How committed are your customers?

Satisfied and committed customers support profitability objectives. It seems obvious, but quite often organisations haven’t been able to attach a financial value to satisfied customers. In the past the role of service and support has never really received significant attention especially since the function’s impact on profitability was relatively unknown. If known, the impact was underestimated to the tune of “satisfied customers don’t spend elsewhere”. But satisfied customers can be a whole lot more. They can be revenue drivers, cost cutters and brand advocates for your business.

In recent research on service performance, we asked the question “Why is it important to have satisfied customers?” Respondents were asked to rank the options shows below. The results were:

1. They increase their spend on products and services.

1 (tie). They continue to spend on products and services.

3. They bring in new customers via referrals.

4. They promote our organisation’s brand.

5. They spend less on competitors’ products and services.

6. They guide product/services roadmap and strategy.

7. They cost less to serve.

While the results aren’t earth shattering, they do show an increasing maturity in understanding the value of satisfied customers. Not only do these folks spend more with the organisation that they are satisfied with, they also spend less elsewhere. More so, they market your products, services and your brand through reviews and referrals and promote the sale of your product to new prospects and customers.

To point to some data that confirms this, of the organisations in our research with a 90% or more level of customer satisfaction, 81% and 34% saw increases in total revenue and volume of customer referrals respectively over the previous 12 months (research conducted in early 2014). On the other hand, for those with a 70% or less level of satisfaction, only 44% and 25% saw increases in total revenue and customer referrals respectively over the previous 12 months.

This raises the thought that the true measure of service success is in customer commitment, wherein customers are willing to act as a result of the satisfaction that they feel from the service experience delivered. These customers aren’t just satisfied; they are committed to supporting and growing your business. Commitment is measured by retention, renewal, revenue and advocacy. Some may argue that you can build committed customers by offering the lowest price. I disagree, as offering the lowest price might only lead to retention and renewal, but does’t ensure revenue and advocacy over the long term. Customers who are with you for price aren’t committed to ensuring your success.

In fact, customer commitment is the true measure of business success and therefore requires a business partnership between service and other functions to ensure that customer needs, documented or otherwise, are met and exceeded so that the customer sees value in a continued relationship with your organisation.

We will be investigating the idea of customer commitment at our 4th Annual Smarter Services Symposium of service and business leaders in March 2015. Please visit us at www.servicecouncil.com to learn more.

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