, and the effortless experience will have the biggest impact on loyalty (and thus LTV).

Key takeaways

Data shows that trying to create an exceptional customer experience has virtually no impact on loyalty and engagement, however, reducing the effort the customer must exert does improve loyalty,
The best way to measure this effort is CES score, which is based on a statement, “the company made it easy for me to handle my issue,” after which the customer is asked to answer (on a 1–7) whether they agree or disagree with that statement.
The keys to implementing successfully an effortless experience program are minimizing channel switching, avoiding repeat contacts, engineering the customer service interaction experience, building the control quotient, creating the right culture and optimizing the purchase experience.

Customer analytics tips for gaming companies

by Lloyd MelnickJuly 15, 2020June 27, 2020

While social and mobile gaming companies are generally at the cutting edge of applying analytics, I recently took an online course from Wharton on Coursera that provided some additional insights in how to best use analytics in online gaming. These takeaways range from ways to improve your UI to how to calculate LTV more accurately.

Make your players wander

One of the most interesting takeaways from the course is that efficiency is not always the desired player behavior in the online world. In traditional retail, retailers found they enjoy much higher revenue when customers wander around the store rather than quickly find what they have come for. In the studies cited, about 75 percent of movement inside a store is not required. Sixty percent of purchases are items people had no intention of buying when they went into the store. Instead retailers optimize for “jiggliness,” as people with the most jiggliness buy the most.

There are uses of this concept for online gaming and iGaming companies. Rather than optimize your lobby and UI (user interface) to ensure your players find what they are looking for, take them on a journey around your game. If it is a social casino, rather than finding the slot they know and love, expose them to some other content, they may find something they prefer.

Higher customer satisfaction may not improve profitability

While customer satisfaction is positively correlated with profitability, the relationship is not linear. Companies with a low level of customer satisfaction, referred to as the Zone of Pain, experience a strong impact on revenue when making improvements. That is, the firms with awful customer service see big benefits just moving out of the Zone of Pain.

On the high end, companies that provide great customer service and differentiate themselves with it experience positive ROI by making the experience even better. These companies are what is referred to as in the Zone of Delight. Retailers like Nordstroms, which enjoy high margins due to their customer service, see a huge impact when they find even better ways to provide a WOW experience.

When customer satisfaction is only a small part of a company’s value proposition, improvements do not necessarily have a positive return. There is a large flat region where increasing satisfaction does not increase profitability. The key takeaway is that the relationship between customer satisfaction and profitability is not linear, but starts with a Zone of Pain, then hits a sizeable flat region, and then moves to a Zone of Delight.

Correlation does not equal causation

We should all know by now that just because two variables have related movement, you cannot assume one is causing the other. I see this mistake made frequently, including by BI experts. Correlation only shows a relationship between two variables. Causation, more critically, shows that one variable produces an effect on the other variable. It is crucial to remember there are three requirements for causality:

Correlation
Temporal Antecedence. X must happen before Y.
No third factor is driving both. Need to control for other possible factors.

Use analytics for pricing

I am surprised at how often pricing strategy in mobile games (the cost of in-app purchases) or in iGaming (RTP and bet levels) is driven by competitive analysis and intuition rather than analytics. Regression, however, can be used to set optimal pricing (including for virtual goods) at the level that boosts profits. Regression can predict demand at prices that have not been tried, thus you can determine profitability for different options. As predictions can be completed for different future prices, you can then determine optimal price. Effectively, you answer the question what you can charge to make the maximum profit (and with virtually zero marginal cost for online products, can be simplified to maximum revenue).

