ICMI's Customer Management Insight - September 2007 - (Page 46) EXPERT’S ANGLE Impact of Delight Experiences on Customer Loyalty Percent Increase in Loyalty and Willingness to Recommend (Top Box) 12% 14% 22% 25% 26% 30% 32% 32% Delight Experience Service beyond expectation Assistance during life event No unpleasant surprises Friendly staff interaction over the phone or at retail Personal relationship over time Tell me of new product or opportunity I can really see Consistently good service Provide information proactively on how to avoid problems issues resolved were more loyal and spread positive opinions. Sub sequent studies confirm initial findings. Consider these research highlights: > Traditionally, half of consumers complain about a serious problem to a front-line retail representative. In business-to-business environments, three quarters of clients complain to a front-line rep. But only one out of 100 to 500 problems is addressed to a senior executive. > Complaint rates vary by type of problem from one per two problems to one per two thousand problems. > Word-of-mouth varies by product, but generally twice as many people hear about a bad experience as a good one. Personal interaction over the phone has up to 20 times more impact than advertisements in shaping customer opinion about a company. > TARP’s original research showed it is five times more expensive to win a new customer as to keep a current customer; dependicmi’s insight ing on the industry, the ratio varies from 2 to 1 to as much as 20 to 1. Quantify the payoff of ex ceeding customer expectations. The challenge in making delight a part of a marketing strategy is quantifying the payoff of specific delight experiences. Customer feedback regarding delight experiences indicates that they tend to fall in common sense categories like those outlined in the chart above. As the chart indicates, all delight experiences create tangible increases in loyalty. However, our research findings in a variety of industries indicates that actions that take the most effort by the company, such as handholding during a tragedy and expediting complex transactions, do not necessarily result in the greatest lifts in loyalty. The most frequent delighters that provide moderate to high lifts in loyalty are those easiest to execute — no unpleasant surprises, consistently good service and a personal relationship. None of these practices should require any extra effort M Cost-Benefit Calculations Calculation for moving a customer with a problem from non-complainant to satisfied complainant: Typically, moving a customer with a problem from non-complainant to complainant to a satisfied caller raises loyalty about 30%. Conservatively, that means handling a customer at a cost of $5 will yield a payoff of (.30 increase in loyalty) x (.75 satisfied) x $30 value = $6.75 or a return on investment (ROI) of 29% ($1.75/$5 cost to handle). If, conservatively, one out of 10 satisfied customers produces a positive word-of-mouth referral (one new customer for every 40 who hear good things), that adds an additional $3 payoff for each customer satisfied, raising the ROI to 95%. Calculation for the payoff after using resources to move complaining customers from dissatisfied to satisfied by spending an additional $5 on talk time and goodwill: Moving a customer from being dissatisfied to being satisfied usually produces a 50% increase in loyalty. For the above situation, the calculation of impact is (.50) x $30 = $15, for a 50% ROI ($5/$10 cost to handle). With word-ofmouth referral payoff added, the ROI rises to 80%. www.icmi.com | SEPTEMBER 2007 46 http://www.icmi.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.