People call them “satisfied,” “loyal,” or “happy campers,” we call them “Fully Engaged.” All of us are referring to a customer who loves doing business with you.  And whatever you choose to call them, the point remains - positive experiences create happy customers, and dissapointing experiences create a substantial lost opportunity.

This insightful infographic by KISSmetrics blends research from Gallup, Harris International, PeopleMetrics, and others to create a beginner’s guide to the value of great customer experiences.

(click here to view the complete infographic)

To learn more about how we help clients create Engaging customer experiences check out our 2010 Most Engaged Customers Study.

There are certain moments of truth in any retail purchasing experience that heavily influence customer engagement. Strategy gurus recommend mapping out every touch point where customers interact with a company in order to understand the customer experience throughout the purchase cycle. A Voice of the Customer program can help you understand how engagement ebbs and flows during the three phases of a customer’s life-cycle described below.

Pre-Purchase

Your brand reputation precedes you. The customer life-cycle begins long before a customer actually sets foot in your store. Companies often rely on advertising to influence customers in the pre-purchase stage. We have found that customer recommendations are the most effective form of advertising, since 90% of consumers trust recommendations from people they know (Nielsen, 2009). A strong customer engagement strategy for retailers should involve methods of encouraging current customers to provide recommendations.

Once they realize that they actually want a certain product, retail consumers begin researching their purchasing options. Of course, many of us make sporadic retail purchases, but it isn’t unusual for customers to carefully investigate the market. For instance, studies have found that 75% of consumers conduct in-depth research before purchasing electronics. The more positive reviews there are for your brand, products, and services, the more likely a customer in the researching, pre-purchase stage is to choose your company. Regularly collecting customer feedback will allow you to gather real customer comments on your products – share these comments with your marketing department to help them understand what Passionate Promoters love about what you have to offer.

Purchase

This is usually the most influential moment in the purchasing life-cycle. Although most retailers assume that price and product quality are the main drivers of the purchasing decision,  our research has found that these metrics are less “sticky” than emotional components. Customers have no qualms about hopping from brand to brand for a lower price or a better product. However, once they are emotionally invested in a brand, they are less likely to switch to a different company. In this sense, the moment of purchase is an opportunity to create a positive emotional bond between the customer and the employee delivering your company’s service or product.

Uplifting, exceptional customer service isn’t easy to deliver—in fact, it usually requires a unique solution for each company. Therefore, your customer engagement strategy should include a Voice of the Customer program, to help you understand how customers feel as they interact with your employees, and a Voice of the Employee program, to capitalize on insights employees can deliver about the customer experience.

Post-Purchase

Especially in this digitally rich age, customers have plenty of distractions. They are unlikely to think back on their experience with you unless you provide a reminder. This can be as simple as an automatically sent thank-you note, or as complex as following up large retail purchases with a personal phone call. For larger retailers, loyalty programs may be a fruitful method of encouraging repeat purchases. However, you can’t really know what kind of post-purchase care your customers want unless you ask them—that’s where a Voice of the Customer program comes in handy. From a customer engagement strategy perspective, the post-purchase part of the customer life-cycle is important because it is when you will gather the data that will drive your future as a retail company.

Additional Resources:
The Driving Factors of Engagement for Apparel Customers
Who Your Customers Trust, and How to Advertise To Them
The Experience Economy: How Today’s Consumers Choose Discretionary Spending

[photo: Baggu via andrewarchy at Flickr]

Lately, we’ve been focusing on the secret weapons at every company’s disposal: Brand Ambassadors (Extraordinary employees who provide stellar service) and Passionate Promoters (Customers who enthusiastically recommend your service to others).  Our Customer Engagement solution helps companies identify the extraordinary talent within their ranks, so as to encourage that kind of performance among all employees and earn more customer recommendations. Yet, from both an employee’s and a manager’s perspective, it can be difficult not to see customer service as little more than a job that just has to get done. Why should it matter when your employees stretch to above-average heights of service? As long as the customer gets what he or she expects, isn’t that enough?

Well, no it isn’t enough to merely meet customer expectations, at least not if you’re hoping to increase profits and attract more and more Passionate Promoters over time.  Here are two major ways exceptional customer service delivers different results than average service:

Customers Don’t Talk About Average. Average customer service means that only 16% of customers will recommend your company to others, according to our Most Engaged Customers study. On the other hand, 84% of customers who receive great customer service will recommend that brand. Word-of-mouth is the most trusted, most effective form of advertising. When your employees provide average, run-of-the-mill service, they fail to inspire customers to rave about your service or product to others.

Personal Recommendations Bring In More Engaged, More Forgiving Customers. Aside from the fact that they bring in new business, personal recommendations are important because of the kind of customer they attract. Not all customers are created equal—some are naturally more engaged, loyal, and likely to spend than others. Another interesting tidbit that our feedback management research has revealed is that customers who find a company through a recommendation are more likely to be engaged than customers who came through other channels. Furthermore, customers who followed personal recommendations to your company are more forgiving of service failures. In other words, these are the kinds of customers that every business leader hopes to attract.

When companies move beyond average service, customer engagement increases. And companies that increase customer engagement see higher stock prices, profits, ROI, and more. Bottom line? Your bottom line depends on getting employees to deliver extraordinary customer service.

The first step in making that happen is ensuring that you actually know what your customers think. 80% of companies describe the service they provide as “superior.” Yet only 8% of customers agree with that rating. Establish a baseline engagement level among your customers first, using a proven customer engagement model. Next, find the Brand Ambassadors within your staff, and study what they do differently to engage customers. Finally, grow customer love by training the rest of your employees according to what the Brand Ambassadors do. Our Voice of the Customer and Voice of the Employee programs can facilitate all of these endeavors, and help you see more customer recommendations and more engaged customers over time.

Additional Resources:
The Power of Customer Recommendations: Customer Engagement and Referrals
Who Your Customers Trust, and How to Advertise to Them
Customer Engagement & Business Outcomes

[photo: Billy Alexander]

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This post was provided by PeopleMetrics, a Philadelphia-based firm that provides a Voice of the Customer program to help companies engage customers. PeopleMetrics also offers Voice of the Employee programs to engage and energize employees.

Engaged Employees create Engaged Customers—it’s one of our mottoes. As we’ve written before, our research shows that engagement among employees is contagious—it quickly spreads to customers. Highly engaged employees foster more loyal, enthusiastic customers who are more willing to give referrals, go out of their way to do business with you, and increase spending. However, the flip side of this foundational equation is also true. Disengaged employees create disengaged customers. In this post we’ll focus on the negative impacts disengaged employees can have on your workforce and customer base.

