Learn about your Customers
This blog post should be more relatable as we are talking about Customers. I trust that most of us have a “Customer Service” persona, whereby we go all smiles and polite when speaking to customers or certain individual. My friends are chilling in my room and they would go into “Customer Service” mode the moment my mother enters the room to get something.
Do customers really appreciate this “Customer Service”? What does a customer truly want? And what are the factors they look at, before making the purchase?
Surely, “Customer Service” alone is not going to clinch the deal yes?
Customer Perceived Value
The first thing we must understand about customers is that they are value-maximizers. Meaning to say, they will choose the offer they perceive to bring them the highest value and act on it. Customer Perceived Value (CPV) is the difference between the total benefits and costs of an offering against other alternatives.
Customer Perceived Value = Total Customer Benefit – Total Customer Cost
Total Customer Benefit is a perceived monetary value that customers forms based on the economic, functional, and psychological benefits that they expect to get from a given market offering because of the product, service, people and image.
Total Customer Cost on the other hand, is the perceived bundle of cost that customers expect to incur in procuring, using, and disposing of the given market offer. These includes the monetary, time, energy, and psychological costs.
Personally, I am very conscious of the word – Perceived. The concept of CPV teaches us to ultimately manage the customers’ expectations. The customer’s buying decision are often influenced by many other factors such as word-of-mouth, and not entirely based on logic alone. This is a testament of how important Brand Awareness is, as it affects how customers perceive the offers before them. There could be an offer that is much more suited for a customer, but he/she will purchase an alternate offer because of Brand Recognition (Customer Service, Business Practices, etc.).
WHAT I THINK: SINGAPOREANS ARE GENERALLY CHEAPSKATE, our perception of value is really tunnel vision-ed. Especially for B2B customers that are making a corporate procurement. They tend to go for the cheapest option and forgo the minor fail-safe costs, e.g. importing over a million dollars worth of assets but unwilling to invest in a simple CCTV system to safeguard the assets. Talents in Sales or Marketing can change the CPV of a product or feature.
How to keep Customers Satisfied?
Manage your customers’ expectation. Never overpromise on what your products can deliver and ensure that your customers receives a good service.
Satisfaction is the fulfilment of one’s expectation, and expectation are formed from past buying experience, others’ comments and reviews, and information and promises from the market. It is therefore important to provide accurate information that matches customers’ expectation to company’s products. And ensure that customer services standards do not fall short of excellent.
WHAT I THINK: As a customer, I feel most satisfied when the product or service I bought is worth my every penny. This is especially so for the immediate period after the purchase where customers may feel like the product or service delivers less than expected. Thus, the post sales service is important to manage the customers’ expectation and help them utilize the product or service to the maximum value.
How to build Customer Loyalty?
The work does not end after you convert a prospect into a customer. There is a general rule which states that 80% of your revenue should come from 20% of your customers. These 20% who are your loyal customers will not come by chance, potential loyal customers has to be selected and cultivated after an assessment of the customer’s lifetime value before they become your loyal customers.
Every customer is valuable, except that some are more valuable than the others. The following steps are proven to help attract, retain and build loyalty:
- Reduce customer loss rate
- Increase longevity of customer relationships
- Attempt to sell more to each and every customer
- Identify low-profit customer and make them profitable or terminate them
- Focus more effort on higher-spending customers who will eventually become your loyal customers
How to manage Customer Relationships?
Customer Relationship Management (CRM) is easy to understand and hard to execute. Thankfully, the marketing industry has introduced several methods where you can cultivate relationship with your customer at various touch points to maximize loyalty.
- Develop loyalty programs
- Create institutional ties
- Brand communities
- Personalized marketing
- Customer empowerment
- Customer reviews & recommendations
- Attending to customers’ complaints
Additionally, I want to emphasize this – Please maintain boundaries when managing Customers.
The boundaries is referring to the company’s policy for customer service and rights of the customer-facing staffs. I have seen many companies fail because of their poor customer service policies. When staffs are instructed to bend their backs for the customers, the company will leave an impression as a “weak” company. People will think that they can trample over the company’s staff and policy, creating a poor and cheap image for the company. While a company should not come across as pushovers, they must be careful to avoid becoming arrogant.
Good Customer Service ≠ Giving into Customers Categorically
WHAT I THINK: PLEASE PLEASE PLEASE PLEASE BE COMFORTABLE WITH LOSING CUSTOMERS. Focus on efforts on the right kind of customers for the longevity of the company. It is perfectly alright to turn away a high-spending customer with a sh*t attitude as they will attribute to a high turnover rate for the company. Employees are going to leave the company if they are constantly forced to deal with this kind of customers, it’s better to drop a few of the customers and keep the good staffs.
What is your customer’s purchasing journey?
Think about the times you made a purchase., what are the steps leading up to your purchase? You would perform some level of research such as comparing prices or features before making the purchase yes? This is because customers are value-maximizers, you want to ensure that you are getting the best offer available in the market that can meet your requirements.
Hence, a five-stage model that represents a customers’ buying decision process is created:
1. Problem Recognition
2. Information Search
3. Evaluation of alternatives
4. Purchase Decision
5. Post-purchase behavior
Knowing where your prospect is in the five-stage model is critical to making better decisions that will eventually convert the prospect into a customer.
WHAT I THINK: We must acknowledge the power of word-of-mouth for this concept. A person can do all the research before a purchase, and the decision can be changed immediately upon a second opinion from someone close to them. This is perfectly normal as a person will heed or at least consider the second opinion from those who are close to them, most of these decisions are emotional decisions as opposed to logical decisions. This is why referral works so well and has to be accounted for in the customer’s purchasing journey (usually around the information search stage).