Preparing better surveys

While market research is a less than reliable way to understand customer intent, it still provides valuable insights into your players. Surveys are a good way to learn about potential customers and are relatively low cost. Some best practices include:

- To improve reliability of surveys, test and then retest. If the results are consistent, it shows you are getting reliable results (people still may not know what they want though).
- There are multiple ways to ask questions in a survey (comparative, rank, paired comparison, Likert, continuous, etc.) and you should understand your end goal when deciding which format to use. Advantages of open-ended questions allow for a general reaction that can help interpret closed end questions and may suggest follow up questions. Closed end requires a lot of pre-testing but is easier to administer.
- Focus on drafting high quality questions. Use simple, conventional language and avoid ambiguity. Do not ask any questions more than 20 words. Most importantly, avoid leading and loaded questions (i.e. How bad a job is Lloyd doing?).
- Pay attention to sequence and layout. Start with an easy and non-threatening question. Have a smooth and logical flow. Have the questions go from general to specific. Keep the sensitive or difficult question at the end.
- The key to using surveys effectively is validity, how well it predicts variables you are interested in. If you find surveys effectively predict certain behavior, then they are an appropriate tool for predicting that variable.
- Make sure your results are generalizable to an appropriate population. You need to define clearly the population, choose a representative sample, select respondents will to be interviewed and motivate them to provide information.
- Pre-test your survey. Ensure respondents understand each question and the questions make sense.
- Collect data on non-respondents as they may be systemically different. Try to convert them to responding.

Recency is incredibly important

When looking at the future value of a customer, the three keys are how recently they made a purchase (recency), how many purchases they have made (frequency) and monetization (size of the purchase) recency is by far the best predictor of future value. Frequency is then significantly more indicative than monetization. Thus, focusing on increasing the size of a purchase (up-selling) is the least valuable strategy you can pursue to increase your customer’s lifetime value.

Include clumpiness in your LTV analysis

I wrote several weeks ago about the important of clumpiness in determining a customer’s future value so will not go into too much detail again. Clumpiness refers to the fact that people buy in bursts and that those customers could be extremely valuable. When calculating customer value and segmentation, we focus on analysing recency, frequency and monetization of the customer, as I discussed above. This analysis is based on customers making purchases in a regular pattern, i.e. coffee, diapers or milk. For certain products (and I would classify social and casino games here), customers actually monetize in bursts. Thus, you need to add C for clumpiness to your modeling.

Key takeaways

People who wander around a retail location spend more than ones who immediately find what they are looking for and retailers optimize to create this jiggliness. Online casinos and games can also build in jiggliness so players find new games and offerings rather than simply quickly go to the one they are looking to play.
While satisfaction with customer service positively impacts profitability, the relationship is not linear. Improvements have a strong impact when players are highly dissatisfied (and that is corrected) or when customers with great service make further improvements, companies in the middle often do not see a positive ROI on CS improvements.
A relationship between two variables does not show one is causing the other, to have causation there must be a relationship plus temporal antecedence plus the absence of a third variable driving both factors.

Customer experience best practices from the best

by Lloyd MelnickFebruary 18, 2020February 15, 2020

Earlier this year, I wrote about how to create a customer experience that improves retention, and thus profits. Given the importance of the customer experience on retention, I have since discovered additional best practices in delivering customer WOW. The New Gold Standard by Joseph Michelli shows how the Ritz-Carlton hotel group delivers fantastic customer service.

Start with attitude

To provide a customer experience that will generate loyalty and engagement and prevent churn you first need to have a message everyone in your company is aligned with. Great customer service begins with a clear and consistent organizational focus. For the Ritz-Carlton group, the phrase “the answer is yes; . . . now what is the question?” crystallizes the attitude throughout the company. This message conveys that if the service Ritz employees offer does not surpass the expectations of guests, then the splendor of the hotel becomes far less meaningful. Michelli quotes Ritz leadership as saying, “the amenity that matters most to our guests is not a fancy chocolate on the pillow but a dedication to service that never wavers.”

Once you have developed a message that conveys the experience you want your team to provide, the approach and behaviors will flow from it. Going back to the Ritz example, by starting with “the answer is yes” everyone knows that there is never any such thing as saying “That’s not my job.” When it comes to providing a service to a guest, the word no is not in the vocabulary of those who work at Ritz-Carlton.

This attitude then guides people not only in their interactions with customers but also with each other. Richelli writes, “this spirit of wanting to serve not only our guests but to lend an extra hand to fellow staffers is how the Ritz-Carlton culture of caring permeates all of our lives.” Thus, the service message becomes an operating principle throughout the organization.