First, let’s look at the current employee engagement landscape. Disengagement is definitely increasing. Worker loyalty is down–84% of employees plan to look for a new position in 2011 (up 60% from last year!). Just 27% of today’s employees are actively engaged. Our own research and others’ studies show that the number of Actively Disengaged Employees—those that are actively working against the growth and success of your business—is on the rise.

Now, let’s explore how disengaged employees create disengaged customers.

1. Disengaged employees’ negative emotions rub off on the customer.
Disengaged employees disengage customers by appearing uncaring and apathetic. That matters because, as behavioral psychologists tell us, 70% of purchasing decisions are emotionally-based. No matter what an executive decrees or an advertisement states about “Customer Care”, it is your customer-facing employees who ultimately create the emotional connection. If a customer detects negative emotions from an employee, he or she is far less likely to feel positive during the transaction. And far less likely to return for another disenchanting encounter.

2. Disengaged employees don’t solve customers’ problems.
Another way that disengaged employees create disengaged customers is that they fail to solve customers’ problems satisfactorily. Indeed, poor problem handling is endemic for disengaged employees. Because they don’t really care about the job they’re doing, disengaged employees are dismissive at best and downright rude at worst when responding to customer problems. Our Most Engaged Customers Study found that 31% of customers who faced problems and received poor problem handling were engaged, compared with a 48% engagement rate among customers who had a problem and experienced good problem handling.

3. Disengaged employees don’t go “above and beyond.”
Disengaged employees are the opposite of your Brand Ambassadors. Brand Ambassadors feel that their work connects with a greater purpose, their work means something and because of this they go above and beyond to delight customers.  Disengaged employees lack this connection.  Their apathy creates Actively Disengaged and On-the-Fence (read: quick to leave) customers. When an employee fails to go above and beyond, we’ve found that customers are three times more likely to be Actively Disengaged, and two times more likely to be On-the-Fence.

4. Disengaged employees create customers who spread negative word-of-mouth.
To the customer, front-line employees are the face of the brand. When the front-line employee is disengaged, rude, and uncaring, customers are more likely to spread negative word-of-mouth about the company. Think about the last time you got atrocious service from a nasty employee. You probably told at least a few friends, making sure to include the name of the company.

5. Disengaged employees sap your company of customer referrals.
Customer referrals are valuable to any organization. We’ve found that customers who come to your company through referrals are more engaged and more forgiving of service failures. In order to earn those personal recommendations of your brand, you must create exceptional service experiences, something disengaged employees do not do. Remember, 16% of customers who get average service will recommend you, while 84% of customers who experience great service will recommend you. Disengaged employees ensure that a customer will rarely find you remarkable and certainly not recommendable.

Given how clearly disengaged employees hurt a company’s performance, what should leadership do to combat disengagement? Well, a strong customer engagement strategy begins with a strong employee engagement strategy. Start by listening to your employees with a Voice of the Employee  solution and find out what their unique motivators are. Take employee engagement seriously and prepare to act on what you learn. Demonstrate that you care about your employees and you have taken the first step toward teaching your employees how to demonstrate care to your customers.

Additional Resources
Employee Effort: Moving Consumers from Loyalty to Customer Engagement
The Role of Emotional Intelligence in Delivering Authentic Customer Service
Measuring Customer Satisfaction: Our Best Practices for Determining Customer Love

Restaurants have a few advantages when it comes to customer service. Unlike in many industries, restaurant employees have the chance to interact personally with customers. This means restaurants have more opportunities to deliver a positive emotional experience to each guest. On the other hand, because it’s such a guest-focused industry, the bar for outstanding customer service is set a little higher in the restaurant arena. Therefore, restaurant managers and owners have more motivation to identify and replicate employee effort that engages and delights customers. In this article, we’ll examine the general customer service landscape in the restaurant sector. Next, we’ll take a look at the characteristics all businesses must exhibit in order to win high Customer Engagement, as our 2010 Most Engaged Customers (MEC) report revealed. Finally, we’ll zoom in on the “hot button” issues for customer engagement in the restaurant space.

PeopleMetrics found a 51% engagement rate among customers in all industries. However, if we limit the focus to only the restaurant sector, we find that 61% of customers are engaged. This implies that restaurant customers generally receive better service, perhaps because this is one of the last industries in which face-time is still common. However, once we break down those statistics according to each brand, we see a wider spectrum of scores, from 51% for McCormick & Schmicks, to 67% for Ruth’s Chris. In other words, some restaurants are more successful than others at creating a compelling customer experience.

What sets apart organizations with high Customer Engagement scores? What do they know about how to improve customer satisfaction? Well, it starts with a compelling business offer. Additionally, restaurants, like all organizations, must display consistent customer care that earns their customers’ trust.  Extraordinary, authentic employee effort is also key to engaging customers. These are the traits PeopleMetrics has found influences Customer Engagement, which in turn impacts such important business outcomes such as profit margins, share price, and ROI. (To learn more about these six traits for Customer Engagement, read our blog post, “Why the Ritz-Carlton is #1 in Customer Engagement: 6 Customer Love Factors in their Credo.”)

We have discovered a few “hot button” issues for restaurateurs, namely the business offer, consistency, customer care, and employee effort. (For a complete picture of our restaurant research, order a copy of our restaurant industry Most Engaged Customers report.) The compelling business offer at a restaurant might be superior food quality. One Ruth’s Chris guest gave insightful customer satisfaction feedback on the brand’s business offer, explaining, “There are no words to describe how good their steaks are. I don’t even want to try. And the desserts are heavenly.” A wide variety of menu choices and an enjoyable atmosphere are also viable business offers.

The most critical trait in the restaurant space is extraordinary extra effort from restaurant employees. As one Cheesecake Factory respondent put it, “They do everything in their power to make certain you have an outstanding time when eating in the restaurant. The staff is always helpful and friendly. They always seem to go above and beyond to make sure that everything is just right.” We have found that Engaged Employees foster engagement among customers as well. Some chains, such as Texas Roadhouse, engage employees through fun activities, including nightly in-house competitions and line dances in the dining room. Each restaurant is unique, so a strong Customer Engagement strategy begins with Employee Engagement research to determine what motivates employees. Ultimately, attentive, consistent, authentic service is what sets apart the restaurants with the most engaged customers.

Additional Resources
Replicating Brand Ambassadors through Recognize Alerts
How the Mode of Interaction Impacts Customer Engagement
Customer Satisfaction vs. Customer Engagement: Which Should You Follow?

