Category Archives: Customer Satisfaction

Customer Experience, Customer Satisfaction, KPI

How do you measure First Call Resolution?

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Before we discuss the best method to measure First Call Resolution (FCR), it is probably important to understand what it actually is and why it matters.

What is First Call Resolution?  

First Call Resolution in its simplest form it is a measurement used by most technical call centers to determine how often a customer’s call is resolved at the first interaction. FCR makes a difference for two different reasons.

  • Customers that call back, add additional volume to the queue on top of the volume already there. This impacts all consumers and depending on how you prioritize calls can significantly impact some callers.
  • Customers that have to call back for the same problem time after time tend to have a very negative customer experience overall and transitioning them to an advocate of the company is quite difficult.

Measuring FCR 

Now while it’s fairly easy to state that measuring FCR is simply a calculation of how often a call is resolved at the first interaction, measuring it gets a bit difficult as you can well imagine.  Depending on the CRM you are using you might be able to set different intervals. If you do not have a CRM at all, check out my guide on the best CRM for 2020 to get started.

Depending on how you are tracking customer issues – if you are able to correlate the customers to their issues you should be able to pull reports that inform you if/when a customer issue is re-opened and that metric would apply as a negative value. 

    In addition, you must account for the time of reports and the potential of customers re-opening closed issues incorrectly. As I’ve mentioned, you need to determine an appropriate time frame as customers will often utilize the same (fixed) issue when reporting a new issue regardless of if the issue has re-occurred or not. 

    If you do not have such a tool available or in house, measurement gets significantly more difficult.  In this case, I’d recommend that you at the very least get a simple and free CRM like HubSpot. The benefits you’ll see from this tool will make the investment of time well worth it.

    As a starting point, you should aim for 5-10 days as your target time frame for FCR.  Any reports after this period in time would count as a new issue. If you are unable to correlate customer reports by a CRM system, you might be able to pull information from your phone system or ACD/IVR system although this does get a little bit more difficult and complicated. 

    Customer Surveys 

    Now in addition to measuring from a customer report perspective, you can also utilize Customer Survey’s to determine what the first call resolution is from a customer perspective.  However, this is a very “subjective” measurement as it is very dependent on the customer’s mindset and viewpoint and might be unrelated to the question being asked. It’s important to realize and understand that tools like Customer Satisfaction Surveys and company NPS scores are backward-looking.

    Basically they consider something that has already happened. Companies and organizations interested in improving customer experience need to look at customer roadmaps and understand the pain-points/touchpoints for customers at each step. Once this understanding is in place throughout an organization, plans can be made to rectify problem issues and areas.

    Can FCR be Improved?

    There are ways to improve FCR and one of them might be a bit surprising. Simply put – remove the consumer from the phone. By using Omnichannel tools like LiveChat, clients have different ways to reach you and your team. It does not solve the problem of providing the wrong answer from the start – that is something only training can really address & that applies to employees as well as customer training.

    Chat however gives your consumers an alternative channel or path to your team. This is a benefit for several reasons:

    • If they are contacting you again for a follow up on an existing issue, by using chat, they can get quick answers to specific information and areas without impacting the overall phone queue.
    • Chatbots can also help in other ways. By using AI learning and knowledge, it is possible to provide consumers with answers to not just the question they are asking now, but also the question they will ask next!

    What is FCR Good for? 

    Is First Call Resolution a useful metric?  By itself, it probably isn’t.  FCR is dependent on historical data and trending.  The goal at all times should be to improve the FCR that you are providing to your customer as that ensures they are getting a speedy and useful resolution to all of their issues at their first call.

    So if your initial measurement of FCR is 80% (i.e. 80% of issues resolved at the first call) your goal should be to aim for 85% in a reasonable time frame, and so on as time progresses.  In addition to the goal of improving the FCR %’ age, you also need to determine and this is where your reports come in useful – why are your customers calling? 

    More than likely you will find that the 80/20 rule applies here – i.e. 80% of your contacts are due to 20 issues.  If you can focus on those 20 issues, you will drive down your overall quantity of issues quite significantly.