Hire right and set them up to succeed

Once you have aligned your company with a message that conveys the customer service experience you want for your customers, you need to build the team to deliver it. When I wrote about creating a great customer experience, one of the keys I highlighted was the need to align hiring with creating a great experience. You can’t teach emotional intelligence, so it is critical to hire people who can radiate warmth, friendliness, happiness and kindness. Ritz-Carlton takes the same approach, believing that excellences starts with the right raw talent instead of attempting to manage employees to overcome talent deficits.

Having people who can deliver a great customer experience does not end with hiring the right people, though, you also have to dedicate the time and resources to train them properly. Training is important not only to provide your people with the tools to create a great experience but also to ensure consistency. You want the experience someone enjoys in Paris to be as good as the experience they would enjoy with you in Sydney. Even in the online world, you want the experience someone gets when talking to an agent about a purchase issue to be as good as when they are dealing with a VIP host about a sale. With the Ritz, all managers undergo three weeks of training. The first two days cover the typical Ritz-Carlton orientation; day 3 involves the expectations of leadership including how to treat their colleagues. On Day 21, after becoming certified in the operational standards of their positions, staff members are given a forum to discuss openly the positives and negatives they have encountered in their first three weeks. It is this training, coupled with openness and feedback, that ensures all customers enjoy a consistent Ritz experience.

Empower the team

Once you have the right people with the right training, you need to empower them to give a great experience. At the Ritz, they “empower through trust…Ritz-Carlton leadership sends a clear message that every staff member has the full authority to use his or her discretion to produce grand experiences for guests…. Every person, including a member of housekeeping and an employee working in the laundry, is empowered to use judgment, without seeking permission from a supervisor, to spend up to $2,000 on each guest each day!”

Creating a great experience depends on the employees, not the leadership. If a Ritz-Carlton employee sees a problem, they own it and are expected to fix it. The job of leadership is to empower people to create that experience. With Ritz, it’s not only the $2,000 budget but also the mandate that it is up to people on the front line to generate unique and memorable experiences. Leadership at the Ritz-Carlton believes “you just can’t micromanage unique and memorable outcomes.”

Part of empowering your people is giving them the freedom to modify their work to respond to customer needs, not just giving them a budget. If a guest has a problem or needs something special, Ritz-Carlton staff will should break away from their regular duties, address and resolve the issue. This action is only possible by not micro-managing the staff or basing their performance evaluation on hard metrics (i.e. tickets responded).

Empowering your team, and giving them the needed resources, not only leads to Wow experiences but is also cost effective long-term. An analysis of manufacturers helped leadership at Ritz-Carlton appreciate that the longer defects went undetected, the more expensive the defects were to repair. Additionally, the longer a defect remained in place, the more that defect caused other errors. When problems are not resolved satisfactorily, they not only create customer churn (for the engaged Ritz-Carlton customer, this lifetime value can be in excess of $ 1 million) but they also produce people who are vocally negative about the brand.

A Ritz-Carlton leader said, “I’ve come to learn that the least costly solution is the one that happens immediately. The longer and higher a customer complaint lives in an organization, the more it grows. By the time a complaint hits senior leadership, what could have been resolved by getting the guest the amenity he or she requested with a slight enhancement turns into resolutions on a par with an upgraded night on the Club Level (an elevated service experience affording access to a lounge serving multiple daily complimentary food offerings and the ready assistance of concierge staff).”

Deliver WOW

All of these elements should come together to deliver WOW. A Wow experience hinges less on the inherent exhilaration of the product and more on delivering service that appeals to both the thinking and feeling aspects of your customer. Michelli writes “operating from this understanding that customer engagement is linked to the consumers’ wanting ‘to feel a rush, Ritz-Carlton leadership calls this desired memorable and emotional connection a ‘Wow experience’ and encourages staff to personally affect guests to achieve this level of emotional intensity…. Wow starts with a commitment to a culture of extraordinary service. Ingenuity brings it to life…. Extremely satisfied customers emerge through memorable and emotional connections forged between them and a business.”

