6: Turning First-Time Buyers into Repeat Customers
(EN: Not preserving the chapter introduction - it's reeks of "urban legend" about a nameless Japanese department store that went to great length and expense to correct an error they had made. But the point is still well-taken: that a regular customer is worth going "the extra mile" for, and firms that do this earn a lot of customer loyalty and excellent reputation.)
After the "Yes"
A common problem is that marketing is largely focused on getting the customer to agree to make a purchase - once they've signed the contract and written a check, there's very little concern for their experience ... until it's time for them to purchase again, at which point the negative aspects of their first experience may lead them to seek another vendor.
Companies that have a hard time retaining customers often present a rosy picture and treat the prospect well before the sale, or they may take special care of a "new client" - and there's a stark contrast between the level of care and attention paid when a prospect becomes a customer, and a customer is no longer "new."
The degree of contrast is a significant cause of customer dissatisfaction: a level of expectation was set, and then the vendor failed to meet it. The author provides examples from a customer "complaint" Web site that support this: they were given great expectations, then neglected. As a result, they are disappointed and often quite angry.
The author suggests following the customer through the lifecycle to discover what they are told during the acquisition progress and what is actually delivered afterward, to identify issues - especially where the customer is handed off from one staff (sales) to another (service). The fact that the service person has no idea what the salesman promised a client compounds the frustration.
Giving Employees the Tools to Perform
The example is given of an insurance company that automated its customer contact center: all correspondence with a customer is kept in a central repository, which can be accessed by anyone who might answer the phone and speak to a customer. In addition to amazing efficiency, it enables each rep to see the full history of the account, knowing what was sent to and received from the customer, to ensure service meets expectations.
It's noted that the employees with whom the customer must interface are, in effect, the personification of the company itself. Many companies outsource this function, or relegated it to the lowest rank of employee who lacks authority to do anything but follow procedures - hence their customer service is terrible. To be effective in serving customers, an employee must have the "tools" to do so (resources, training, and authority).
(EN: It unravels after this, and the author channel-surfs various topics regarding empowering employees to provide good service - this topic is better addressed in other sources.)
A Closer Look at First-Time Buyers
The purchase entails consequences for the buyer. They occur as a result of what consumer behaviorists call postdecision reevaluation. Every customer brings to a purchase a certain set of expectations. Following the purchase, the buyer compares what she received with what she expected. If the comparison is favorable, the buyer is said to be satisfied. If the comparison is unfavorable, the buyer is said to be dissatisfied.
After making a purchase, the customer evaluates their decision. If they are satisfied, it increases the likelihood that they will seek the same solution in future. "Satisfaction" describes past choices, and the next time the buyer is face with a similar choice (it is never the exact same choice), there may be different circumstances, the buyer may have different or additional criteria, the buyer's needs may have changed, or the buyer may have become aware of new options.
For subsequent purchases, the buyer will evaluate their decision not only in terms of their own satisfaction, but against previous experience with the same vendor: was it the same or different? If different, was the difference better or worse?
As such, the notion that the buyer falls into an automated process in which they repeatedly purchase the same items as they have in the past without thinking about what they are doing is entirely false: it is not conditioned behavior. Each time, the buyer evaluates the success of their action, and at any time they may decide that the result was unsatisfactory.
(EN: this may push a little too far in the opposite direction. Some may abandon a vendor at the first sign that something has changed ... but I expect most buyers have some tolerance for error. If a repeat buyer notices an undesirable deviation from previous experience, they may dismiss it as an anomaly - they are usually good, but "this one time" things were off - and they may weather it without complaint. It may be two or three times before they decide this is a permanent change in quality rather than a temporary or unusual mistake, and re-evaluate their purchasing behavior.)
Dissatisfaction, or "post-purchase dissonance" will be impacted by several factors. Dissonance is greater when great effort put into obtaining the decision (cost, difficulty to obtain, time spent decision-making), when the purchase is irrevocable (which may mean "no refunds" or a one-time opportunity has passed, such as a botched wedding), when the buyer's judgment was impaired (they felt "forced" to make a decision, or they acted against their better judgment, or it was a purchase of a product they are unfamiliar with)
A few anecdotes are used to illustrate ideas to set customer expectations appropriately: being up-front about things that might once have been slipped into the fine print, being proactive about customer education ("about a third" of complaints come in from customers who don't know how to use a product), using calls or letters (as appropriate) to remind the customer or reiterate key information.
