Look, no one’s perfect.
All companies make mistakes from time to time. Fail to live up to expectations.
But the fundamental business question is — what next? Because we all know it’s cheaper to keep a current customer than gain a new one.
In this week’s customer-first marketing chart, we dive into the issue of customer loyalty as we explore how to get customers to give your company a second chance.
Read on for research-backed data, along with analysis and commentary from Andrea Riley, Chief Marketing and Public Relations Officer, Ally Financial, and Jonathan Furman, Founder, Furman Transformation.
As seen in the MarketingSherpa Chart of the Week newsletter. Click to get a free subscription to the latest research and case studies from MarketingSherpa.)
In October 2016, we asked a demographically representative sample of customers questions about marketing and how it affects their views of the companies they do business with. We asked half of them to tell us about a company they were satisfied with, and the other half to discuss a company they were unsatisfied with.
This week, we look at how likely consumers were to Continue to shop with the company and hope that they do a better job next time when asked … When [company name] makes a mistake and fails to meet your expectations, how likely are you to do the following?
To see 34 more charts from the study, download the free report.
Customer Loyalty and Mistakes: The vast majority of satisfied customers will give your company a second chance
As we’ve previously published, unsatisfied customers are far more likely to say a company doesn’t practice customer-first marketing than satisfied customers. In fact, it was their most frequent response when asked about a company’s marketing.
And it’s a valuable thing to get those satisfied customers with customer-first marketing because four out of five satisfied customers (82% to be exact) will keep shopping with a company and give it another chance if something goes wrong — 40% of satisfied customers said they were very likely to keep going with the company, and 42% of customers said they were likely to stay loyal.
“I believe this data is an eye-opener if nothing else. On average, in my business and line of work, it is approximately 5-10 times more expensive to acquire a new customer, as it is to retain an existing customer,” said Jonathan Furman, Founder, Furman Transformation.
“Based on the findings shown, it is clear, and not surprising, that customers who received a high level of attention and ‘customer-centricity’ tended to become much more malleable through inevitable hiccups and poor circumstances of day-to-day business,” he said. “This has been demonstrated and shown time and again with my clients and seems to be a universal truth whether you are a B2B- or B2C-oriented company.”
“The data highlights the need for improved customer relationships and customer-centricity,” said Andrea Riley, Chief Marketing and Public Relations Officer, Ally Financial. “Additionally, this data shows us that quality matters deeply to customers. Whether it be a product, service or communication exchange, marketers should ensure that customer expectations are pleasantly exceeded at each touch point, leveraging every opportunity to build credibility and loyalty.”
Building a customer-first mentality
You can use this chart to help make the business case for creating a unique value proposition focused on putting customer needs first with your marketing — and your entire business.
That was Ally’s intention. “When Ally launched in 2008, the world did not need another bank, it needed a better bank; a bank that was truly focused on customers,” Riley said.
Banks, and the financial industry in general, are known more for obfuscation than clarity. A long and confusing set of terms and fees, for example.
Brick-and-mortar banks tend to overcome this complexity and build trust by having physical locations with big, thick metal safes, rich dark woods and polished stone floors.
Well online banks can’t use cherry wood or granite flooring to convey trust. But they can discover what their customers want and communicate it through customer-first marketing. When Ally was born out of the former General Motors Acceptance Corporation (GMAC), even the name reflected this new approach.
“Standing by our commitment to doing right by our customers, we examined their pain points and formed an identity that put the customer first in everything we do, serving as their ‘ally.’ It was a disruptive approach, but it worked because we listened and acted entirely based on the needs of the customer,” Riley said. “In doing so, we created a loyal following of people who were willing to bank online with us (some of them for the first time, ever) and willing to overlook some of the bumps in the road because they knew we were focused on trying to do right by them.”
Continually optimizing new and existing customer relationships
Customer-first marketing doesn’t stop with a brand launch, of course. It’s a continual cultural, operational and messaging process. And these processes can always be further calibrated to increase customer intimacy.
“Marketers should first examine their brand identity and processes to see if they are truly putting customers first at each touch point and phase of the customer journey,” Riley said.
If not, you have identified an area of opportunity to build deeper, stickier, more authentic relationships with customers, she said.
But brand and process are only part of the equation. The actual product — and how it meets customers’ wants and demands — is important as well.
Sometimes this requires proactive attention before the customer is even aware of a problem. “For some of my clients in the ‘wearables space’ it is not uncommon to do an entire recall of any given version if there is found to be even a minor bug affecting the product. This shows proactive engagement with the customer and leaves them with a feeling of strong appreciation and of being in good hands,” Furman said.
But listening to your customers is crucial as well, because sometimes you aren’t even aware of a problem. After all, you know your products so well that you often experience them differently than your customers. “At Ally, we find that feedback from customer-focus groups is extremely important as we navigate different challenges and opportunities,” Riley said.
Another way to learn from your customers is through behavioral experimentation by using A/B, split or multivariate testing and letting customers tell you what works (and doesn’t work) for them by their actions in real-world customer situations. You can use focus groups to build hypotheses and then test your opinion of what works against what customers tell you.
Think that headline is so clever or that offer is so promising? If you split test it against a customer-derived treatment and test results show your control gets lower conversion, you will quickly discover a more effective — and likely more customer-first — approach to your marketing.
How to Assess Your Loyalty Program - 6 Steps (from the MarketingSherpa archives)
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