Some of the greatest opportunities for wowing customers occur when breakdowns happen. Earlier this year I wrote that “mistakes are one of the best things that can happen in the customer experience world. Players remember the way mistakes are handled much more than the mistake and often more than the actual gaming experience. Mistakes provide an opportunity to create a great memory and a connection with your customer.” Breakdowns will occur despite the best intentions to provide flawless service. Empathy, quick attention, and a willingness to go beyond the resolution will salvage a bad situation and turn it into a winning outcome. Although many businesses go out of their way to deny responsibility for guest problems, the staff of Ritz-Carlton typically acts responsibly, without ascribing blame, through targeted corrective action.”

Hold the team to high standards and measure, measure, measure

Once you have the right people and they are trained and empowered, you need to ensure they are delivering on your core message and it is resonating with customers. If people are set up to succeed, then it is also their responsibility to create a great customer experience. You must monitor your team and make sure they are creating Wow experiences for your customers.

Not only should you work with them individually, you should look at how well your customers are responding. Start with monitoring NPS (Net Promoter Score). Net promoter score is very straightforward. It is the answer to one question, on a scale of 1-10: How likely is it that you would recommend the company to a friend? Those who are answer with a 9 or 10 are considered loyal enthusiasts who will keep buying and refer others. Those who answer 7 or 8 are passives, satisfied but unenthusiastic customers who are vulnerable to churning. Those with a score of 0-6 are considered detractors, unhappy customers who can damage your brand and impede growth through negative word-of-mouth. While target NPS scores are dependent on your industry and audience, you can monitor your team’s performance by looking at the trend, whether your NPS is improving or deteriorating.

The Ritz-Carlton takes measurement to the next level and that provides a great way to move from providing excellent customer service to delivering Wow. At Ritz, they focus on customer engagement using a methodology developed by the Gallup organization:

How satisfied are you with Ritz-Carlton?
How likely are you to continue to choose Ritz-Carlton?
How likely are you to recommend Ritz-Carlton to a friend or associate?
Ritz-Carlton is a name I can always trust?
Ritz-Carlton always delivers on what they promise?
Ritz-Carlton always treats me fairly?
If a problem arises, I can always count on Ritz-Carlton to reach a fair and satisfactory resolution?
I feel proud to be a Ritz-Carlton customer?
Ritz-Carlton always treats me with respect. 10. Ritz-Carlton is the perfect hotel for people like me?
I can’t imagine a world without Ritz-Carlton?

By looking at NPS and customer engagement, you can measure how well you are delivering a great customer experience. Most importantly, look at the trends and see if you are maintaining a strong experience, getting better or deteriorating. Once you understand how your customers feel, you can then work with your team to improve. Transparency is the key, at Ritz, once the data is collected, results are posted monthly, and an 18-month rolling average is used to place each hotel in a green, yellow, or red zone. You should use this data to adjust swiftly what you and your team is doing to enhance the emotional bond with your customers.

Treat your staff like you treat your customers

The final key to creating a great customer experience is treating your team the way you want them to treat your customers. Leaders need to lead by example and this includes helping people see how they should treat others. At the Ritz-Carlton, the philosophy is that everyone is as important as everyone else, from the CEO to the housekeepers and clerks. Michelli writes that “by not confusing title with importance, leadership at Ritz-Carlton understands that creating an environment of respect universally results in a respectful service….I knew the guests were very important. But a few months later I realized that the maître d’ I watched every day was just as important because every guest was proud when he talked to them. Why? Because he was a first-class professional. He was somebody special—because of the excellence he created for the guests.”

This attitude also should translate into protecting your team when necessary from customers. If a customer is disrespectful, that is no more acceptable than an employee being rude to a customer. You need to empower your team to fire customers gracefully to reinforce the importance of treating everyone well.

A story to create WOW

Integrating best practices from the Ritz-Carlton with the way Danny Meyer created a restaurant empire, it becomes clear that building a great customer experience is not about one thing (a catchy slogan, a big CS team, etc.) but about a process. First you need to create the appropriate mentality across your organization, then hire the right people, train them consistently and focus on (and measure) delivering what the customer does not even realize they want. With these elements in place, you will create a customer experience that accelerates engagement and retention of your customers and translates into higher profits.

Key takeaways

Ritz-Carlton, one of the most profitable hospitality groups, leverages creating a great customer experience to build its competitive position
To provide an exceptional experience, you need a message that your organization can rally around; for the Ritz-Carlton it is: the answer is yes; . . . now what is the question?
You then need to build a team focused on delivering that experience, from hiring correctly, to training and then empowering.