What Good Service Really Means
The author suggests that not only do businesses want regular customers, but customers desire to have a regular vendor (or regular brand) they can depend upon, and the prospect of having one may influence their buying decision. While this desire does not trump price or quality demands, it may reduce sensitivity (the customer will pay a little more for their "regular" brand, even when presented an alternative of similar or slightly better quality).
The author identifies "five dimensions of service quality" that seem to resonate:
- Reliability: the vendor is available to provide what is expected, when expected
- Assurance: the buyer feels that they can trust the vendor
- Tangibles: the visual appearance of facilities, equipment, and people are in-line with expectations
- Empathy: the vendor is concerned with the individual needs of the consumer
- Responsiveness: the vendor is willing to help customers and provide prompt service
Customers generally rank reliability highest, though companies tend to emphasize responsiveness. A likely cause of this is that companies perceive responsiveness to be a problem they can easily address (hire more operators, install more phone lines, etc.) and objectively measure (seconds spent on hold), whereas "reliability" depends on meeting customer expectations of availability, which is harder to gauge or address.
Ultimately, reliability is the more important factor: if the customer requests a follow-up call for Wednesday, the fact that the company attempted to call on Tuesday does more harm than good. The customer is not impressed by the early call, and may well be inconvenienced by it, and in any case is a failure to meet expectations.
Given that the Internet is available around-the-clock for immediate service, responsiveness is taken for granted (provided the server isn't down), but companies still show poor responsiveness to inbound inquiries. The author mentions that recent research by Jupiter Communications indicates that companies that five or more days to respond to a Web site inquiries, even to "the simplest customer requests."
(EN: no stats are given on expected response times, but I have previously heard that it was an expectation of a same-day or next-day response, and that seems reasonable. Also, customers expect a n e-mail reply indicating their question has been received, they do not consider this to be a "real" response.)
The author also mentions Web sites as a method of facilitating customer self-service. From the perspective of the business, it is a cost-effective method of providing customer support that can handle 70-90% of all customer inquiries. From the customer perspective, the speed and convenience of Web-based support is a boon, but also raises customer expectations for the quality of the site (it should be useful and easy-to-use) as well as for phone service (if effect, they expect the time and money saved to be reinvested in phone service to promptly and expertly deal with questions the Web site doesn't answer).
The author goes on to make a few general statements about e-mail support (bad execution, and a real disappointment to customers) and "live chat" (mixed results) - but the details are too anecdotal to support any general conclusions or bold assertions.
Call Centers: The New Front Line
The key to growing and maintaining loyal customers is an effective front-line employee. While outsourcing call centers has been a popular trend to save cost, more "visionary" companies have recognized that the customer's opinion of a company and willingness to continue to do business with a vendor hinges on their experience with call-center personnel, and the potential damage to the customer relationship (loss of future income) far exceeds the economic value of cost-per-call thinking.
It's also noted that "call centers" are changing to "contact centers" that touch multiple channels, as service reps handle not only phone calls, but also e-mail, live chat, co-browsing, and other communications technologies to support the customer's preference of channel.
The author mentions that writing skills are of increasing importance. A badly-written e-mail makes a poor impression on the customer, who may also share that message with others (or post it to a Web site for public shaming). Also, e-mail is easier to store and trace, so it constitutes greater "proof" of what was "said" to the customer. (EN: Arguably, any customer could record a phone call, but that was never a widespread practice. Saving e-mails is much more common.)
To that end, the author provides a list of random tips, that include things such as hiring people with writing skills, training to maintain and improve them, providing template letters and corporate style guides, managing workload better (a tired employee makes careless mistakes), using knowledge management systems, and carefully monitoring the performance of agents.
(EN: The author doesn't mention this, but "careful" can be taken too far. If every outbound e-mail must be reviewed and approved, response time suffers. If employees feel they are being too closely monitored or even punished for trivial mistakes, morale drops, good people leave, and quality suffers. It's a delicate balance.)
Actions that Encourage First-Time Customers to Return
(EN: The author goes into laundry-list mode, offering random tips and ideas based purely on speculation or anecdotal evidence. Much of it seems like "good ideas" but it is lacking in factual support, and it is not at all systematic.)
