The value of customer loyalty, based on a positive experience of service, is more important than ever, writes Hazel Davis
Without doubt it is the age of the customer. They are louder than ever, have greater power and more ways of exerting it. Digital innovations have meant the consumer knows everything about a company, the product and its origins, as well as faster and more efficient ways of airing grievances and singing praises.
While it might be terrifying to think your customers know everything about your processes, there’s an argument for embracing the move towards customer empowerment. This is absolutely crucial to loyalty, says Alex Cheatle, chief executive of lifestyle concierge and loyalty solutions provider Ten Group.
“There is simply no such thing as a customer for life anymore; customer loyalty needs to be earned. Companies must show that they understand their customers and are responding to them as individuals,” he says. “A luxury clothing brand can’t just give away a pair of cufflinks with a shirt; they need to give the customer tickets to the opera – because they know they like opera – in a city they visit regularly.”
The customer isn’t just a buyer of a product, says Mr Cheatle, “Car manufacturers such as Maserati don’t just stick extras on their cars, they think around the issue and provide benefits that are perhaps unrelated to motoring, but are tailored to the person who is buying the car. Banks will no longer just offer travel insurance or Avios [reward currency] – customers have no patience with poring over small print or jumping through endless hoops for fulfillment.
“Programmes such as Thank You from Coutts offer curated opportunities selected and tailored to their account holders. The customer needs to feel in charge of the benefits they receive and companies must use benefits to show how well they understand the individuals they are doing business with.”
A report from Forrester, entitled Navigate the Future of Customer Service in 2014, outlines a number of key trends. Customers now demand an omnichannel service. They want to start an interaction in one channel and complete it in another. The report says today’s customer is beginning to adopt a “mobile-first” mindset. Companies are starting to move away from duplicating their web presence for mobile and instead are looking at the right usage scenarios to add value to customers in a mobile environment. There is now a tendency towards a more focused user experience that allows tasks to be accomplished efficiently.
Customer service is the next brand differential, and by 2020 will overtake price and product
Customers 2020, a report from US customer intelligence consulting firm Walker, looks at the customer experience industry of the future. The report claims customer service is the next brand differential, and by 2020 will overtake price and product.
The report says to be relevant in 2020, companies must focus on leveraging data to create a single source of truth and make customer intelligence accessible. It says: “Companies must consider ‘insight generation’ as a sales enablement function.” It also predicts the likelihood of more companies having “chief customer champions”, serving one purpose, “to create an unrelenting focus on the customer”. Data is being used to reach out proactively to customers in the form of invitations to chat and take part in tutorials. In addition it is being used innovatively to develop post-purchase engagement.
Forrester’s The Business Impact of Customer Experience, 2014 report looks at the link between customer experience and consumers’ loyalty to a company. Unsurprisingly, the correlation is high. And the business case is strong. The research shows loyalty-based revenue benefit for a firm going from a below-average customer experience index score for its industry to above-average, ranged from $55 million for consumer internet service providers to $1.6 billion for wireless providers.
And then there’s personalisation. There’s certainly a move towards the individualisation of the consumer process. Companies are increasingly using predictive analytics to up and cross-sell to consumers based on their individual buying and browsing habits. It’s no longer just about knowing the customer’s name; it’s now about making sure offers are bespoke.
A 2013 IBM study, The Customer-Activated Enterprise, says that customers are the “new” business advisers, claiming that 90 per cent of senior leaders expected extensive collaboration with customers within the next five years. More than half (54 per cent) of chief executives said customers now have a considerable influence on their enterprises and, crucially, the outperformers are 24 per cent more likely than underperformers to have given the customer a prime seat at the boardroom table.
The report highlights that in the first IBM study of this kind, released in 2004, chief executives ranked their own customers as sixth on the list of all market factors they believed would drive the most change in their organisations. What we see today is a very different story, where empowered customers now lead the agenda.