Creating an experience that retains players

by Lloyd MelnickJanuary 14, 2020January 9, 2020

One of the most useful book I read last year had nothing to do with tech or the gaming space but was Danny Meyer’s Setting The Table, about how he created an incredibly successful restaurant empire. Meyer, who is not a chef, has built arguably the most successful restaurant business in the hyper-competitive New York market and is one of the founders of Shake Shack. Meyer built his empire not on creative dishes but creating a fantastic customer experience, which resulted in very high customer retention.

Given the importance of retention to game companies, creating a great customer experience is critical to retaining your players. While the product contributes to the experience, there are many other factors. When you go to a restaurant, the food is important but a key reason whether you return (are retained) is the overall experience. You might have great food, but if the waiter is surly, you have an issue paying the bill or even the cloakroom attendant is rude, you might not come back and will probably leave a bad Yelp or TripAdvisor review. Thus, the restaurant industry provides great lessons on how to create a superior customer experience, and Danny Meyer is probably the best restaurateur at delivering a fantastic experience. By extrapolating Meyer’s philosophy into a more general strategy, you can build a roadmap for improving almost any business.

The Golden Rule

Creating a fantastic customer experience begins with the Golden Rule, “do as you would be done by.” In effect, you should treat your customers the way you would want to be treated (and spoken to). If you do not want to get a call at 5 AM, do not try to call your customers at 5 AM because they are more likely to answer. If you would not want to have to answer ten stupid questions to cash out from a casino, do not ask your customer ten stupid questions. In all situations, put yourself in your customer’s perspective and ask how you would want to be approached or treated.

You are as strong as your weakest link

While your core product offering may be fantastic, customers are going to remember the worst part of their experience. If you are in a hotel, you may have a beautiful room with a very comfortable bed but if when you check out you are charged for a bag of cashews from the minibar that you did not take, that is what you are likely to remember. If you go to the hotel restaurant and the food is bad, that is what you will write about on TripAdvisor. It also does not matter to the customer if the restaurant is owned by the hotel or licensed to a third party; the customer will probably be more irate if you try to blame someone else. The key lesson is if you are spending time and money creating a great game or product, do not neglect all the other ways you interact with your customer or player.

Create a connection

One of the strongest motivators for people is seeking connections. As I wrote last week, after satisfying physiological needs and safety, people focus on needs of belonging and esteem, so if the organization is focused on building connections with customers that focus creates tremendous value. Meyer writes, “business, like life, is about how you make people feel….Service without soul is quickly forgotten.” Creating this connection and sense of affiliation builds trust and leads to repeat business.

To create a connection, the first step is to make your players feel important. They should not feel like a number or one of many players (you are number 800 in the queue, please hold on). Every customer should feel like a VIP, they should feel important and loved by the company. According to Meyer, “everyone goes through life with an invisible sign hanging around his or her neck reading, ‘make me feel important.’” If everyone dealing with customers treats them (and considers them) VIPs, you will build a long-lasting connection that keeps the customer from churning and probably improves engagement.

Customer’s time is money

Many companies fail to realize that a customer’s time is more valuable to them than money. All game and gaming companies at their core are entertainment companies, people are choosing between playing your game online or watching the latest episode of the Witcher, land based casinos have learned the Bellagio is competing not only with the Wynn but also with a trip to Hawaii. Your customer facing team must realize it is as important to save customers’ time as how much money they are spending.

Optimizing your customers’ time is also critical in ensuring their experience is better than their next best option. If you are using your customers’ time, you need to provide value (to them, not you) in exchange. Meyer writes, “what mattered most to me was trying to provide maximum value in exchange not just for the guests ’ money but also for their time. Anything that unnecessarily disrupts a guest’s time with his or her companions or disrupts the enjoyment of the meal undermines hospitality.”

If you have a great game, say an online casino, that they enjoy but have to spend half their time dealing with technical issues or trying to cash out, it effectively reduces their enjoyment 50 percent. Even if they get 10 percent more pleasure in your online casino then they would watching the Witcher, by forcing them to waste 50 percent of their time you make the Witcher, your competitor, a superior option.