    Customer Satisfaction, Customer Trust

    Consumer Trust (Part 2)

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    Read the first part here

    Customers’ Preference for Innovation 

    In this world of ever-increasing change, companies have the chance to improve customer trust through innovative technological advances. Research has shown that customers have a preference for companies that have implemented innovative strategies of operation. Historically this innovation has taken the shape of improved efficiencies in business but today the provision of digital services is a key preference. 
    Brands that use intelligent software like AI have a sharper impact on customers due to the user experience they have when engaging with these companies. Innovation in technology also offers brands a chance to engage customers in different ways while also providing customers with a variety of tools they can utilize to improve customer self-service. 
    Customer expectations are being surpassed due to the multiple possibilities that have been brought about by the implementation of technological innovation. When customers realize that they can get digitized customer service and engaging artificial technology, they develop trust in the brand owing to the ease of engagement with brand services. Technological innovation has so far been a major driver in building customer loyalty and improving customer experience.

    Data and Improving Customer Trust

    Customers are sensitive about their personal data. Research findings have proven that more than 75 % of customers will not purchase services or products from a company that is not assured to protect their personal data. The pool of customer data collected is like an oil field-rich in possibilities. Aside from brand owners, customers have also come to understand this fact and since then have been protective of their personal data. 
    With this in mind, companies have to maintain ethical and responsible data practices that will see them become more effective in handling customer data. Data practices within the organization can only be successful if the employees are correctly trained. From the management level down, employees should be able to maintain a high level of data integrity in a bid to protect customer data. 
    Ethical practices in handling customer data will ensure that customers are satisfied with services which eventually improve customer trust. This commitment maintained in handling customer data with care goes a long way in drilling employees towards a positive culture of data integrity. Through a systemic operational framework in data management, a company can establish strong data principles that will ensure customer satisfaction and improved CX.

    Engaging Customers

    Most of the time, customers do not have a way of ascertaining whether the company they rely on preserves or misuses their private data. This can make them skeptical as to whether the brand is, in fact, protecting their personal data. 
    A recent trend in customer service has been formulated to engage customers in data management practices. Here, customers are able to participate in data protection practices like authorizing the use or manipulation of their data by the company. In this way, brands can directly address customers in matters related to their personal data. As customers’ preference for ethical data practices increases, businesses need to take the initiative and provide ways through which they can provide customers with a chance to protect their private data from ill use.

    Having a Competitive Edge

    Every business is in a competition with others in their sector and they are all competing for a chance to show the customer who can best provide the service to their liking. 
    True to the fact, customers are more receptive to companies that they think offer a differentiator when compared to the other companies. This matter of maintaining the top spot among your competition impacts heavily on customer perception and eventually customer trust. 
    Customers will be automatically driven to your brand since they deduce that being the best, your brand offers most of the needed services in customer support and service provision. If a brand can maintain a high appeal from customers and relative brands as well, then they are in a better position to improve customer loyalty and customer trust in the brand. 

    Customer Convenience 

    As customers engage with business services whether online or offline, they have to enjoy an ease of operation. If the customer finds interaction with your brand representatives tedious or too long, they won’t take long before they switch off and move to more promising brands. 
    We live in a digital world where almost everything revolves around mobile phones and computers. Most people are usually stuck on their phones and computers for a large part of the day making it a concrete pathway for brands to engage with customers. 
    Developing mobile-friendly websites and automated assistants can go a long way in improving customer experience. If a customer can receive brand assistance quickly as he navigates through social media and other similar sites, they are likely to enjoy the brand service and observe brand trust in the long run. Making operations customer friendly and easy to access for customers is very vital in maintaining your customer base while also providing good customer experience. 

    Conclusion

    Probably one of the most relevant points to make here is a simple recitation of a quote from Warren Buffett. Buffett stated that

     “It takes 20 years to build a reputation and five minutes to ruin it.” 

