I love ice cream. I’d eat it every day if I could. And I would always choose my favorite flavor: mint chocolate chip. The combination of tangy mint and the deep sweetness of chocolate gets me every time.
If ice cream flavors were brands, I’d be a die-hard customer devoted to The Mint Chocolate Chip Company for life. Am I a creature of habit? Probably. But the real reason I stick with my favorite flavor is because I know it will make me feel good every time. I can even think back to great experiences I’ve had with mint chocolate chip ice cream ever since I was a boy in a bathing suit. Talk about customer retention.
Customers have experiences with brands, and those experiences inspire positive or negative emotions which guide the customer the next time he or she is deciding between one brand and the next. Customers who have positive associations with a brand are more loyal because they know they can rely on that brand for a positive experience. That's more important than anything else, including price.
Mark Hillary of the CX Files recently interviewed me about an omnichannel experience and putting the customer first. By having a digital first mindset, contact centers can seamlessly talk to customers across platforms, so the customer isn't repeating themselves and thus having a better experience.
Let’s look more closely at the link between customer experience and customer retention.
The statistics behind the emotions
There is a growing body of evidence that suggests customer experience is directly responsible for whether or not a customer stays with a brand. Here are some of the most revealing statistics on customer experience and customer retention.
- 86% of consumers will immediately quit doing business with a company because of a bad customer experience
- 73% of dissatisfied customers cite incompetent, rude, and "rushed" service as the #1 reason for leaving a brand
- Companies with a social customer service program experience a 7.5% YoY increase in customer retention, while those without one only see a change of 2.9%
- 78% of consumers have bailed on a transaction or not made an intended purchase because of a poor service experience
- More than two-thirds of consumers who encountered a customer service or customer experience issue on a brand’s website left the site or visited a competitor.
Customer experience isn't a one-time thing
The link between customer experience and customer retention is clear. Putting this knowledge into practice involves a conceptual shift. Most brands now think about customer experience as a series of individual exchanges when a customer purchases and/or complains. However, customer experience is a cycle; it doesn't end until the customer goes to the competition.
Therefore, it is constantly necessary to inspire positive customer emotions, and to do more to reinforce those positive emotions in the long-term. This leads to real customer retention (like me with mint chocolate chip), as well as the acquisition of new customers through word-of-mouth. This is what we call the Customer Retention Model. Here's how it works:
- A customer gets in touch with a brand's contact center
- The contact center uses integrated technology to serve the customer more personally
- Personal service inspires positive customer emotions
- The customer is more loyal and spreads the word about the brand
- The customer repeats the Customer Retention Model and encourages others to do so
As if you needed any more motivation to increase customer retention, remember that it is 6-7 times more expensive to acquire a new customer than it is to keep a current one. The key is knowing more about your customers. If you know who each individual really is, you’ll know how to inspire and delight them.
Interested in learning other ways the digital age is changing customer expectations? Check out our webinar, Digital – First Customer Service: The Future is Here Today.