The Customer Experience: How To Wow Your Customers (PART 9)
TRANSCRIPT: Alright, goal number five on these five simple lessons, our goal should be customers for life. Remember the slide from earlier, according to Bain & Company it costs six to seven times more to acquire a new customer than to retain an existing one. In other words, the experience doesn’t end once they’ve paid you because it costs me more to get new customers. You need to have a goal of customers for life, and how you do that is you focus on service before, during and after the sale.
Let me give you a before the sale example. Tire Rama is a tire store up here in the Pacific Northwest. I first encountered them about 21 months ago, I’d never been there before but they happen to be the closest tire store to my house, and I had a slow leak in one of my tires. I’d never done business with them before, but the slow leak got to be a hassle so I just went there to get a plug. I took the vehicle there, I sat and waited for, it was no big deal to wait, and when they came to me, they said, “Mr. Stauning, your car is ready.”
I got up, I got my credit card out and they went through what happened, I thought they were going to tell me tthey put a plug in. They said actually there was a problem with the rim, the bead wasn’t right, so we had to reset that. I don’t know, I’m not a tire guy. They did what they needed to do. It’s holding air perfectly now. It has been for 21 months. Here is what happened, I had my credit card out, they asked me to sign here and then they said, “No charge.”
I said, “But I didn’t buy the tires here.” They said, “That’s okay, it’s no charge. We fixed it. I said, “What if you had to put a plug in it, I’d say it would have been no charge.” I was fully expecting to pay $35 for the visit and had they said 50 or 60, I’d have been okay because it was convenient, I got it done, but they said, “No charge.” They didn’t know if I’d ever be back there again, but it didn’t bother them. They just said, “No charge.” That was a service before the sale.
Since then in the last 21 months I’ve spent over $4000 with Tire Rama on my family’s five vehicles. I have three sons who drive plus my wife and myself, five vehicles. We spent over $4000 on tires, on service, on oil changes, we get all of our oil changes there. Everything we do with our vehicle, we go there first. In fact when I went to that Ford store with my F-150, the only reason I did is because they couldn’t service the transmission on that year F-150. They didn’t have the right equipment, and they were honest about that. That’s service before, during and after the sale.
Let’s talk now about service during the sale because that’s everything we’ve talked about so far. It really is, remember number one, treating your customers like orphans, treating your team like volunteers, volunteers and orphans. How about number two? Always expecting them. Number three, we are going to make it convenient. Number four, we are going to manage expectations. That service during the sale was four things we talked about.
We talked about service after the sale, there is some industries like autos, RVs, furniture, appliances that you got either some sort of delivery or some sort of after the sale function built-in. In cars it’s F&I and service; in furniture it’s delivery, appliance has delivery. There might be warranty service with those. How you treat me after I’ve paid you is more telling than how you treated me before.
Let’s look at somebody who is not a customer for life. This is an actual review, now I took out all the names of the salesperson and the F&I manager and the dealership because I don’t want to embarrass anybody, but something as simple as returning a phone call can keep a customer for life. This dealer is just shooting themselves in the foot after the sale. They said, with the name there they said, they gave a one star review on Yelp. They said, the name of the salesman, he said, “Bob was great, but our finance contact,” and they gave his name, “was terrible, he is unresponsive.” They said that he won’t return calls.
Here was the deal. They had to change the deal from one credit union to another. Now the client was expecting this credit union and they got to change to this credit union. Had they told the customer in advance, had they managed the expectations? Then after the sale, had they just returned phone calls, this could have all been resolved.
Remember, it costs six to seven times more to get a new customer than to keep an existing one. If this is your guy, you should fire him. He is not doing you any good, he is costing you too much money because I don’t care how much money he is making for me in F&I, those people are never coming back and they are going to tell nine to 15 people, and they went online and told everybody. Remember, four negative reviews online can equal a 70% reduction in new business.