    For many of the companies that have been impacted by data breaches, hacks and security scandals the impact to the business is still only just being realized. Companies need to realize that their customers’ matter and they need to put the necessary effort and systems into place to protect their most valuable commodity – you and I!
    Customer Satisfaction, Customer Trust

    Consumer Trust is at an All Time Low

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    In recent years, customer dynamics has become a very sensitive topic to brands and service providers in particular. The customers’ preferences and likes have slowly and gradually taken on greater importance as businesses work to provide and maintain an excellent customer experience.
    With the increased number of brands in the market, the issue of customer loyalty is no longer the only factor to be considered for customer-oriented services. Today’s consumer has to worry about their data, how information is shared across sites and even the threat of cyber-attacks on a regular basis. In 2017, several massive breaches of personal data were observed after a series of cyber-attacks that saw many brands lose customer trust. The brands impacted ran the gamut from technology companies (Sony, Yahoo & Uber) to Home Renovation (Home Depot). 
    More than two billion people were affected by different issues, and in addition to cyber-attacks, issues related to ransomware were prevalent. On the political front, it’s now been proven that foreign governments have influenced voters. Customer trust is very sensitive and when it comes to products and services, its something that companies need to keep in mind if they expect to maintain customer loyalty.

    Poor Engagement by Employers as a Cause of Customer Distrust

    Before any customer decides to purchase a product from a specific brand for the first time, they are always skeptical about the quality of the service and the product that will be provided. 
    Customer trust is not usually an automatic switch that can be turned on when needed. Customer trust has to be nurtured and allowed to grow in order for customers to be fully comfortable transacting with a specific brand.
    The level of employee engagement with customers usually determines how well the customer will trust the brand and the possibility of staying loyal to the brand. Most brands focus on providing quality services to customers and neglect the important aspect of engaging the customer in order to make them assured and comfortable during purchase. 
    This engagement ensures rapport building which improves the relationship between the customer and the brand. With high customer engagement, brands provide customers with an enjoyable CX through customer support and assistance. 
    With the development of technological methods of customer support like AI technology, brands can easily engage with customers directly and in so doing develop and maintain customer trust in the brand.

    Customer Concerns over Personal Data

    After the recent cyber-attacks in this and the previous year, customers have become very wary concerning the safety of their personal data when transacting with any brand. 
    Recently, we observed Facebook facing lawsuits due to their inappropriate use of personal data to influence poll research that was unrelated to the customer expectations of the brand. Such incidences spiked the customers’ concern over how brands treat and utilize personal customer data. 
    Most customers have now developed the preference of brands that are more customer-oriented and focused on responding to customer likes before using their personal data to determine the best solution for on-going problems. 
    Privacy practices need to be maintained and regularly observed by any brand if they want to maintain customer trust. Today, customers are more knowledgeable about how their private information is used to improve customer service and in protecting their individual identity. If a brand breaches this set of privacy practices, then they are very likely to lose customer trust and eventually observe a drop in customer retention.

    Personalization and Customer Trust

    As customers interact with your support team, they are usually more responsive to an empathetic conversation versus one that only makes them feel like a statistic. 
    For instance, simple interactions like addressing the client by name and not through a default system of salutations can greatly improve customer trust. A personalized experience on the customer’s side relays the impression that they are important to the company thus making them more likely to stick with the company. 
    Brands can use customer data from previous interactions to improve personalized customer service and product promotion that will give the impression of a customer-based brand.
    Everyone likes being treated like they matter and this often helps ensure that customers, respond better to personalized services. With an improved customer experience, the customer also increases the trust they have for the brand ensuring customer retention for the company.

    Continue to Part 2

    Customer Management, Customer Satisfaction, Customer service, Management

    Nine Commandments

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    Customer service is an integral part of our job and should not be seen as an extension of it. A company’s most vital asset is its customers.

    Without them, we would not and could not exist in business. 

    When you satisfy our customers, they not only help us grow by continuing to do business with you but recommend you to friends and associates (remember, that while it seems only complaining customers tell others, this isn’t actually the case!).

    The Key Commandments of Customer Service 

    Know who is boss. 

    You are in business to service customer needs, and you can only do that if you know what it is your customers want.
    When you truly listen to your customers, they let you know what they want and how you can provide good service. Never forget that the customer pays our salary and makes your job possible. 

    Be a good listener. 