[photo: Zoetnet]

Nearly every company watches rational market drivers such as price and product innovation. But today’s customers aren’t deciding how to shop based on these traditional, rational forces alone—they’re also highly influenced by their emotional experiences with a brand. Tuning into and appropriately responding to the customers’ emotional needs is a prerequisite for achieving Customer Engagement. Customer Engagement is important because engaged customers are the ones that stick around for years. They bring in new business with their ebullient recommendations. Ultimately, Customer Engagement boosts your organization’s profit margin, share price, and ROI. To fully engage customers, you must offer an exceptional buying experience, not just another product. But customers’ emotions aren’t one-size-fits all; in order to figure out what each customer wants, front-line employees and managers must have tools that help them maximize their own emotional intelligence.

Emotional intelligence is the ability to identify and appropriately respond to one’s own emotions and the emotions of others. In business, it is becoming more widely accepted that this intelligence has great influence in HR—many studies show, for instance, that emotionally intelligent teams are more productive. However, although many firms now offer trainings on how to get along with coworkers by growing Emotional Intelligence, few customer satisfaction programs train service reps and front-line managers how to read and appropriately respond to customers’ emotions. Empowering employees in this way is what separates the customer service wheat from the chaff, so to speak.

Daniel Goleman, the author who had the most influence in popularizing the concept of Emotional Intelligence, has addressed its relevance to business in his book, Working with Emotional Intelligence. He writes, “How customers feel when they interact with an employee determines how they feel about the company itself. In a psychological sense, the ‘company’ as experienced by the customer is these interactions. Loyalty is lost or strengthened in every interaction between a company and its customers.”

Goleman also examines the skills needed to earn loyalty (which is included in our Customer Engagement model). The most successful service reps, he writes, are emotionally intelligent enough to assess a customer’s emotions. They empathize and stay emotionally present so as to fine-tune their understanding of the customer’s emotional needs as the interaction continues. Finally, they are able to assertively (not aggressively) make suggestions according to what the customer wants. Instead of telling the customer how she should feel or what she should buy, which often leads to resentment on the customer’s part, the emotionally intelligent customer service representative can find a win-win outcome in which the customer finds the best product or service for her needs, and the company sees increased Customer Engagement and sales.

Such service is definitely beneficial in the long run, as many studies have shown. For instance, a L’Oreal study found sales agents selected for their emotional intelligence each sold $91,370 more annually than salespeople selected through the traditional hiring process. What’s more, the emotionally intelligent salespeople had a 63% lower turnover rate during the first year of employment.

To harness the power of emotional intelligence, hire with emotional intelligence in mind and provide tools for current employees to hone their emotional competency. Doing so will foster authentic, engaging customer interactions that will bring you business for years to come. PeopleMetrics has developed a real-time customer feedback dashboard to empower your front-line employees and managers to read and respond to customer emotions with empathy. Learn more at our Customer Engagement Management page.

Additional Resources:
How Long Term Customers Benefit Your Company
Customer Engagement vs. Customer Satisfaction: Which Should You Follow?
The Power of Customer Recommendations: Customer Engagement and Referrals

[photo: Jim Borgman]

Over the past few months, we’ve outlined the key findings of PeopleMetrics’ 2010 Most Engaged Customers (MEC) study, which analyzed over 15,000 ratings of 67 brands in 12 industries to establish a hierarchy of characteristics companies must demonstrate to achieve high Customer Engagement. We’ve talked about why Customer Engagement matters, and how companies with a compelling business offer, consistent caring service, customer trust, and extra effort from employees see the highest engagement scores. So far, we’ve created the foundation and core of our pyramid toward Customer Engagement. Now, let’s explore why genuine service sets apart “the cream of the crop” as far as Customer Engagement is concerned.

Dedicated, engaged customers, like all human beings, crave genuine interactions with others.  The findings of this year’s MEC study confirm what business gurus like Joseph Pine and James Gilmore have claimed for years: the customer experience is now where service companies must focus , and a genuine service experience is what the world’s top brands now deliver. PeopleMetrics’ research verifies that companies that create authentic relationships with their customers achieve higher Customer Engagement scores—which, in turn, leads to higher profits, stock prices, and a slew of other positive business outcomes.

What does authentic service look like? Our respondents made it clear that they’re looking for real smiles, active listening (including asking relevant questions), and eye contact. In general, authenticity falls into four categories:

Sincere, Honest, Helpful Service. As one Saks Fifth Avenue customer remarked in our survey, “You can usually tell when people are being ‘fake’ in their compliments or interactions. The employees [at Saks Fifth Avenue] seem very genuine and sincere.”

Real Smiles. A Trader Joe’s customer expressed this customer desire well, saying, “Their eyes as well as their actions smile. Their voices are friendly and even when they’re busy they acknowledge me so that I know they are aware of my presence without being rude to anyone else involved.”

Recognize and Know the Customer. We all want to feel special, and employees who know customers by name foster higher engagement.  One Costco customer explained, “Yes, they all recognize me as being a Costco member…in fact, some of the employees that were in one location where I first joined recognize me and they know I have been a member for many years.” A Cartier customer put it more simply: “[Cartier employees] always know my name and address me as a friend.”

Cares as a Friend Would. Many would scoff at the idea of a corporation being a consumer’s friend, but companies with the highest Customer Engagement scores indeed do form friendships with their customers. One Progressive customer expressed it this way: “When you call on the phone, they seem like they actually care about your particular problem or concern. When they deal with a claim, they consider what you want to do, as well as what their opinion may be. One car I had was involved in an accident, and I so wanted it fixed. The adjuster went out of his way to try to make this so for me. In the end, the car did have to be totaled because the frame had been bent. But, he really seemed genuine in his concern for my wants.”

Abraham Lincoln once said, “Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing.” Many market research firms focus on improving the shadow (a company’s reputation), without thinking about how to how shape the tree (the service patterns informing that reputation).  Measuring customer satisfaction isn’t enough; leading companies also need tools to design customer-centric processes. Unfortunately, very few customer feedback management guides include tools for translating survey results into increased organizational authenticity. PeopleMetrics’ feedback management software helps our clients achieve authenticity, the pinnacle of Customer Engagement.