Agents over gatekeepers

Creating a great customer experiences requires agents to act as advocates of the customers, not as gate-keepers. In every business, there are employees who are the first point of contact with the customers (attendants at airport gates, receptionists at doctors’ offices, bank tellers, executive assistants). Those people can come across either as agents or as gatekeepers. An agent makes things happen for others. A gatekeeper sets up barriers to keep people out. They need to represent the customer’s interest, fight for the customer and thus understand the customer’s concerns. As Meyer writes, “hospitality is present when something happens for you, it is absent when something happens to you.”

Mistakes are an opportunity

To me, mistakes are one of the best things that can happen in the customer experience world. Players remember the way mistakes are handled much more than the mistake and often more than the actual gaming experience. Mistakes provide an opportunity to create a great memory and a connection with your customer. Meyer writes, “The road to success is paved with mistakes well handled. Business is problem solving. As human beings, we are all fallible. You’ve got to welcome the inevitability of mistakes if you want to succeed in the restaurant business — or in any business. It’s critical for us to accept and embrace our ongoing mistakes as opportunities to learn, grow, and profit.”

Meyer identifies five elements for effectively addressing mistakes, fortunately all start with the letter A:

Awareness. Knowing that a mistake has been made.
Acknowledgment. Admitting that a mistake was made. It is incredibly frustrating having to argue with a company that they made a mistake. I remember a recent business trip to Sydney where the Internet in my room was not working. I had to argue with the front desk, then with a maintenance worker, both assumed that I did not know how to connect my phone to the Internet. Long story short is the wireless access point in the room was broken but their refusal to acknowledge the problem quickly ended up in my cancelling a stay the following month and not staying during visits every quarter. That is the cost of not acknowledging a mistake.
Apology. Saying you are sorry is an important step in turning a mistake into a good experience for your customer.
Action. Fix the mistake. Say what you are going to do to make amends then follow through. Make sure that the issue is resolved to the customer’s satisfaction and that you take care of it, do not put the resolution of the problem on the customer (remember to value their time).
Additional generosity. Do not simply make good for the mistake, provide more than you have to. Turn the bad experience into a great one. If a diner has a bad experience at one of Meyer’s restaurant, not only would they probably not be charged for the meal, but they might get a bottle of wine or champagne.

Another area to leverage mistakes is to turn a customer’s mistake into your mistake. Rather than fighting with a customer, accept responsibility even if it was not your fault. If you stress the customer made a mistake, either they will be mad at you or mad at themselves (if they do not believe you). Either way, they are not having a good experience. Instead, turn the mistake into your mistake and make them happy. That will drive additional engagement.

You need to align hiring with creating a great experience

To create a fantastic experience for your customer or player, the people responsible for dealing with them must have the right mentality. To have the right people, you need to hire the right people. As Meyer stresses, “you can’t teach emotional intelligence.”

You can have scripts and processes for dealing with customers but unless your team members can radiate warmth, friendliness, happiness and kindness, you will not be able to create great experience. Thus, you need to hire warm, empathetic people who have an excellence reflex. The excellence reflex is a natural reaction to fix something that is not right or to improve something that can be better. Not all hiring is perfect, so if you end up with some people who are not empathetic or have an excellence reflex, then you need to find them a new home. Otherwise, you will not be able to create great customer experiences.

You also need to ensure your people can control their moods. We all have bad days, but the customer does not care. You need people with personal mastery, team members aware of their moods and able to keep them in check.

Hiring is the key. As Meyer explained, “Over the years, the most consistent compliment we’ve received and the one I am always proudest to hear, is ‘I love your restaurants and the food is fantastic. But what I really love is how great your people are. ‘ The only way a company can grow, stay true to its soul, and remain consistently successful is to attract, hire, and keep great people.”

Customer experience is the key to success

While it is very challenging to build an organization with great customer experience, it is critical to engaging your players and preventing churn. Meyer’s success using customer experience as the key differentiator in building a restaurant empire in New York City, one of the most competitive and saturated markets, shows how this feature can help companies in other industries (like gaming) stand out and succeed.