    Take the time to identify customer needs by asking questions and concentrating on what the customer is really saying. Listen to their words, tone of voice, body language, and most importantly, how they feel.

    Beware of making assumptions – thinking you intuitively know what the customer wants. It’s key here to not only listen to the question itself but also what the questions “means”.  A key example is when a customer asks

    What time is the 3pm parade?

    At first glance, this seems like a stupid question, but when you realize that the customer actually means:

    What time does the 3pm parade ARRIVE HERE (where I’m standing)

    it makes a lot more sense! (nb. this example is taken from Lessons from the Mouse – a training course that teaches Disney customer service excellence).


    Do you know what three things are most important to your customer?

    Identify and anticipate needs. 

    Customers don’t buy products or services.

    They buy good feelings and solutions to problems. 

    Most customer needs are emotional rather than logical. The more you know your customers, the better you become at anticipating their needs.

    Communicate regularly so that you are aware of problems or upcoming needs. Make customers feel important and appreciated. Treat them as individuals. Always use their name and find ways to compliment them, but be sincere. People value sincerity. It creates good feeling and trust. Think about ways to generate good feelings about doing business with you. Customers are very sensitive and know whether or not you really care about them. Thank them every time you get a chance.

    Help customers understand your systems & terms. 

    Stay away from jargon and industry-specific “speak”.  While these terms are completely understandable to you with your years of experience – to an outsider they don’t make any sense at all!  Remember, you’re the expert in your field, but your customer is the expert in theirs and quite often the service you provide to them is not their core business!

    Your organization may have the world’s best systems for getting things done, but if customers don’t understand them, they can get confused, impatient and angry. Take time to explain how your systems work and how they simplify transactions. Be careful that your systems don’t reduce the human element of your organization.

    Appreciate the power of “Yes”. 

    Always look for ways to help your customers. When they have a request (as long as it is reasonable) tell them that you can do it. Figure out how afterward. Look for ways to make doing business with you easy. Always do what you say you are going to do.

    Know how to apologize. 

    When something goes wrong, apologize. It’s easy and customers like it. The customer may not always be right, but the customer must always win EVEN WHEN THEY ARE WRONG! Deal with problems immediately and let customers know what you have done.  When a customer makes a mistake, don’t make them feel foolish, but rather treat them with dignity.  The key thing to remember here is the Golden Rule:

    Treat Others, the way you Want to be Treated

    Make it simple for customers to complain. 

    Value their complaints. As much as we dislike it, it gives us an opportunity to improve. Even if customers are having a bad day, go out of your way to make them feel comfortable. Give more than expected. Since the future of all companies lies in keeping customers happy, think of ways to elevate yourself above the competition.

    Consider the following:

    • What can you give customers that they cannot get elsewhere? 
    • What can you do to follow-up and thank people even when they don’t buy? 
    • What can you give customers that is totally unexpected? 

    Get regular feedback. 

    Encourage and welcome suggestions about how you could improve. There are several ways in which you can find out what customers think and feel about your services – I talk about this in a bit more detail here. Listen carefully to what they say. Check back regularly to see how things are going. Provide a method that invites constructive criticism, comments and suggestions.  Whatever issues are identified need to be addressed and not ignored!

    Treat employees well. 

    Employees are your internal customers and need a regular dose of appreciation. Thank them and find ways to let them know how important they are. Treat your employees with respect and chances are they will have a higher regard for customers. Appreciation stems from the top. Treating customers and employees well is equally important.

    Customer Experience, Customer Management, Customer Satisfaction

    The Voice of the Customer

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    There are many ways of learning what is essential in your business.  However probably the most powerful and least practiced is that of Customer Feedback.  Having the greatest widget in the world is useless if your customers don’t want to buy it and if it doesn’t resolve a perceived need.  Getting that information from your customers can be accomplished in a variety of ways though and it pays to ensure that you are doing as many of them as possible.  (One point to note – conducting a survey is important, but if you don’t actually do anything with those results, then you shouldn’t have wasted the time or the money in gathering that information!)

    Customer Feedback Is Critical

    In order to drive continual customer service improvements, companies need to focus on obtaining the information from their clients, analyzing that information and acting on that information.  Remember, as stated earlier … if no action is taken – don’t bother!