Additional Resources:
Why the Ritz Carlton is #1 in Customer Engagement: 6 Customer Love Factors in Their Credo
Customer Engagement is the New Competitive Advantage
5 Fatal Mistakes in Customer Engagement Surveying

[photo: McD22]

Science has shown that humans remember information better when their emotions are involved. As early as 1890, psychologist William James observed that emotions “leave a scar upon the cerebral tissue.”  Since then, the number of studies on the connection between emotion and memory has skyrocketed. Only a small fraction of the business world, however, applies this widely accepted psychological concept to customer service programs. When a customer has an emotionally pleasing experience, it almost always goes to his or her long-term memory. Of course, the opposite is also true: an emotionally traumatic customer service experience won’t soon be forgotten. PeopleMetrics’ 2010 Most Engaged Customers study verified that service failures stick like glue in customers’ memories.

To further break down the connection between emotions and Customer Engagement levels, we must examine the influential role trust plays in building Customer Engagement.  A brand must build up reserves of trust in order to create satisfied, loyal, engaged customers in the long-term. However, trust is one emotion that can be built or lost in a flash. Just one five-minute interaction might be enough to entrust a customer to your company for years to come—or to demolish any trust they had in you, and even drive them to complain about you to friends and family.

Many of the more than 5,000 customers interviewed in the Most Engaged Customers study brought up service memories from years long past. For instance, one respondent reminisced,

“A few years ago at the White Plains (Westchester Mall), I was dissatisfied with the quality of a meal…No problem, no charge, and a credit for a free lunch for two at any café in the Nordstrom chain. Again, these are the kinds of things that build customer loyalty.”

Customers’ memories of emotionally negative experiences are also elephantine:

“I would not trust management with any decision at that store [Sam’s Club] from one shopping experience I had there three years ago.”

Companies can take advantage of the fact that customers never forget by selecting customer service programs and customer feedback management programs that speak to and measure emotional responses. Winning trust and building Customer Engagement also require that companies commit to a systematic service recovery and complaints handing process. Ideally, companies should be able to measure and respond to customers’ emotional interactions with their brand in real time. Make sure your customer satisfaction surveys are capturing the emotional facet of your customers’ experiences.

Additional Resources:
The Two Routes of Building Customer Trust
Customer Engagement vs. Customer Satisfaction: Which should you follow?
Benefits of Responding Immediately to Customer Feedback

[photo: Patrick Denker]

Last December, many experts were calling 2010 the year of social media—and in many ways they were right. Facebook now has 500 million users, and Twitter signed on over 100 million users in 2010 alone. Nielsen has found that Americans spend a quarter of their time online at social media sites, a 43% increase since 2009. It’s no surprise, then, that marketers around the country are touting the importance of a social media presence in business, and praising customer engagement software for social media management. Yet PeopleMetrics’ 2010 Most Engaged Customers (MEC) study reinforced the age-old idea that face-to-face interaction is best as far as customer service is concerned.

In the MEC study, PeopleMetrics compared engagement levels for customers interacting with a brand in-person, online, and over-the-phone. Customer satisfaction feedback from the study revealed that Fully Engaged customers are more likely to have had face-to-face interactions with a brand. More than half (52%) of Actively Disengaged customers had phone contact with a company, compared with just 18% of Fully Engaged Customers. On the other hand, 76% of fully engaged customers had in-person interactions, versus 48% of Actively Disengaged customers. In other words, customers are more likely to be engaged when they have had in-person interaction with a brand.

Authentic customer service is  challenging to achieve over the phone because it is more difficult for service representatives to read the customer’s mood. During in-person interactions, eye contact and facial expressions allow for a better understanding of each customer’s mood and personality. Furthermore, many customer service call centers are so focused on metrics such as call volumes that they discourage the kind of small talk and humor that can endear customers and give service reps insight into each consumers’s state of mind.

However, it’s unrealistic in this day and age to expect companies to conduct all of their customer service in-person. Nearly every company today interacts with customers via multiple channels. The challenge is to ensure that your productivity metrics don’t trump the customer experience.  A customer feedback management system can help your managers monitor customer engagement levels, and quickly respond to any service slip-ups. Such Enterprise Feedback Management software gathers all customer touchpoints into one easy-to-read dashboard, which employees at every level can check to determine the current state of a company’s customer service.

Additional Resources:
Enterprise Feedback Management Dashboard Tools to Improve Efficiency
The Importance of Customer Satisfaction and Customer Engagement in Business Outcomes
Benefits of Assigning Customer Engagement Research Access Levels

In his timeless work How to Win Friends and Influence People (1936), Dale Carnegie traces all human motivation to one sensation:  feeling important.  Quoting American philosopher John Dewey, Carnegie emphasizes “that the deepest urge in human nature is ‘the desire to be important.’” Flash forward to 2009, when the most innovative business leaders are applying Carnegie’s dictum to the workplace through Employee Engagement Management.  More than just an “HR buzzword,” Employee Engagement Management is a leadership approach that values each employee’s well being and input, with the understanding that passionate, engaged employees are more productive.  This article will explain why gathering and implementing employee suggestions is an effective technique for improving both employee and customer engagement.

Making use of employee suggestions increases employee engagement because humans have an innate need to feel that their actions and ideas make a difference. In fact, human development theorist Erik Erikson tells us that the major developmental crisis of middle adulthood is generativity vs. stagnation—whether or not we successfully contribute to the society around us.  When employees see that their suggestions are highly valued, they feel important to the organization.  Later, as their ideas are implemented, employees feel generative and effective. This is why employees typically become more personally immersed in their work when staff recommendations are regularly implemented.  Personal contribution raises our attachment to any outcome. As they recognize that their ideas can make a difference, employees will often spend more discretionary effort to find ways to improve their own working conditions and performance.  A contributing, innovating employee is an engaged employee.

Moreover, taking suggestions from your employees makes good business sense, since employees often have unique insights about how to improve operations. Since they are on the front lines, your employees have a rich understanding of what your customers need and want. By harnessing their first-hand customer knowledge, you can also improve your organization’s customer service, thereby boosting customer engagement and enjoying higher profits.  (In fact, PeopleMetrics has found a clear correlation between increased customer engagement and higher profit margins.)

The Japanese have a name for the end result of respecting every employee’s ideas—kaizen, or continuous improvement. By listening to your employees’ suggestions, you can boost engagement while ensuring that your organization continues to grow and improve.

