Proof Positive... Wow Your Customers and They Will Pay More.

As Steve Curtin, "Customer Enthusiast", points out in a recent article on his site (lots of good stuff there), several recent studies prove that if you can delight your customers, they'll be willing to spend more money on your product or service. Who would have thunk it?

Some research highlights from the Steve's article: 

• A 5 percent improvement in customer satisfaction leads to an increase of over 35 percent of future operational cash flow. American Customer Satisfaction Index (ACSI)

• According to J.D. Power and Associates, hotel guests who rated their overall satisfaction with a hotel a 10 (or Very Satisfied on a 10 point scale) spent, on average spend $12 per day more on hotel services than guests who rated their overall satisfaction as an 8 or 9 (or Somewhat Satisfied on a 10 point scale).

• Consumer research firm PeopleMetrics, surveyed 1,250 customers on their experiences at restaurants Customer engagement was measured by four factors: customer retention; the extra effort a customer was willing to make for a return visit; whether a customer would recommend the restaurant to a friend or family member; and passion—whether the customer “loved” the restaurant. At the end of the study, the restaurants were divided into two groups: those with low customer engagement scores and those with high scores based on the survey results. When year-to-year financial data for the two groups were compared, the group with high customer engagement scores had an average increase of 29 percent in gross margin versus a 12 percent decline for those restaurants with low scores.

• American Express and Echo Research compiled research that revealed American consumers are willing to spend, on average, 9 percent more with companies that provide excellent customer service.

Improve customer service, improve your bottom line! Seems obvious doesn't it? Something every company should be striving for, every day.  But do this simple exercise. Think about the last businesses you "engaged" with; stores, restaurants, credit card companies, insurance companies, you name it. Now think about how many of them provided you with outstanding service and a memorable customer experience you'd be willing to share with your friends and family. I'm betting not many. Many companies just don't think about customer service enough. 

In fact, according to Steve, many companies are doing more to annoy customers than delight them in their quests to boost profits in the face of price competition, and a still lousy economy (I'm a pessimist). Airlines, hotels, credit card companies and many others are lowering prices to compete, but adding fees for the most inane things to your bill to make up the difference. 

Curtin mentions a hotel charging a $2.95 minibar "restocking" fee, and an airline seriously considering charging for the use of toilets on their planes. Of course, making customers think they're being ripped of (even if that's not the underlying strategy) is a whole lot easier than investing in employee training to create a culture of wow. Or figuring out what it is that makes their company special and adds value their competition does not offer.

Being retail mavens, we've have had a lot of conversations about this in an era of deep discounting and price slashing by some of our clients and retailers in general. We typically pose these questions: 

"Why would your customers come to you if your products and services and those of your competitors were free?" What would they be willing to pay for then?

Intriguing questions, aren't they? They force you to think about the things you do, or the things you could do, or should do to differentiate yourself and add distinct value that truly wows your customers.

The bottom line? Before you cut prices, consider adding value. 

What are you doing to delight your customers? 

Oh, and check out the Customer Enthusiast for lots of great info on the art and science of brand fandom.

Comments

[Survey Questionnaire]

The other thing I notice in this retail world is that most people love to save money, even if it's only a dime. Maybe it's because of our current economic condition or maybe it's just a plain old American value. A lot of people might not like coupons but they're eager to participate in some kind of retail contests in order to get something for free. Like McDonald's coffee deals, collect a bunch of stickers to receive a $1.50 coffee. Why? Because it makes consumers feel good. And more importantly, it makes consumers feel good about the retailer, even if it's just a little bit, they win too.

[Russ]

heck, I can't even understand the kid at the drive through window to begin with through those lousy speaker/intercom systems they have. They likely can't understand me either - hence the need to repeat the order. Surely in this day and age there's some sort of digital de-mumbleification process they could incorporate!

[Greg]

Also, I hate the "faux" service you get at some places -- they greet you with a smile when you come in, but you can't find any help in the department you're in. The person at the restaurant's cash register asks you "how was everything" but doesn't stop to listen to your response or ignores it completely. The high-schooler at the drive-thru speaker asks "can I take your order" then stops you half way through your order so that you have to repeat the whole thing over again when they have taken care of whatever it was that was more important than you. I could go on, but I won't. I'm getting pretty worked up.