    Capturing Customer F

    Capturing what your customers want can be done via a variety of different means now a days.  Web and surveys are common as are physical surveys that are mailed out to customers.  Depending on the size of your business and your customer base, there are many large organizations that can assist in gathering, collating and analyzing this information for you, but if you are just starting out a simple spreadsheet with the feedback that you’ve received from your customers is a great starting point! 

    Listen to them NOT just in your surveys but also in your daily interactions with them via your support and customer service teams.

    Another great way to get information from customers is via focus groups.  Often used at the beginning of a product stage to determine WHAT customers want, it is just as effective afterwards to determine HOW you are performing and if you are meeting or exceeding expectations.

    Another point to note – DO NOT over survey your customers.  It is quite common for different parts of the same company to send out different surveys to the SAME customer.  While it is obviously important to that division, the information that is returned will not be as useful as the customer will NOT be providing an unbiased response. 

    It is best if all survey’s are done via a centralized team or department and then the results of that survey shared among the company as a whole. Customer feedback collected through surveys, e-mails, phone calls, online chat and other channels can be combined into a single instance, integrating both structured and unstructured data into a central platform and enabling companies to extract maximum insight from the information collected in a cost-effective and timely manner.

    Analyzing the Data

    Customer feedback is subjective.  It always will be and this needs to be understood by the group running the survey and appropriate steps taken.  Another very significant point is that when survey’s are sent out it, it is essential that steps are taken to “tie” the response to a specific issue so that you are able to make the most use of this information.  In addition, decisions via survey should never be taken unless the sample size is large enough.

    Solving the Issues

    Once you’ve determined what your customers want, prioritize those issues based on the 80/20 rule (Pareto principle) and let your clients know what you are doing to resolve the issues.  What your plan is, how soon you expect to have the issue resolved and what the benefits to them would be.  There is no harm in sharing a commonly perceived error with your existing users … THEY ALREADY KNOW IT’S THERE! … and if they see that you are going to take steps to resolve the problems they will understand that their best interests are in remaining with you.  Remember that these are already your customers – you just want to treat them the right way and sharing information with them is a simple and effective way of doing this.

    Customer Satisfaction, Management

    Managing Technical Teams

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    Managing technical staff is becoming more of a challenge daily. Even more so, when your staff are MORE technical than you are – which to some extent is expected … you are a manager and responsible for multiple area’s of the company, they are specialists and able to focus on their area to the exclusion of everything else.
    In most cases technical staff are those who prefer to perform their work with little or no supervision and they often view Management “oversight” as a hindrance to their – getting the job done. They also quite often forget that at the other end of the phone line, there is a customer (or customers) that has been impacted and regardless of the fact that they “think” they can resolve the problem, there are timelines and SLAs in place to ensure that issues get escalated. Now, while “techs” are members of the team that managers depend upon heavily to resolve the problem, it is the managers responsibility to understand the “big picture” and also the challenges faced by these key members at a non-technical level.
    The manager is responsible for balancing the needs of the company against the needs of these key resources and obviously directing technical staff can be a challenge. It is made even more of one, by those managers that are unable to step back and release control (or delegating). The understanding between a manager and his team must be such that trust exists at either level. You trust them to get the job done in a timely manner and escalate those problems that they are unable to handle & they trust you to keep their best interests in mind, work with them to get more training (which is something a “true” techie will never have enough of), ensure that they have the resources and training to resolve the problems that you are assigning to them and in those instances where its necessary … pull them back and away from a problem so that they do not get defeated. This mutual respect MUST be in place if the team and organization is expected to be effective.
     