Let’s not invent issues for our customers. That dealer’s finance guy, he invented an issue. Also for convenience sake, there are some idiotic retailers, Massage Envy comes to mind that allow third parties, and I’ll explain this in a minute to send their customers pre-collection letters when their credit card on file has expired. Someone in the automotive industry discovered this when he got one of these letters and he posted on LinkedIn, and I’d seen this before, but I hadn’t realized that this happened to other people.
Massage Envy, and maybe it’s not true today but it was true, it’s true as of this recording. When you put your credit card on file and you are a member of their service, I assume they provide massages. When you are a member of their service and your credit card is about to expire, your credit card on file and they can no longer charge you, instead of calling you or sending you an email and telling you your credit card is about to expire or the next time you visit, “Hey, your credit card on file is about to expire. Can you give us your new one?” They let a third-party company send pre-collection letters that look like you’ve been turned over to a collection agency. This is insane. What the heck are they thinking?
You’ve got to provide service before, during and after the sale. They are inventing an issue to make their customers unhappy. One other thing about after the sale issues is your loyalty programs. See bad loyalty programs, in that more issues. You are better off not having a loyalty program if it’s not going to be a good one.
Now the good news on loyalty programs, 69% of millennials belong to a loyalty program, and 70% of those are happy with the programs they belong to, but there is three things that they are looking for. They are looking for it to be simple, they want the loyalty program to be transparent. It means they understand what’s going on. Number three, it’s got to be worthwhile.
Does your loyalty program help you create customers for life after the sale? Ask your frontline employees to explain the company benefits of the plan? Go right to your frontline people who, the people who stamp the card or whatever. Ask them, “Hey, tell me how the company benefits from this loyalty program?” this card or whatever. Then ask them to explain how the customer benefits from the plan, and then ask them how easy the rewards are to redeem. Finally, ask them how valuable these rewards are to the customers.
If your loyalty program is not working, if you find your rewards program is a lot of smoke and mirrors, it’s losing you customers. Or if it requires a lot of hoops to jump through with lots of fine print, then you’re losing customers. Consider abandoning, completely abandoning your loyalty program or drastically revamping it. See, the goal again is customers for life.
Now we talked about convenience in number three, the focus on convenience, we talked about returns, but it’s also a fit here as well. Do you want customers for life? Then ask yourself, how easy is it for people to return something to me? Do you have this sign up in your business? No returns or refunds, all sale is final. Boy, that is a, don’t do business here again sign if I were selling.
See, because of online retailers like Amazon and Zappos, now Walmart with all these hassle-free returns, it’s important for all businesses to act this way. If your policies are intended to save you money and not to wow the customers, you’ll always be fighting an uphill battle, you’ll always be spending money to get new customers. Finally after the sale, let’s file this one under either, let them know you are in it for them or the little things that matter.
The Journal of Applied Social Psychology, they published a great study, you’ve probably seen it, but I’m going to go through it again. Researchers tested the effects that after dinner mints had in order to measure their effectiveness, the mints’ effectiveness of increasing tips. They studied four groups of diners over a period of time. Now the first group of diners, they got no mints, the first groups that they were studying got no mints with the check.
The second group had the waiters quietly including mints with the check. This grew tips by 3% over the no mints group. Just including mints with the check grew tips by 3%. The third group had waiters bring out two mints per person by hand separate from the check and then mention, “Would anybody like some mints before they leave?” This grew tips by 14%. The final group, the last group had waiters bring out the check along with a few additional mints. A short time later the waiter would come back with more mints letting the customers know they had brought out some more mints just in case they wanted the extras. For this group, waiters saw an increase of 23% in tips over the no-mints group.
Think about this, this contrived follow-up after the sale of giving out extra mints and saying, “Hey, look at me, look what I just did.” That appeared as genuine to the customer. This act created a connection with customers as the waiters appear to be going above and beyond. Ask yourself, in our business where can we replicate something like this? Where can we replicate something as simple as mints that would make people want to give a tip that’s 23% higher than they normally would?