- Express Appreciation. This can be as simple as saying "thank you" at the close of a sale. For large-ticket items, consider sending a thank-you note - it's a rare practice, and it stands to reason you will stand out for having done so.
- Seek feedback and respond promptly. Asking for feedback shows that you are concerned about the customer's satisfaction; responding to feedback demonstrates that your concern is genuine. Especially where the revenue-per-customer is significant, paying extra attention is key to giving the impression of a desire to serve (EN: a factoid from another source - technology makes it cheaper and faster, but also gets better feedback. There is social pressure to say "everything's fine" if you ask for feedback face-to-face, but people are more open if they can provide feedback anonymously)
- Consider indoctrination mailings. Especially when it comes to complicated technology products, people will buy things they don't know how to use (the example given is gadgets that literally "gather dust"). Teaching customers how to use the product, or explaining helpful features, can help them to actually use it, value it, and repurchase it.
- Tell customers why they should value you. In advertising, brochures, and any collateral, make your value proposition clear and provide evidence. For example, don't just claim you have low prices, compare your prices to MSRP in your ads, show how much the user "saved" on invoices and receipts, etc.
- Use customer information. Customers largely expect that any merchant that requires them to register and authenticate is tracking their behavior, and expects the merchant to be cognizant of their habits, tastes, and preferences. But for most merchants, this data is never effectively used. Examples given is a venue that recognizes the kinds of events people attend and send them notices of upcoming shows of a similar nature; florists who send a "reminder" the following year of a birthday, anniversary, or other holiday; even pizza delivery companies who "remember" the customer's address and their last order.
- Guard customer privacy. A counterpoint to the previous item, customers expect you to know them, but can be upset when you seem to know them too well. You must tread carefully, enable them to opt out, etc. (EN: I don't sense this is about ensuring loyalty so much as it is about not destroying it.)
- Communicate your full range of services. The author notes that companies seem surprised that customers don't know their full range of services, and yet these same companies have never attempted to inform them - so how are they expected to know? (EN: My sense is there are two prerequisites to this advice. First, you should make sure that the customer is happy with the product they have before recommending others. Second, stick to brand strategy if you have different brands for different products - the decision to separate them was generally made for a reason.)
- Sell the notion of "future possession." For certain industries, like landscaping, interior decor, event planning, and others, you can sell your customer on the notion that their current purchase is a "first" and that there are others to follow over time.
- Turn a single purchase into an ongoing service. For some products, consumption and repurchase is common and may be predictable, and it can be useful to position your product as a service. For example, rather than selling a single car wash and hoping the customer comes back for another, sell a "membership" that entitles them to a wash each month - so they see it as an ongoing service rather than twelve separate buying decisions.
- Consider service costs as an investment. Companies that are reluctant to undertake expenses to impress or appease a customer tend to take the perspective that service is an unnecessary cost that consumes profit from past sales. Companies that are service-oriented tend to take the perspective that it is an investment in making the next sale. And the latter, more so than the former, tend to actually make the next sale.
- Remember the decision-maker. Especially in B2B sales, there is a tendency to focus on providing support to the people who use the product, who are often not the same as those who participated in the process of selecting and purchasing it. While satisfying the day-to-day users is still important to getting their endorsement, it's critical to maintain contact with the decision-maker in order to cinch the next sale.
- Develop customer reward programs. Customers who purchase frequently expect to be treated specially - and it's hard to argue that they don't deserve it. The company that offers perks - such as an auto dealer that offers free oil changes - is value by customers, and the "rewards" can ensure a periodic touch with customers in-between major purchases.
- Develop a "welcome" program. For new customers, consider a specific promotional campaign to encourage them to repurchase. The example given is a salon that gives each new customer a "kit" that includes samples of products, coupons for additional services, and other things designed to introduce the customer to the full range of services and encourage them to return.
- Offer unconditional guarantees. Some retailers balk at this, and are wary of lost revenue on merchandise returns. But it can put a first-time customer at ease - and even if the merchandise is returned, a "cheerful refund" creates an impression of service that will create goodwill.
- Use value-added promotions. (EN: The author doesn't explain this very well at all, but mentions an interesting example): a piano store gave customers a 30-year savings bond equal to the value of the piano they bought. Word-of-mouth boosted sales by 50% during the promotion, and the notion was that the bond would remind customers of the retailer periodically.