    The manager of a technically oriented department MUST have a reasonable grasp of the technologies and issues that his staff will face. They should be able to understand it at a “high” level, but it is OK to let your staff know that they are smarter than you! Remember they are skilled in their unique discipline and while you could not do their job, they are not managers and could not do your job either. It is far more important for the manager to be able to direct the staff to the right resources, tools or training when working issues. If the employee cannot perform the task with his current level of knowledge, it is incumbent on the manager and the company to ensure that appropriate and relevant training is available in a timely (& frequent) manner. Technical skills “rust” when not used and with the plethora of new technologies constantly being developed and launched it is very difficult to always be current with the newest while maintaining a grip on legacy tools/applications and knowledge.
    Managers are constantly expected to do more, with less resources, regardless of the economy (think about it – in good times, the number of customers you have are increasing whereas your resources won’t (at least not at a comparative rate) as the company is in business to make a profit … in bad time, you lose staff and have to service what customers you have left with fewer and fewer resources) and unfortunately is probably one of the few constants in our world! Now, not only do you always have to do more with less, but you need to also ensure that the staff you have you KEEP! The cost of hiring/training and integrating new staff and making them useful is a topic for another day, but suffice it to say, if you have a “good ‘un”, you want to keep him! Its a fine line between customer satisfaction and employee satisfaction and its a tightrope you’ll be walking every day. I generally tend to err on the side of employee satisfaction – if you have good staff, doing a good job who are happy doing that job … customer satisfaction just comes naturally!
    Customer Satisfaction

    Why Do Customers Matter?

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    Perhaps this is stating the obvious, but we want a large base of loyal customers as they are  a lot more profitable than just “happy/satisfied” customers. They consistently do business with us and on top of that they give free advertising to others to do business with us.
    Besides that, we already know that is ten times easier to keep a customer happy than to gain a new one, so based on this, it sounds like a pretty good deal to just give customers the GREAT/MEMORABLE service they are expecting and keep their business coming “home”.
    The question of course is – What is Memorable and What do customers want from us?
    First we need to understand that customers these days are smarter, more demanding, less forgiving, harder to satisfy and most of all approached by competitors on a daily basis, therefore the extra mile we used to walk has now become “The Expected”.
    In order to gain Customer Loyalty we need to show them:
    • The value of our service. Let them know that they are dealing with  professionals that are willing to understand and help them. “We are here to help you”.
    • How assertive we are. We will provide the correct information exactly when they need it and in the way they need it. “We are here to inform you”.
    • The best attitude. Regardless of how you communicate with your customers be that email, voice or chat it is essential that your willingness to help is transmitted through the conversation.  “We are glad to help you”.
     Now like I said earlier – these three things are no longer going above and beyond but are rather the expectation, so if you do them the only thing you are guaranteed to have is satisfied customers.  To get to the next level you will need to demonstrate:
    • Reliability, as there is nothing better for a customer than to know what service to expect and always get it, over and over again, if you don’t believe me then take a look at how McD’s is doing regardless of the market.
    • Timing, because customers want it now, the faster the better. However, worse than late is wrong. If you ordered a pepperoni pizza, a potato salad and light coke delivered to your door three minutes after hanging up the phone would probably not improve your loyalty.
    Now I don’t think anyone would disagree that by providing these elements of service to your customer you are going to have a significantly happier customer out there.  However its really easy to say that you need to do it … doing it is another question.  Here are some tips!
    1. Every time you start working on an issue ask yourself the following questions in this order: How any issues is the customer bringing to my attention? Is it clear to me what the problem(s)  is(are)? What information do I need to solve the problem? What information do I have at this  moment? How can I get what I am missing? By doing this, you will improve your accuracy in  solving the customer’s issues, you will start to work smarter instead of harder as you will focus  your efforts and time on solving the problem.
    2. Let the customers know what you have understood, what information you are giving them and in which order. This will tell the customers that you are taking their concerns seriously and that you will address all their questions. Remember there is nothing worse than being ignored and  when you address two out of three questions you are basically telling the customer “your third  request is not important to me”.
    3. Get training on the things you find difficult to solve, the more you know, the easier your work will be, and the easier your work is, the faster you can provide the right answer to the customer.  It is like body building, the more you know the stronger you get. The difficult part of putting this advice in practice is to recognize what we don’t know and even harder to be humble and ask for help. In my experience every time I have asked someone to teach me, they have felt proud of passing their knowledge to anybody who approaches them with respect,  paradoxically this does not always work with teachers but has worked perfectly with  colleagues.
    4. I don’t have specific advice on improving your attitude, there is no method or technique to follow that guarantees an improvement in this area, however, I suggest you start doing some exercises, drink two more glasses of water every day, reduce caffeine, eat chocolate and most of all worry only about the things you can control, like your reaction to every day events.

