The Missing Marketing Channel Costing You Sales
There are a number of marketing channels your business should be using based on your ideal customer and their journey. Most companies are using a web site, social media and paid search.
However there is a channel that many companies aren’t including in their marketing mix and that is customer service.
Yes, customer service is a marketing channel and not using it properly is costing you dollars both in increased revenue and in wasted marketing expenditures.
You want to grow your business, but you feel like you’re on a treadmill constantly trying to acquire new customers. You’re spending money on marketing, but for some reason… your business just isn’t as profitable as you would like it to be.
Here’s the thing…
Even with great marketing and an acquisition funnel that brings in new business, your goal should be to keep as many customers as you can – for life—if possible. This allows you to spend the same amount in marketing but see your business grow exponentially. In other words, to grow a sustainable business that provides increasing ROI and stands out from your competition, you need to provide exceptional service to your existing customers.
With many similar products and services on the market, creating an exceptional customer experience is one way to differentiate your brand. In fact, the majority of companies view customer experience as a competitive differentiator and will prioritize it over product or pricing, according to a survey conducted by SuperOffice. And you’re probably already aware you need to provide great customer service. Makes sense, right?
Yet, here’s the reality…
Most businesses focus the majority of their efforts on customer acquisition. And react to customer issues as they arise. And responding to customer service issues is part of it, but it’s not all of it. What makes a business more profitable in the long run is to be intentional and proactive about customer service.
Why?
Hard Dollar Costs of Poor Customer Service
Because you can’t “wing it” when it comes to customer service. You need a plan and a process. Just one bad experience and you can lose a customer for life.
So, what’s one customer in the grand scheme of things? You could just acquire a new one tomorrow, right? Turns out, it doesn’t work like that. You have to consider the total impact that one customer can have on your business. To do that, look at a “customer’s lifetime value.” HubSpot defines customer lifetime value as the “metric that indicates the total revenue a business can reasonably expect from a single customer account. It considers a customer’s revenue value, and compares that number to the company’s predicted customer lifespan.”
HubSpot goes on to explain how to find out what that number is in your business:
1. Calculate average purchase value.
2. Calculate average purchase frequency rate.
3. Calculate customer value.
4. Calculate average customer life span.
5. Finally, calculate the customer lifetime value.
What you’re left with is the amount you stand to lose if just one customer walks away because of a bad customer experience – not to mention the others that walk away from talking to that one customer. On the flipside, if you’re spending money on marketing to acquire a new customer, you can see from this calculation that the value you’ll receive over the life span of that customer is way more than what you’ll spend to acquire them.
Good customer service and a customer experience mindset builds upon the investment you make in marketing. Just look at a few of the stats cited in this Forbes article:
·A customer experience mindset can drive revenue 4-8% higher.
·84% of companies that work to improve their customer experience report an increase in revenue.
·Brands with superior customer experience bring in 5.7 times more revenue than competitors who lag in customer experience.
·Customers switching companies due to poor service costs U.S. companies a total of $1.6 trillion.
· Offering a high-quality customer experience can lower the cost of serving customers by up to 33%.
·70% of Americans have spent more money to do business with a company that offers great service.
It’s clear that making customer experience one of your differentiating factors can pay hefty returns to your business. Just look at others who’ve built their business on great customer service.
Who’s Doing Customer Service Right?
I hate to say it, but many companies have sacrificed customer service in the name of getting more customers. So many businesses think that all they need are more clients and all they need help with is prospecting – that those are the answers to saving or growing their business. But in my experience, that’s not usually the case. If they aren’t taking care of the customers they have, why do they need more? Many times, the reason they constantly need help finding new clients is because they aren’t giving any attention to keeping the ones they have. It’s like trying to fill a bucket with a hole in it – a losing battle. And while there are probably plenty of horror stories we could tell about customer service experiences, I bet you remember the last time you had an exceptional customer experience.
Some companies, like the ones below from the list compiled by HelpScout, consistently provide these types of experiences for us to learn from:
Trader Joe’s: This grocery store chain’s employees are given the freedom and flexibility to make a decision on the spot or to do what’s right for the customer.
Rackspace: This cloud-infrastructure company proves it doesn’t cost much to live a “fanatical support” approach to business.
Ritz-Carlton: The luxury hotels and resorts show how important it is to stay emotionally connected to the happiness of your customers. If you consider them irreplaceable, they’re likely to feel the same about you.
Wistia: The video-hosting platform can teach us that sometimes you have to make difficult decisions based on what will work best for your customers and how you can ensure that you help as many customers as possible.
So, how can we be more like THESE companies and less like those that simply react when something goes wrong and STILL often come up short with their customer service?
Enter: “Retention Marketing”
Retention marketing is that plan and process I spoke about earlier. It’s an intentional way to retain existing customers by providing an exceptional experience. If we refer to the Alexa blog on retention marketing, they define it as a strategy that markets to existing customers. It focuses on winning back and keeping customers. By this point, you probably see the value in doing this.
We know there is a direct correlation between good customer service and your bottom line. And poor customer service can mean that you’re wasting dollars spent on marketing campaign. And even great marketing can’t save a company with poor customer service from struggling.
I’ve made proactive customer service part of the discussion I have had with former clients over the years. We dove into questions like:
1. What is your new customer on-boarding experience like?
2. What additional information to your provide to the customer after the sale?
3. Who do you have dedicated to customer service after the sale?
4. Is customer service handled via email, phone, or both?
5. Do you have a real person responding or just an artificial intelligence (AI) bot?
6. How long does it take someone to respond in your organization?
7. Is the person empowered to make immediate decisions?
8. What’s your customer service training like?
In working with marketing clients over 20+ years, I’ve found that if you only concern yourself with acquisition marketing and neglect your existing audience, you run the risk of losing customers and therefore, never making any real forward progress in your business. And as a result, losing money.
In the Alexa blog’s Complete Guide, they state that retention marketing is proven to boost revenue while using fewer resources than acquisition marketing. They also point to a number of sources that back this up with cold, hard numbers, including:
·Increasing customer retention rates by only 5% can if increase profits by 25% to 95%.
·Brands have a 60%- 70% chance of selling to an existing customer versus only 5% to 20% chance of selling to a new customer.
·87% of customers who say they had a great experience will make another purchase from the company.
·Loyal customers are 5X more likely to purchase again and 4X more likely to refer a friend to the company.
Here’s the best part and where you can really ramp up your ROI when you put your efforts towards customer experience. Happy customers who got the results they were looking for… will tell others about it. They will become ambassadors for your brand. And we all know there’s nothing better than word-of-mouth marketing. You can talk ‘til you’re blue in the face about how great your business is, but if you can get your current and past customers to sing your praises, you’re much better off. Because people are more apt to believe what others say about you.
The bottom line: If your customers have a great experience with you, they can become your most effective form of marketing.
To wrap things up…
Committing to customer service is part of the brand story you’re communicating to your customers. And if you have a plan and process for good customer service…
You can rise above your competition.
You can blow past average.
You can get over any plateau and take your business to the next phase in 2021.
I include customer service best practices in my speaking engagements. Contact me for your next event or conference.