~Kate Feather, Executive Vice President

Additional Resources:
Using Customer Engagement Management to Create a Culture of Accountability
1001 Ways to Energize Employees
Kaizen Teian 2: Guiding Continuous Improvement Through Employee Suggestions

Photo credit: Alosh Bennet

As we recently discussed, long-term customers provide many financial benefits to your company. In fact, strengthening current accounts is one of the most effective methods of boosting profits. Recruiting new clients usually costs a pretty penny, so many world-class organizations focus on increasing up-selling and cross-selling to current customers instead. Unfortunately, many salespeople avoid these techniques because they are afraid that suggesting additional products or services could scare off customers. However, as long as you follow a few basic strategies, as outlined below, you can successfully cross-sell and up-sell to your current customers.

1.    Identify the Roles of Individuals in the Buying Process. The administrative assistant may actually put in the order, but he or she doesn’t set the budget for office supplies.  Get to know the different roles in your clients’ buying hierarchy.  Understanding your clients’ buying hierarchy will help you pinpoint where you should spend your cross-selling and up-selling efforts.  Don’t be afraid to ask your contact who is involved in decisions.

2.    Learn from your customer throughout the buying process. How often do you get accurate customer feedback for your pitches?  In order to successfully sense when and how to up-sell and cross-sell, you must gather feedback throughout the selling process.  Follow-up questions are often rich sources of information on how to improve your methods. If a customer is unhappy with your service, ask what you can do better. Most “tough customers” are happy to help you improve your operations.

3.    Increase Employee Engagement to Wow the Customer. 54% of clients who interacted with an employee that went above and beyond expectations say that they would go out of their way to do business with that firm again in the future.  In comparison, only 25% of customers who haven’t had a “Wow!” experience say they would go out of their way to do business with that firm again. Consistently exceeding expectations is a great way to double repeat business from your current clients.

4.    Map opportunities for cross-selling and up-selling to your clients. Every customer cycles through a specific series of steps during the buying process, as outlined below in Miller Heiman’s Buying Process map.  Miller Heiman is a global leader in sales performance solutions.

They note that certain times are riper for up-selling and cross-selling, as indicated by the arrows in the figure.  A customer who hasn’t yet recognized a need to change won’t be ready for up-selling. On the other hand, once a customer has implemented a certain product or service, and is assessing the value of their purchase, he or she is ready to consider additional products; this is the perfect time to cross-sell.

By continually seeking customer feedback, carefully timing your pitches, improving Employee Engagement, and harnessing a good understanding of the roles of each buyer, you can successfully increase your sales to existing customers.

~Monica Nolan, Account Manager

Additional Resources:
How Long-Term Customers Benefit Your Company
Customer Engagement Management Tools for Organizing Customer Feedback
The Customer-Engagement Boost: Why your customers’ emotions matter

Top photo: Beck Tench

Customer service training guidebooks traditionally focus on molding the worker, not the manager.  Similarly, many firms deliver customer engagement training only to new entry-level employees.  Sales managers, it is often assumed, already have customer service skills, since they must have acquired them in order to be promoted.  And yet managers impact customer engagement in unique ways.  By understanding managers’ roles, executives can better train and equip them for delivering unparalleled service.

One immediately apparent managerial role is addressing unhappy customers.  Someone has to respond when a customer asks to speak with a higher up.  Accordingly, firms may train managers in soothing frustrated customers. Specific concessions or treats may be extended to keep a customer who is considering abandoning the brand.  However, if managers are only trained to address the situation and not the overall issue than customer attrition is inevitable.

Today, the most effective managers do more than simply carry out executives’ customer service orders.  This represents a shift in business operations.  To use a military metaphor, previously, managers were often seen as enlisted men, not officers.  It wasn’t a part of their job description to strategize; they were simply expected to carry out the plans that superior officers had designed, even if they knew from personal experience that the plans wouldn’t work.  Today, many firms share the burden of strategy by educating their entire work force in customer engagement.  In this new paradigm, managers do more than just respond to complaints.

A manager’s first new role in delivering customer satisfaction is keeping up on the latest customer engagement research. This is because managers inevitably meet with completely unexpected, novel customer service situations.  To be able to respond quickly and appropriately, managers must have customer engagement information at their fingertips. Some systems empower managers to research best practices.  PeopleMetrics’ Customer Engagement Management tool, for instance, includes a library of best practice information, which allows managers to instantly tap into the actions that produce the best results.

Second, managers should be involved in designing new customer engagement procedures.  Actually, your whole customer-facing work force should be included.  These employees often have unique insight into what customers want.

Once customer engagement stratgies are in place, managers can provide a crucial link to inform upper management about which customer engagement initiatives are working.  This is their third new role:  tweaking new systems to maximize customer engagement.

~Monica Nolan, Account Manager

Additional Resources:
Customer Engagement Feedback Tools For Organizing Customer Feedback
Customer Alerts: Turning Customer Feedback into Immediate Sales
Using Customer Engagement Management to Create a Culture of Accountability

Top photo: bixentro

Most Americans are members of at least one loyalty program, if not several. Whether they carry around a R.E.I. dividend, a key chain tab for their grocery store, or a card for their airline, Americans love to get a little something extra for their patronage—and loyalty programs claim to give it to them.  The American love for loyalty programs is strong, even in the recession.  As loyalty research firm COLLOQUY’s Rick Ferguson put it, “Despite the recession, more consumers across all demographic segments are participating in rewards programs than ever before.” In fact, COLLOQUY found a 25% increase in American loyalty program memberships since 2006.  So, reward programs are popular, but are they effective from a business perspective?

The effectiveness of loyalty programs may be defined in several ways, but we’ll look specifically at how loyalty programs affect Customer Engagement.  Engaged customers have a positive emotional connection to a brand, they are loyal, passionate advocates for a company.  Engaged customers will go out of their way to do business with you.  We focus on customer engagement because we have found that Customer Engagement is a predictor of overall business success.  Companies with more engaged customers see higher profit margins, more loyal customers, and even happier employees.  For us, then, the real question is how loyalty programs impact customer engagement.

From a customer engagement perspective, rewards programs are not automatically successful.  Many companies hope their loyalty programs will increase sales, help gather customer data, and entice customers into trying new products. However, none of these outcomes guarantee higher customer engagement.

This is because loyalty programs, in and of themselves, do not change the way a company does business.  Doling out customer rewards for shopping with you won’t elevate the caliber of your service.  Piling on loyalty points cannot change how customers feel about their interactions with your employees.  Do your customers feel that their complaints, suggestions, and songs of praise are heard?  Do they see evidence that their ideas are taken seriously?  Do they see new products and procedures based on their ideas?  These are the questions that determine whether or not your firm is actively listening to customers.  This is what runs through your customers’ minds when they reflect on their emotional connection with your brand.