Key takeaways

The key to strong retention is creating a great customer experience outside of the actual product, ensuring that customer contact is extraordinary.
To create a great experience for customers, everyone dealing with them needs to treat customers as they would want to be treated.
It is also critical to ensure you have no weak links in your interaction with customers, you create a connection with your player, your people act as agents for the customers and not gatekeepers, you treat mistakes as opportunities and you hire for emotional intelligence.

How to truly personalize and test

by Lloyd MelnickMarch 6, 2018March 6, 2018

In 2018, if you are not delivering a personalized customer journey in your game or product you will fail. Personalization, for marketing, for customer experience, for CRM, for almost everything, is the current buzzword but it is still rare that companies have a comprehensive plan to create a personal experience. David Norton, former CMO at Harrah’s Casino group and architect of its Total Rewards program, discusses several ways companies can personalize effectively in his book The High Roller Experience.

Personalization is critical not only to a great customer experience but also to optimizing efficiency. As Norton writes, “personalizing the marketing communication approach will dramatically improve the efficiency of marketing spend both by eliminating activities that will not be fruitful and by improving response through more appropriate offers.” As your competitors are already optimizing, if you are not you will not be able to spend as many marketing dollars as they can, putting you at a fatal disadvantage.

How to create a personalized experience

Realistically, you are not going to have one-to-one personalization on day one, so you need practical planning to create a personal experience. A great way to start is replicate what Harrah’s did as a way to improve its marketing effectiveness, using a basic life cycle approach: new business, non-loyal, loyal, and defector. If you initially communicate differently with these segments, you will see an increase in overall ROI.

You also need to leverage the data you have on customers beyond the typical events. At Harrah’s, they looked at implied preferences based on all the information they had about their customers normal behavior, such as what customers did on their visits to our properties, including games played, offers redeemed, and nongaming activities, and then stored the preferences at a customer level for easy use in campaigns. They noted whether the customers preferred slot or table games, if they participated in gaming tournaments, if they most often came midweek or on the weekend, how often they redeemed offers when they came, what type of entertainment they preferred, which channel of communication they preferred, and a host of other factors. They used these implied preferences as inclusion and exclusion rules in campaigns. By excluding customers from programs that they had no chance to respond to based on their past behavior, they significantly improved response rates and cost savings. Most importantly, as Norton wrote, “we made our customers happier.”

Find the segments with high ROI

As alluded to above, you do not need to create hundreds of micro-segments initially but you do need to determine which segments you should invest in. Non-loyal customers represent a particularly attractive segment to target, as this is where you have the biggest opportunity to win market share. At Harrah’s, they targeted this segment by giving them increased value for more frequent visits, generating a significant increase in revenue from this group than they had predicted. In gaming, this creates opportunities, especially in the social and real money casino spaces, where players normally play three to five competitive apps.

Another segment rich with opportunity is defectors. Harrah’s found a way to identify those customers who had broken their typical visitation pattern as opposed to the standard inactive program practice of waiting 6 or 12 months to reach out to them, at which time they would have been long gone. This practice created lower churn and more value from this segment.

Treat VIPs extra special

I have written multiple times about VIP, and you need to ensure your personalization extends to giving VIPs a very special experience. This includes making sure you not only identify VIPs who make a large purchase in one product (or in Caesars case one property) but the ones who have the highest lifetime value. For an online company, the key is looking at number of transactions and adding across products to get the best picture of who your true VIPs are. You then need to treat VIPs in one product as VIPs in all your products. One of the biggest failures of personalization is when a VIP in one product or one retail location then goes to another and is treated as a standard customer.

Personalize all touch points

It is not just personalizing communications that is critical but you also need to personalize all the core functions. According to Norton, personalization needs to extend to brand, loyalty and customer service. As Norton writes, “if a company can execute against all three of these well, it is going to outperform its competitors….Customers increasingly want a seamless experience across touchpoints with a brand, and contact channels are often one of the greatest frustration points.”

Do not forget customer service (CS)

Given that you need to personalize all touch points, the one that companies most often miss is customer service. The service profit chain is not a theory but a powerful motivator and value creator.

