“How great would it be if 40% of your new business simply knocked on your door without you having spent a cent advertising for it?” (Smith & Wheeler, 2002). Research suggests that First Direct, a division of HSBC bank has reached this level. Companies like these prove how managing the customer experience can benefit both parties involved. The simple trick involves turning satisfied customers into loyal ones who become advocates since their satisfaction with the service makes the company the only one they would want to deal with. If you can think about any company whose logo you would tattoo on your arm, then you know that they have got it right. But how many companies can you think of?

Research suggests that very “few companies focus on the key issues of customer satisfaction” (Jamieson, 2009). It is obvious that companies would like to have happy and satisfied customers, however “they simply do not see the financial benefit in going the extra mile” (Denove & Power IV, 2006). Strange as it may sound, present value of an investment in customer satisfaction is not calculated. On the other hand going out of the way to ensure customer satisfaction may not always be economically feasible. It is important to note that “not every company can be The Ritz-Carlton; someone has to be the Holiday Inn, and someone even needs to be Motel 6” (Denove & Power IV, 2006). But that in no way means that Motel 6 does not need to care about customer satisfaction. It suggests that Motel 6 will have to try to satisfy their customers at a different level. Providing free of cost donuts and coffee for customers at breakfast is not the same as a luxurious experience at The Ritz-Carlton hotel, but it is still an effort in the same direction.

Service providers, who operate in a monopoly, may not consider customer satisfaction due to high switching costs faced by customers. In a monopoly, the choice would be between using the service and switching to a position of not having the service. Even if customers are not satisfied with the service, the option of being without it is almost never chosen. It puts the customers in a position of having freedom in prison. When services like that of an internet service provider are considered something is bound to go wrong. The weather, the wiring and maybe a cable cut in the Mediterranean Sea may cause the service to be temporarily discontinued. If an entire office looses several work hours due to low connectivity, the first thing they require is good customer service. To deal with problems which are uncontrollable by the firm, the service provider needs to “build a reserve pool of goodwill” to help them keep customers (Denove & Power IV, 2006). It would be interesting to see how many customers would shift from that particular service provider, if the market was not essentially a monopoly, due to poor customer service.

Customer satisfaction is an essential step for climbing the ladder to reach a position like First Direct. No further justification is needed to prove that a company can only survive if it focuses its operations around the customer. But how does a company determine what its customers want or what is the customer’s perception of satisfaction? Simple answer: By asking. Companies such as “Hyundai, Continental Airlines, and Westin Hotels, are turnaround stories in which a company lost its way but found redemption and financial success by reconnecting to the voice of the customer” (Denove & Power IV, 2006). On the other hand Amazon.com seems to be in a different league itself due its highly customer-centric approach. With sales going from “0 to $3billion” in just six years, Amazon.com proves how important it is to listen to the customers and provide them with what they want (Smith & Wheeler, 2002).

But just satisfying customers by fulfilling a need is not enough. Exceeding expectations is what counts for taking customers one step further and making them loyal. Thomas Fuller once said that “good is not good when better is expected” (Denove & Power IV, 2006). Customers want to see a firm going the extra mile to serve them. When we talk about loyalty almost instantly we think about competition. It becomes important to note that “customer satisfaction does in fact impact the likelihood your customers will return, but customer satisfaction is only one of the many factors that determine actual loyalty” (Denove & Power IV, 2006). Customers may be happy with your service but they may still choose to do business with your competitor. This is when the concept of adding value and building a brand comes in. Companies would have to “provide a customer experience that successfully differentiates the organization and drives brand loyalty” (Smith & Wheeler, 2002).

Edward Artzt, former CEO of Procter and Gamble once said, “…loyalty is very much like an onion. It has layers and a core. The core is the user who will stick with you until the very end” (Smith & Wheeler, 2002). Customers who remain loyal to the company serve to be more profitable as the costs of sales are spread over a longer period of time, they cost less to administer and refer your business to others. Loyal customers make your product or service their brand. The Pareto Principal still applies to modern day business. It states that 80% of your business comes from your top 20% customers. The challenging task is for businesses to identify those 20%. “By focusing on delighting [these top 20% customers,] companies [are able to] keep them loyal and eventually turn them into advocates who attract others who value the same things” (Smith & Wheeler, 2002).

That’s the secret behind the success of First Direct. 40% of their business comes to them by referral. It is the advocates who brand your firm. Perhaps now the reason why Stelious Haji-Ioannou, owner of UK airline easyJet, said that, “I did not start a brand. I started an airline which became a brand” becomes clearer (Smith & Wheeler, 2002). To effectively manage the customer experience a firm needs to start with focus on customer satisfaction; build up a loyal customer base which will eventually help them to enjoy the benefits of advocacy.

Shilpa Asnani
Service Quality Executive,
The International Customer Service Institute

References

• Denove, C., & Power IV, J. D. (2006). Satisfaction. How Every Great Company Listens to the Voice of the Customer. New York: Penguin Group.
• Jamieson, D. (2009). Customer retention: Focus or failure. Retrieved August 12, 2009, from Proquest database
• Smith, S., & Wheeler, J. (2002). Managing the Customer Experience. Turning Customers into Advocates. Great Britain: Pearson Education Limited.