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Agrimarketing : November December 2009
November/December 2009 Agri Marketing 47 Last issue we introduced the con- cept of Net Promoter. Customers are asked if they would recom- mend you to a friend or colleague. Based upon their responses they are segmented into Promoters, Passives and Detractors. A Net Promoter* score is determined by taking the percentage of Promoters minus the percentage of Detractors. The higher the score the stronger your relation- ships with clients. Today consumers have an abundance of choices in every cate- gory. In response to this competitive environment businesses have sharpened their pencils to develop a strong array of quality products at competitive prices. However, if price and quality are quite similar what is it that makes some customers become Promoters of your business and others Passives or Detractors? How people feel about your business is based upon their total experience with your organization. Think about a time when you bought something and later swore to friends and family never to do business with that organization again. This may have been due to a fault with the item itself. However, in many of the examples we hear the item itself was fine. It was the way people were treated that made them so determined to never patronize that organization again. So, if customer experience is a key to long term customer loyalty, how are businesses doing when it comes to delivering a superior customer experience? In 2005, Bain and Company interviewed 362 businesses asking them if they provided a superior customer experience. As illustrated in the table, 80% of these organizations said yes. However, when the customers of these companies were asked if they received a superior customer experience, only 8% of them said yes. We call this the Experience Gap, the chasm that can exist between the experience companies think they are delivering and what cus- tomers feel they actually receive. Companies that understand that this gap exists and are committed to finding out how they can narrow it, are on the road to creating more Promoters and improved customer relationships. Customers interact with your company on many levels. Some companies tend to focus all their attention on the representa- tive. While your rep or account man- ager is a vital component of the cus- tomer experience, so are many other parts of your organization. How accounting handles billing, how shipping handles delivery, the quality of follow up by technical and service staff right down to the ease of use of your web site are all points of customer contact. All these and more are opportunities to create positive, or negative, customer experiences. People genuinely have a challenge in telling you which experiences actually impact their loyalty. Put another way, there is a second gap. This one is between what people say and what they actually do. For that reason it is important to look at people's behavior rather than their opinions. We ask customers to rate a company on a series of experiences and then correlate these with the customer 's actual sales data. In that way we can determine which experiences are having the most influence on repurchase, and help companies determine where to focus their efforts to improve the customer experience in a meaningful way. Understanding why customers behave the way they do is vital if one is to develop strategies that are meaningful to unique customer segments. The experiences that are most important to Promoters and their ratings on your company's performance are likely to be different than those of Passives or Detractors. In today's hypercompetitive markets delivering a superior customer experience is the best strategy for developing a loyal clientele. Whether you are a manufac- turer or an agency, a distributor or a retailer the old adage of treating peo- ple the way you'd want to be treated has never been more powerful. AM * Net Promoter is a registered trademark of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld. In a survey of leading companies, 80% of respondents said they "delivered a superior customer experience." Only 8% of their customers felt they received a superior experience. This Experience Gap has significant implications on customer loyalty. DIRECT/RELATIONSHIP MARKETING: CUSTOMER RELATIONS ... PART TWO OF A SERIES WHAT INFLUENCES LOYALTY? by Perry Graham 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Customers Companies 80% 8% The Experience Gap Perry Graham is a partner in Experiata, Inc., a marketing consulting firm specializing in the customer experience. He can be reached at perry.graham@ experiata.com. Graham
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