Technology has leveled the playing field for small-to-medium businesses (SMBs), removing traditional barriers and improving efficiencies at every turn, from product development to finance. But while the digital ecosystem makes it easier to attract new customers, it has fundamentally changed the rules of customer retention.
It’s not enough to simply deliver quality products or services, or provide good customer service or interaction. Companies need to anticipate customer needs, offer a seamless experience at every stage and put the needs of the customer at the center of everything they do. In other words, SMBs need to prioritize customer experience.
The challenge, particularly for smaller enterprises, is understanding where customer experience should fit into an organizational chart. The short answer is: It shouldn’t. Customer experience isn’t something you can patch on to a business plan; it should be the common thread that links all areas.
With the right processes and technology, SMBs can not only deliver a more cohesive customer experience, they can also see where they stand with their customers in real time – and respond appropriately, whether that means addressing the needs of one customer, or shifting a product or strategy to better meet the needs of an entire segment.
In fact, 80% of a company’s future profits are likely to come from just 20% of existing customers, according to the Gartner Group. Here are three reasons it pays to prioritize customer experience – and how you can start.
For better or worse, the digital ecosystem has made it easy for consumers and business-to-business clients to compare prices and read customer reviews. While this creates a more transparent marketplace, it means that, increasingly, companies are no longer in charge of the buying journey.
One exception is customer experience. While it may not always be possible to compete on price or sidestep a poor review, SMBs can still control the quality of customer experience.
In fact, companies that have a 360-view can even take steps to turn angry customers into loyal ones. For example, in a recent study published in the Harvard Business Review, when airlines responded to customer complaints on Twitter, those customers were willing to pay nearly $9 more with that airline in the future. Post-purchase, they were also more likely to recommend the brand to others – as measured by the Net Promoter Score of -100 to 100 – increased 37 points.
Notably, this wasn’t just true for complaint touch-points. When companies responded to customers who tweeted a positive comment, customers indicated that they would be willing to pay $28 more for a future airline ticket.
Best-in-class companies understand the importance of staying a few steps ahead of the marketplace by developing products or delivering services that answer customers’ needs and contribute to overall experience. What's the best way to understand customer expectations? Create a strong connection and experience through stellar customer interaction. An example of an SMB that delivered this type of customer experience strategy is Flipboard.
By linking third-party data with its own customer data, news and social media aggregator Flipboard was able to gain a far deeper understanding of its users’ interests, which in turn helped the company suggest targeted, high-quality content to readers. Just as importantly, they gained insight into purchase intent – information that is invaluable for advertising partners – and behavior. For example, Flipboard discovered that use swelled between 9:00 p.m. and 10:00 p.m., a period the company dubbed “personal prime time.” The upshot: Flipboard has grown to be one of the top five news platforms in the world, amassing over 100 million readers per month.
SMBs that are able to engage with their customers not only improve retention, but they also get a clear window into what their customers need and want. That kind of insight has always been valuable – but in today’s fast-changing marketplace, this facet of customer experience is critical.
Most SMBs understand that it is typically far more cost effective to keep an existing customer happy than to try to win over a new one. Even so, many neglect to appreciate the implications of customer retention strategy. A frequently-cited study by Bain & Company found that increasing customer retention rates by 5% increased profits by anywhere from 25% to 95%, depending on the industry.
Yet, many SMBs put retention on the back burner and focus on acquisition because many prioritize share-of-market growth metrics. What they may not realize is these metrics depend on meeting and exceeding expectations at every stage of the buyer journey. Not getting retention right is like having a hole in the bottom of the bucket. Again, that’s where holistic customer experience comes in: The right processes and technology solutions start to bring all the pieces together for a great customer experience, no matter where a customer is on the journey.