Competing loyalty programs operate much like lower prices—they may win a fair-weather customer, but they won’t guarantee lifetime patrons. Such loyalty programs can turn into a corporate version of “Keeping up with Joneses” when competitors attempt to woo customers with more extravagant rewards.

In the end, loyalty systems may have many business benefits, but without engagement companies will not create passionate lifetime customers.  As Harvey Thompson, former IBM executive and  author of Who Stole My Customer?, points out, “The key to effectively competing for loyalty is ensuring the quality of customer service, not the quantity of customer rewards.”  The first step in improving the quality of your customer service—and increasing customer engagement—is researching what your customers actually want.  You can’t buy loyalty—it must be earned.

~Monica Nolan, Account Manager
PeopleMetrics

Additional Resources
Customer Engagement Management resources
How to Use Customer Testimonials to Increase Engagement
What to Look for in Customer Engagement Feedback Tools

Most business owners and executives would concur that customer satisfaction is key to long-term business success. And yet, it doesn’t take much these days to lose a customer.  Even if customers are satisfied, they may switch companies.   After all, Business Week has reported that 60% and 80% of defecting customers describe themselves as “satisfied” or “very satisfied” just before they leave.  Especially in today’s challenging economic environment, customer satisfaction is not enough.

Customer actions should be measured by more than customer satisfaction. A more accurate metric to measure and improve is Customer Engagement, i.e., how passionate, loyal, and energetic customers are when doing business with a firm.  Engaged Customers will jump at the chance to advocate for your brand, simply because they are so happy with their own experience with your company. To maintain engaged–rather than simply satisfied–customers, it’s crucial to consistently gather customer feedback.  Today, we’ll highlight the importance of organizing such feedback, so that managers can quickly respond to customers’ problems.

Why focus on the administrative, organizational side of things?  Because it’s very difficult to efficiently respond to customer complaints if your organizational system is broken. In fact, the ability to quickly, enthusiastically resolve customers’ problems is often what distinguishes organizations with sky-high levels of Customer Engagement. To see how swift, satisfying problem solving can win lifelong customers, consider the Ritz-Carlton.  The Ritz-Carlton is well known for doing whatever it takes to form positive emotional relationships with their customers. And their guests reward them for it: the 2009 MEC report found that 80% of the Ritz-Carlton’s customers are engaged.

Unlike many research companies, PeopleMetrics delivers both aggregate trends and day-to-day tools for helping managers drill down on specific customer complaints.  PeopleMetrics’ CEM (Customer Engagement Management) tools can help any organization quickly spot, respond to, and remember customer issues.  They show actions taken on each customer account, and they can easily work with an organizations current CRM software.   Here’s a brief overview of the CEM tools PeopleMetrics offers:

1.    Action Alerts: Action alerts are sent out right after a customer submits feedback.  The alerts are sent to designated people in the organization who are responsible for that particular client or business area.  These alerts are categorized based on the clients’ feedback.  There are four types of Action Alerts: Recover, Grow, Recognize, and Market.  Our clients love that customer feedback is immediately labeled, shared and tracked.

2.    Action Alert Management: Once an Action Alert is sent out, a case is created in the CEM hub.  It is assigned to a certain employee of the organization who is responsible for follow-up.  As the case is resolved, the manager or supervisor can track it and close it once the customers’ concerns have been fully resolved. PeopleMetrics also provides suggestions on which actions will be the most effective for each type of Action Alert.  Results can be tracked, recorded, and shared with the entire organization.

3.    Manager Dashboard and Action Taking Hub: This tool identifies which areas offer the greatest opportunities for improving Customer Engagement. Included in this tool is PeopleMetrics’ proprietary library of best-practices actions for increasing Customer Engagement.  Managers who are incentivized according to Customer Engagement scores will find these assets especially useful.

With these tools, PeopleMetrics’ clients have been able to organize customer feedback, optimizing operations and enabling them to take targeting action to increase Customer Engagement.  To learn more about PeopleMetrics’ Customer Engagement Management solution, visit our page on Customer Engagement.

~Kate Feather, Executive Vice President
PeopleMetrics

Additional Resources:
The Customer Engagement Boost: Why your customers’ emotions matter.
Ritz-Carlton Case Study: Luxury retailers know Customer Engagement.

Top photo by Seth Sawyers.

If we tallied a vote for the most popular new social networking tool, I’m betting Twitter would take the prize.  It seems that everyone from Elizabeth Taylor to John Cleese is tweeting these days.  Elected officials and state and local agencies across the country  are now tweeting, too.  Twitter has even been credited with disseminating information from countries that were previously isolated, like Iran.  Will Twitter soon become an essential part of doing businesses?  And if so, how?

Some industries, such as market research, have ridden Twitter’s rising wave of popularity to predict and understand consumer trends.  Others see Twitter as a marketing tool; as Craig Howe recently wrote for the LA Times-Washington Post, car companies are tweeting about new products in an effort to stir up consumer interest.  As we are interested in any tool that has the potential to increase Customer Engagement, PeopleMetrics has been especially interested in the fact that some businesses, like H&R Block and Zappos, are now using Twitter to respond to customer queries.

So, how does Twitter relate to customer engagement?  Well, in one sense your Twitter followers are likely to be engaged customers. As Mr. Howe pointed out in his article, Twitter “gives a company direct access to an audience that has indicated it wants to receive information.”  Anytime customers opt-in for updates, emails, Facebook messages, and tweets, they are indicating that they have a high degree of interest in your company. Twitter can be a useful tool for learning what those interested customers are looking for from your product and future products.

In his article, Mr. Howe turned to Andy Sernovitz, the author of Word of Mouth Marketing, to explain the importance of Twitter.  According to Mr. Sernovitz, “Twitter is a bunch of people who are asking to hear from you, and that’s wonderfully powerful.  They’re asking for the information, and they want to share it with their friends.”  When you put it in those terms, it’s easy to see that setting up a company or executive Twitter account can definitely have its rewards.  The idea is that your Twitter followers are so enthusiastic about your brand, that they’re likely to retweet and share the love.

Twitter is also an easy way to answer questions for your customers.  As USA Today recently reported, Comcast has been using Twitter to post updates on service failures.  In April, many Comcast subscribers went to the company’s Twitter page to find out why they lost their connection to a Stanley Cup playoff game.  In fact, those who opted for Twitter were rewarded with an almost immediate answer—more so than those who called Comcast’s automated help line.

Some companies, like Dell, are even reporting significant Twitter-based sales.