    Customers are human beings, as demanding and difficult to please as you and me. Think about the restaurants, pubs, stores, online sites, etc that keep you going back and spending your money there,  what have those places done to earn your loyalty and then think about what else can we do to keep  earning your customers loyalty.

    Business Planning, Customer Satisfaction

    The Fallacy of Price

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    A common misconception is that if you lower the price you will get more customers.  This is not always the case by anymeans and there are some significant downsides to playing the price card which you should consider.

    Now, you might not really have an option – if your competition has cut their price to some extent you will be forced to match this to ensure that you are not priced “out of the market” – however if this is not the situation and you are choosing to cut your price without any prompting from competitors or customers, there are reasons for and against this action.

    Companies that pursue this strategy do so for a variety of reasons including the idea  that lowering prices will revive their customers’ wavering devotion and ultimately make the company better off. To defend the cuts, they cite changes in the competitive landscape, the convictions of upper management, a willingness to share cost savings and productivity improvements with customers, and the mistaken belief that lower prices equates to higher volumes. Because price cuts seem to offer the easiest way to lavish special treatment on customers, companies find the temptation hard to resist.

    Now while some of these actions might be true there is significant justification in resisting the temptation.  Proactive price cuts don’t make you different, nor do they make you better off. They make you poorer, unless you have the evidence, the data, and the math to prove otherwise.

    Lets look at a simple example:

    Price of your widget = $10
    Volume sold = 100

    Revenue = $1000

    New price of your widget = $8 (reduction of 50%)
    Volume sold = 150 (increase of 50%)

    Revenue = $750 … you would need to sell twice as many units … an increase of 100% to achieve the same revenue you enjoyed before the price cut!

    This holds true regardless of how you cut prices. You can cut them through outright price reductions, by offering coupons or cash-back incentives, and by heaping services upon your customers in order to clinch a deal or cling to an existing customer relationship.  Remember that in an established industry there can only be one cost leader … in a mature industry in which competitors offer similar products based on similar technology and inputs, it may even be impossible for any company to achieve more than a slight cost advantage.

    The key thing to remember is that you are in a business to make money AND deliver a service.  Your customer wants to pay fair value for the services rendered and they realize that if you went out of business they would need to go elsewhere. 

    Customer Satisfaction

    Happy Customers vs. Satisfied Customers

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    Choosing your customer – if you had a choice, would you pick a satisfied customer or a happy customer?  Well, first you need to understand the difference between these.  Neither of them are unhappy with you, your product or service so what differentiates them?

    What is a satisfied customer?

    You could say that they that felt OK after dealing with us. Their needs were met. The service was OK. The experience was OK. They are satisfied (even happy) with their “purchase”. They may or may not talk about their experience with others. They may or may not refer someone to us. Their overall feeling is between neutral and positive and their experiences with us have not been negative or disappointing. As we can see this is good but NOT great. This customer can also be satisfied with our competitors.

    What is a happy customer?  

    This type of customer feels GREAT about dealing with us.  Their needs were met and/or exceeded. The service delivery was GREAT. The experience was GREAT. They will talk about their experience. They will proactively refer someone to us. Their overall feeling about us is wonderful and their experiences have been memorable. 
    Satisfied Customers Tell Three Friends … Pete Blackshaw 

    Now I think if I was to ask you that question again, the answer would be fairly obvious – but the question that still remains is why is the happy customer better for us and our business? The satisfied one isn’t going anywhere after all?

    The simple answer is referrals and word of mouth.  Happy and loyal customers are the ones that think of us first when they have a need that must be met and perhaps of even more importance – they tell their contacts about how great we are also!  Studies have shown that for businesses with a focus on Customer Service, new business through referrals amount to 20% of all new business generated!
    While the saying goes “there is no such thing as bad advertising”, obviously good (& free) advertising from loyal customers and advocates is better.

    Service Matters – Learn What Works!