It is absolutely essential, however, to think about the holistic customer service experience and understand the interplay among various channels. The call center and other contact channels are a valuable commodity. When personalized, CS can drive revenue and brand advocacy and provide valuable customer data. Norton writes, “I have always viewed customer care as a critical marketing channel that can build customer relationships, be a source of relevant information about the customer, and of course turn demand into revenue.“ Many of the product improvements that have led to the most revenue growth in my past two positions originated from feedback from our customer facing team members and VIP hosts.

CS is also an area for innovation, as you can improve your offering through technology. Customers may embrace technology before your company might, so CS can be a great vehicle to try new tools and channels.

To truly leverage customer service as a tool to improve personalization and the customer journey, you need to measure it at a granular level. This helps drive service improvement efficiently.

Testing is the key

You need to constantly test to ensure you are personalizing optimally. As Norton writes, “constantly testing and learning and holding out control groups is the best way to optimize marketing spend. This allows companies to find the most appropriate message and to spend .”

The first step is to automate the test process. If it takes months to evaluate what happened, the results become useless as the competitive landscape has changed.

It is also critical to have a control group for each campaign and program. While this policy seems automatic, there is often pressure to release what you believe is the optimal campaign or communications to everyone, as you do not want to leave money on the table. Holding out customers, however, from a specific marketing program is much more informative in determining which marketing activities drive the most incremental profitability, changing the customer’s behavior to spend more with you than with a competitor. This is also a better strategy than a universal control group, which does not show you the relative performance of different marketing programs.

As mentioned above, customer service is critical to personalization and measuring customer service with a significant level of granularity provides tremendous insight about the customer experience and helps identify areas for improvement. As Norton writes, “being able to correlate improved service to increased revenue, and developing a well-constructed incentive plan, leads to great outcomes for both a company and its customers— especially when there is innovation around challenged service touchpoints that drive overall customer satisfaction with the brand.”

Personalize, personalize, personalize

The key to success in the current business environment is personalization, your customers expect it, and if you do not deliver they will go to a competitor. And you need to deliver not only in communication but also in customer service and VIP. Then you need to optimize to ensure you are delivering a truly effective personal experience. This is not a secret to gaining competitive advantage, it is the cost of doing business.

Key takeaways

Personalization improves the efficiency of marketing spend by eliminating activities that will not be fruitful and by improving response through more appropriate offers
Think holistically about the customer journey. Ensure all parts of it are personalized, from the initial communication through the product to customer service and support.
Testing and control groups are the best ways to optimize your marketing and ensure your personalization efforts are creating value.

Making happy customers more profitable

by Lloyd MelnickMay 10, 2017April 18, 2017

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

by Lloyd MelnickMay 7, 2015January 4, 2016

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

by Lloyd MelnickApril 21, 2015January 4, 2016

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 “It’s about the customer journey, not the touchpoints” →

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

by Lloyd MelnickMarch 12, 2015April 24, 2021

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

The Business of Social Games and Casino

How to succeed in the mobile game space by Lloyd Melnick

customer service

Why customer delight does not work

What customers want

Where to focus your customer service strategy

KPIs, good and bad

Key tactics to achieving an effortless experience

The danger of channel switching

Avoid repeat contacts

Experience engineering

Build the Control Quotient

Create the right culture

Purchase experience

An effortless experience is the recipe for increasing LTV

Key takeaways

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Make your players wander

Higher customer satisfaction may not improve profitability

Correlation does not equal causation

Use analytics for pricing

Preparing better surveys

Recency is incredibly important

Include clumpiness in your LTV analysis

Key takeaways

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Start with attitude

Hire right and set them up to succeed

Empower the team

Deliver WOW

Hold the team to high standards and measure, measure, measure

Treat your staff like you treat your customers

A story to create WOW

Key takeaways

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The Golden Rule

You are as strong as your weakest link

Create a connection

Customer’s time is money

Agents over gatekeepers

Mistakes are an opportunity

You need to align hiring with creating a great experience

Customer experience is the key to success

Key takeaways

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How to create a personalized experience

Find the segments with high ROI

Treat VIPs extra special

Personalize all touch points

Do not forget customer service (CS)

Testing is the key

Personalize, personalize, personalize

Key takeaways

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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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