Twitter is representative of the wider societal shift from the telephone to the internet.  As consumers increasingly see companies and brands as more than just providers of goods, Twitter and other social networking tools are helping companies position themselves as approachable, real, and innovative organizations.  As Salesforce.com CEO Marc Brenoff told USA Today, “Brands aren’t about ‘messages’ anymore.  Brands today are conversations — and today the most important conversations are happening … through social media such as Twitter, Facebook and MySpace.”

So, if you’re ready for increased communication with your most dedicated customers, by all means, start tweeting.  Keep in mind, however, that Twitter cannot replace, only supplement, your company’s current litany of customer communication tools. In all likelihood, most of your customers aren’t even on Twitter, so it’s important to provide a variety of ways for them to communicate with your firm.  At current rates of use, Twitter is a great way to communicate with people who are already dedicated to your brand—your engaged customer base.

Top photo by Jeff Turner.

When a customer interacts with one of your employees, what emotions do they have after the experience?  That may seem like a rather touchy-feely question, but in reality, your customers often rely on their emotions to determine who they do business with.  They may not realize it, but they are far more likely to return when their last interaction with your business left them with a happy, excited feeling. This dictum applies to both B2B and B2C firms.  A Engaged Customer is almost always a happy, loyal, passionate customer.

Most businesses train their employees to follow procedures, be polite, and meet expectations.  Some organizations have found that this isn’t enough to win loyal customers, so they also require their employees to act enthusiastic about their work.  This tactic often backfires when cynical, embittered employees recognize that they really have no reason to be enthusiastic about their job.  This gap between management’s expectations and the employee’s impression of their work situation is like a ticking time bomb: eventually an employee is going to let their true emotions show to the customer, who certainly doesn’t want to do business with a company that appears to mistreat its employees.

So, if you can’t require an employee to be enthusiastic, how can you get them to shine for the customer?

In an article for HR Pulse, Peter Lanser and Suzanne Coshow explain that Employee Engagement is more than just a show: it must be organic.  Unless employees enjoy genuinely positive, fulfilling relationships with their managers and peers, they are unlikely to feel engaged.  Lanser and Coshow urge managers to:

Think of your employees like a delicate flower you are trying to grow. You wouldn’t want to just measure its height and the fullness of its bloom.  You would check the soil to see if it has enough water.  You might see whether it needs special plant food to thrive.  In short, you would make certain that it has everything it needs to grow and bloom to its fullest.  Your employees require the same sort of attentiveness to their environment in order for them to more fully engage in the performances of tasks at work.

The first step in achieving an engaged employee pool is to find out what they need.  Although the above metaphor conveys the idea that Employee Engagement Management requires a holistic approach, it’s important to recognize that human needs and wants are quite complex.  Each employee and each workplace is different, so you must communicate with your employees to figure out what they need to perform at their highest ability.  Our Key Driver Analysis identifies the items that will have the biggest impact on engagement, so that managers can prioritize their engagement-boosting strategies.

Additional Resources:
Ritz Carlton Case Study:  Luxury Retailers Know Customer Engagement.
The Customer Engagement Boost:  Why Your Customers’ Emotions Matter.

Top photo by Paul Sapiano.

Question: Besides reputation, quality, and cost, what separates the Ritz-Carlton from Motel 6? Answer: Customer Engagement.  As our 2009 Most Engaged Customers (MEC) study showed, luxury retailers like the Ritz-Carlton are masters of engagement.  65% of luxury customers are engaged, as compared with only 35% of cable and satellite TV customers.  With most industries engaging less then half of their customers, luxury retailers and hoteliers lead the way in engagement.  Today, we’ll explore how one company, the Ritz-Carlton, consistently earns high marks for Customer Engagement.

First, let me explain just what I mean by Customer Engagement. 80% of the Ritz-Carlton’s customers are engaged.  This means that 80% of their customers agreed or strongly agreed on the following points:

• He or she will return to the Ritz-Carlton.
• He or she will go out of their way to do business with the Ritz-Carlton.
• He or she will recommend the Ritz-Carlton to friends.
• He or she feels love or passion for the Ritz-Carlton brand.

Any score higher than 60% is considered very strong, so the Ritz-Carlton’s Customer Engagement rating is especially impressive, and topped the 2009 Most Engaged Customers list.

The fact that the Ritz-Carlton engaged 80% of customers is especially remarkable given the past year’s economic meltdown.  The international economic crisis has led to many luxury consumers cutting unnecessary expenses.  High customer engagement ratings are especially hard to come by in today’s market, yet Ritz-Carlton customers wouldn’t dream of staying anywhere else.  How does the Ritz-Carlton manage to consistently engage customers, regardless of the market?

Ritz-Carlton President and CEO Simon Cooper traces his company’s success to emotional connections.  He says, “It’s all about the people. Nobody has an emotional experience with a thing. We’re appealing to emotions.”  The goal, Cooper says, is to develop such a strong emotional engagement between the hotels’ staff and guests that “a guest will not consider staying anywhere else, if they have an option.”

In other words, the Ritz-Carlton is ahead of the curve when it comes to Customer Engagement.  Shelves of books have been written about the Ritz-Carlton’s approach to customer service, but the ultimate key to their success is simple:  forge a lasting emotional connection with customers.

Learn more about customer engagement here.

~Monica Nolan, Account Manager

Top photo by Witt Istanbul Suites.

What brings customers to your company? Do they find you through advertising? Or do coupons and special offers bring them to your door? The international economic crunch has businesses all over the globe wondering how to attract customers more frugally. With revenues and consumer spending on the decline, few businesses can afford to spend on traditional advertising, as the recent 30% drop in newspaper advertising sales indicates. Fortunately, PeopleMetrics’ research shows that the best kind of advertising is free. Your current engaged customers are already spreading positive word-of-mouth, so why not make their recommendations the center of your next sales drive? As PeopleMetrics’ 2009 Most Engaged Customers (MEC) report states, “If a brand or service is recommended to a [new] customer by a trusted source, this recommendation goes a long way toward building goodwill and Customer Engagement, even if the organization fails to meet expectations.” In other words, positive word-of-mouth from current customers is a highly effective method of attracting new loyal customers.

PeopleMetrics research shows that a company’s financial success is directly tied to its level of customer engagement. As we’ve written in previous posts, companies with more engaged customers enjoy higher ROI, ROA, and overall revenue growth. After analyzing how companies with highly engaged customers achieved their results, the 2009 MEC report suggests several strategies for increasing customer engagement.

