What does it mean to be relevant to a customer? How much is customer loyalty really worth? These are just some of the questions business leaders face when trying to improve the customer experience and drive profits.
Don Peppers, founding partner of Peppers & Rogers Group, tackles these questions and more in his latest book, Customer Experience: What, How, and Why Now?
1to1 Media sat down with Peppers to discuss his new book, including the importance of eliminating friction before trying to delight customers and what it takes to build a truly customer-centric organization.
1to1 Media: What do companies often get wrong about improving the customer experience?
Don Peppers: The first thing companies have to know is unless your name is something like Disney or Ritz Carlton, your customers aren't coming to you to have an experience. They're not coming to you to enjoy the process of doing business.
They're coming to you because they have a problem and they think your product or service might help them meet that need or solve that problem. If that problem would go away without them having to deal with the business that would be the best solution for the customer.
That's why the ideal customer experience in most cases is no experience. The lesson is that minimizing the obstacles and points of friction that lie between the customer and solving the customer's problem should be the number one goal at most companies.
Once a customer experience is truly frictionless, you can think about trying to endear yourself to the customer with surprise and delight and other emotional attributes, and make it enjoyable. Don't work on making your business more enjoyable without taking the friction out first. As long as there's a shred of friction in your experience, the customer won't notice or care about it being enjoyable.
And that's what companies get wrong: The vast majority assume their experience is already frictionless enough to concentrate on making it enjoyable. I'm not saying it's not a good idea to make enjoyable experiences, but the biggest payoff is eliminating the problems first.
What are some solutions for eliminating friction in the customer experience?
Let's say you're a customer and you have a product and there's a problem with the product. Or maybe you would like to order more of the product. So you go online and look at the company's website. But you can't find what you need.
Finally you call and tell the company about your problem. And even though you spent time on its website, the company is unaware of what you just did. The fact that it can't pull up your click stream and see what you've already tried to do, adds friction to your experience. Yet, there are plenty of technologies to eliminate that friction.
For instance, the "call me" button on a website. Instead of the customer calling you, why not have the company call you and connect the call to your web session? When you click "call me in 10 minutes," for example, that instruction can be connected with your web activity and they have your whole click stream in front of them. That way they can see which solutions you've already tried.
You can get the same results with a temporal phone number. How a temporal phone number works is, say I get upset on the website and click the "contact us" number. I dial that number but unbeknownst to me, that number is unique to my web session. When that number rings, the company knows it's my web session. Or if you're on an app, you should be able to hit "call me" to link your online interaction with the phone call.
There's also proactive chat. Maybe I don't call, and you detect I've been to the same page twice so a window pops up. The point is there are plenty of ways for companies to connect an inbound interactive inquiry by chat or call with the web session. The vast majority of inbound inquiries today are preceded by those types of web sessions.
What is your favorite section of the book?
I'd have to say my favorite sections of the book are chapters 10, 11, and 12. These chapters deal with a common problem that people encounter when they go on a customer experience improvement journey. That challenge is financial justification.
Let's say I'm an executive and I know I need to provide a better customer experience. But it costs money to do that. I have to budget for it. How do I justify that and invest in a better customer experience? The answer is when you have a better customer experience, customers will stay longer, buy more, spread the word, etc.
The problem is those benefits all occur in the future. And frankly, our accounting systems in businesses today are very unfriendly to customer experience management. Accounting systems rely on looking at the rearview mirror. You're not allowed to count how much money you might get.
So how does a business reconcile the cost that's incurred through improving the experience with the actual substantive value of the experience? There is also an alignment problem at many companies. I might have someone whose job is to improve the customer experience, but my salespeople are paid commissions for selling products, regardless of what the experience is.
Therefore, the salespeople will do what they're paid to do. And sometimes, selling a product by itself is not in the customer's interest. There are lots of reasons why the sale of a particular product might or might not be in the customer's long-term interests. But it's always going to be in the business' short-term interests to make a sale. And therein lies the problem.
How can companies solve these problems?
There's no easy answer, but some companies like Amazon have figured out that satisfied customers are worthwhile. For example, if you were to buy a book that you had already bought from Amazon, they would remind you that you already bought that book.
This would have been money in Amazon's pocket, but rather than take that money, Amazon used its data about the customer to remind the customer it might not be in his best interest to buy the book. That can get pretty expensive on a systemic basis. But Amazon figured out it gets more back from not processing returns and better customer satisfaction.
However, at many companies, the incentives, metrics, and accountability are often not aligned with the value of the customer and increasing the value of the customer. And that's why it's my favorite section of the book, because this is an issue so many companies need to address.
It's also worth noting that a lot of research shows a poor correlation between customer satisfaction and customer loyalty. The world is full of companies that have satisfied customers who still leave. However, there's a strong correlation between customer dissatisfaction and disloyalty. When a customer is dissatisfied, the likelihood they're going to leave goes up exponentially.
The lesson there is customer satisfaction's largest benefit is to minimize customer attrition. You won't maximize loyalty as much as minimize attrition by reducing friction. [Customer satisfaction] does have the effect of increasing customer loyalty but not because customers jump up with joy. It's more like, "I don't have a reason to leave for someone else so I'll stay put."