Short term strategies to try and meet monthly KPIs are severely affecting the longer term performance of many businesses.
This approach according to Chris Bell New Zealand’s leading customer experience designer and coach fails to recognise that these strategies have a significant impact on business growth and profitability.
Customer loyalty is on the decline, New Zealand’s productivity is near the bottom of the OECD rankings, customer word of mouth has become more powerful than any other form of advertising driven by the internet and social media. Due to increasing commoditisation business is finding it increasingly difficult to develop a sustainable competitive advantage.
All this according to Bell is driving an increasing focus on price with the resulting negative impact on margins and profitability.
If businesses started to capture numbers on the impact of these vital areas of business performance (customer loyalty, employee disengagement, cost of staff turnover, negative word of mouth), Bell believes there would be a much greater focus on improving these areas. This would result in the development of strategies designed to build a more holistic approach to improving business growth and profitability.
The examples below illustrate the importance of focusing on non financial drivers for business success.
The value of customer loyalty
50% of satisfied customers and 25% of very satisfied customers are doing business with a competitor
The value of positive word of mouth
83% will act on a recommendation before any other form of advertising
Loyal customers are 50% more likely to recommend than satisfied customers
The damage of negative word of mouth
Businesses that have not met customer expectations will tell on average 8-10 other people - Colmar Brunton and many more via social media
It takes 5 positive experiences to counter 1 poor customer experiences – Colmar Brunton
The value of capitalising on your creativity
The most important leadership quality was “creativity” - survey by IBMs Institute of Business Value
Higher engagement &productivity
The value of increased employee engagement
Top trend- employee/employer relationship changing to a partnership
Acquiring and keeping key talent a priority
People have become the primary source of competitive advantage
80% of market value today comes from the intangible
You can copy products & services but you can’t copy people
High engagement = high growth
Higher sales goals
The savings from low staff turnover
Lost productivity costs
Towers Perrin published research –
Income improved 19.2% from high engagement
Income declined 32.7% from low engagement - over same sales period
Increased engagement = high customer satisfaction
Attracts and retains high performers
The value of a sustainable competitive advantage
Competitors don’t have it
Competitors don’t know how to get it
An investment to develop it/not a cost
Good marketing investment
Customers do the work for you
For those businesses that would like to adopt a greater focus on their customer experience as a way of differentiating themselves from competitors Customer Experiences has just launched a unique free customer experience development programme www.customerexperiences.co.nz
Chris Bell is managing director of Customer Experiences, a company that specialises in helping businesses improve the way in which they interact with customers and clients. – firstname.lastname@example.org; mb 027 2792360 www.customerexperiences.co.nz