One of those strategies involves disseminating positive word-of-mouth about your company.  To attract new Engaged Customers, the 2009 MEC report recommends that companies provide customers with opportunities to evangelize and provide testimonials.  It’s important to emphasize the quality of customers who follow word-of-mouth recommendations to your company’s door.  PeopleMetrics’ research shows that customers who come to companies through the recommendations of friends or family members are more forgiving of service failures.  This is important because service failures often lead to disengaged customers who no longer want to do business with a company. The 2009 MEC found that 2 out of 5 customers who “chose an organization based on a recommendation and subsequently experienced a problem are engaged, versus just 1 in 4 of those experiencing a problem with an organization that was not recommended to them.”

Techniques for encouraging current customers to provide positive recommendations include:

• Adding a section to your website to allow customers to provide ideas, recommendations, and testimonials.
• Asking new customers how they found your company.  If they were recommended by a current customer, reward that customer who provided the referral.  (Obviously, these little treats for referrals don’t have to be huge–a $5 gift card for your product or services could be enough.)
• Participating in online social networking communities.  By establishing a presence in relevant online communities, you will be able to better understand what your current customers think.  Social networks also offer easy tools for spreading good word-of-mouth to new customers.

To learn more strategies for increasing customer engagement, read the full 2009 Most Engaged Customers report.

~Kate Feather, Executive Vice President

Top image by Mark Smiciklas.

UCLA’s Anderson School of Management recently hosted a seminar for executives with an unusual message: A crisis is a terrible thing to waste. With consumer spending at 1997 levels, many companies are struggling to find easy ways to cut costs and boost productivity. Yet the speakers at UCLA’s conference urged executives to take advantage of the economic crisis as an opportunity to improve performance as well.  In addition to strengthening balance sheets, executives at the seminar were advised to hold onto key employees, let go of unprofitable business lines, and grab up new investment opportunities– in other words, work smarter, not harder. As finance professor Antonio Bernado said, “If you invest now when your peers and competitors are waiting on the sidelines, you can be a leader in your industry when the recovery does come.”

Here are three more areas to consider if you’re looking for ways to work smarter in today’s volatile business climate.

Reward Your Most Engaged Customers For Bringing In New Business.
Looking for a treasure trove of hidden value in your company’s current assets? Look no further than your own customer list. PeopleMetrics has found that highly Engaged Customers will passionately advocate for your brand.  Can you offer an additional incentive to motivate your best customers to bring in their colleagues, family and friends?  Before you roll your eyes at the idea of spending more money in sales, consider how much you spend in-house to bring in new customers.  If you can pass that job on to your customers, there’s a good chance you can save money– and attract more Engaged Customers.  Customers attained through positive word-of-mouth recommendations are more likely to be engaged and more prone to forgive your organization for any services failures if they do occur.

Present a Passionate, Friendly Face.
Even if you can’t cut your customers’ costs, you can keep them coming back with exceptional customer service. When Engaged Employees smile, sympathize, anticipate customers’ needs, and move quickly to solve problems, customers are more likely to feel an emotional connection to a company– and PeopleMetrics has found that emotional connections attract Engaged Customers who will stick around for the long haul. If you’re not sure how to motivate your employees to provide stellar service, consider implementing an employee feedback program. (PeopleMetrics can help– check out our section on Employee Engagement.)  As a bonus, keeping your employees emotionally connected to your company will also reduce recruiting costs, thanks to lower turnover rates.

Strive to Maintain Marketing Budgets
In lackluster economies, it’s tempting to trim marketing budgets. Why market a brand when consumer demand is so low?  Because some day, consumers will have expendable income, and  marketing during the recession will influence what they’ll buy.  Coke’s worldwide dominance in the beverage industry can be traced to crucial advertising during a historic financial slump:  World War II.  Despite the fact that both Pepsi and Coca-Cola had limited distribution and demand, Coca-Cola advertisements continued to appear.  Pepsi slashed advertising budgets during the war and could not maintain a steady presence.  Once the war ended, Coca-Cola’s consistency was rewarded:  Coke dominated the market.

During economic downturns it is more important than ever to keep your customers front and center.  Gathering and listening to their feedback is essential – doing so will allow your company to spot new opportunities for growth and innovation.

Top photo by Jekert Gwapo.

Source for UCLA seminar: The Los Angeles Business Journal.

The teetering economy is making today’s customers extremely particular.  According to the US Department of Commerce, consumer spending rose a paltry 3.6% in 2008—the lowest increase since 1961.  And although the American Customer Satisfaction Index actually rose .9%, consumers don’t have extra cash to spend, especially given that saving is a growing trend.  In this competitive market environment, losing a customer is more costly than ever.

Business owners are rightly distraught over the direct losses associated with lost customers.  The disappearance of consistent, predictable income resulting from the loss of a single customer may not be huge immediately, but it’s certainly noticeable.

The long-term, indirect profit loss stemming from one customer’s departure is less apparent, and can include:

•   Missed Opportunities for Recommendations. Happy, engaged customers recommend their favorite companies to colleagues, friends and family.  Their heartfelt recommendations hold a lot of weight and are more directly influential than even the most targeted advertising campaign.  When you lose a customer, you lose future opportunities for personal recommendations which often turn into additional engaged customers.

•    Cost to Recruit New Customers. Experts estimate that it costs seven to nines times more to recruit new customers than it does to keep current customers.  This illustrates the point that the loss of one customer also includes the loss of the original investment required to attract that customer.  And in this economy it’s becoming more difficult to predict how much you’ll have to spend to attract another customer to maintain consistent income.

•    Negative Word-Of-Mouth. You may never even hear from unhappy customers–they may walk out on your company without saying a word.  Still, you can bet they’ll have loose lips around their friends.  PeopleMetrics has found that 1 out of 4 consumers don’t report problems with a company, so that company is never even given the chance to right the situation.  In addition, PeopleMetrics’ 2009 Most Engaged Customers Study found that, on average, an actively disengaged customer will tell 3 more people to avoid a company and its services.  So, lost customers not only directly affect your bottom line, but they may be preventing you from attracting new customers.

The true value of a lost customer is more clear when long-term losses are considered.  Given today’s especially choosy consumers, maintaining and engaging current customers is extremely important. As University of Michigan Business Administration Professor Claes Fornell said in his ACSI commentary, “At the micro level, the first priority for any company should be to defend its customer base. Without it, the prospects for the future would be bleak.”

To learn more about how to engage customers and prevent customer attrition, visit PeopleMetrics’ site on Customer Engagement.

Top image via freeimages.co.uk.