Why “satisfied” customers leave
If your business isn’t as successful as you think it could be, it may be because you’re satisfying your customers! Having satisfied customers could be the worst
thing to happen to your business.
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According to research conducted by Bain & Co., a business consulting firm with 37 offices around the world, 65 to 85
percent of customers who defected to competitors described themselves as “satisfied” or “very satisfied” just before they made their move. Customers who say they are satisfied are
almost as likely to change cleaners as those who say they are dissatisfied. Put
another way, a satisfied customer is a former customer waiting to happen.
So if customer satisfaction isn’t the goal, what is? In a word, loyalty.
Satisfied customers have no particular attachment to your cleaners, and would
not hesitate to buy from your competitors. You cleaned and pressed their
clothes, as expected, and they paid for your service, as expected. The deal’s done and they owe you nothing. Studies have found that only nine percent left
because they preferred the competition, and only 14 percent because their
former cleaner didn’t address their problems. More than two-thirds – 68 percent – didn’t have a specific reason.
On the other hand, loyal customers will stick with you. They’ll put up with a little inconvenience to do business with you. They’ll even forgive your mistakes. They’re committed to getting the products and services they get from you alone, and
it will take something really earth-shattering to get them to go elsewhere.
Just this morning, I stopped in the local Caribou Coffee shop (I like their
coffee better than Starbucks.) and ran in to a lady that owns one of the
print-houses we use to print our postcards. She told me a story about how the
drycleaner she uses ruined one of her husband’s dress shirts but, because she likes the work this cleaner does so much, she
refused payment for the shirt, saying simply, “Don’t worry about it. The next time I have a really special garment to be cleaned, I
know you’ll give it extra-special care.”
The bottom line is that satisfaction is temporary, while loyalty can be forever.
So how can you turn satisfied customers into loyal ones? You need to know the
customers’ rules.
All customers have rules. Customers’ rules are the needs, desires and expectations that determine how, when, what,
and why they buy.
For example, a frequent traveler might set a rule that he won’t buy a laptop computer weighing more than four pounds. Things like screen
quality, storage capacity, and even the brand don’t matter, while the four-pound limit matters a lot.
For your business, the only rules that matter are the ones followed by your core
customers. If you know and play by their rules, they’ll be fiercely loyal to you, and your business will thrive.
The truth is that all customers have rules, and they know exactly what they
want. If you want to find out what those rules are, all you have to do is ask.
Over the years, traditional drycleaners didn’t ask their core customers — and suffered because of it. Their core group consisted of customers with
incomes of $75,000 or more annually.
Increasingly, they wanted a diversity of services and the opportunity to have
their clothes ready when and where they found it convenient. Eventually, they
began to find this model less frequently in the traditional middle-of-the-road
drycleaners and more in very high-end and one-price cleaners.
The customer rule about convenience is an important one. It doesn’t mean that you have to do everything (shoe repair, drapery take-down and
re-hang, etc.), but it does mean doing what your core customers want.
When companies give good customers and good prospects what they want, they
improve their results. Finding out exactly what will make customers loyal means
listening very carefully to them.
In the late 1990s, McDonald’s began losing market share. Researchers found that customers thought the chain’s food quality had deteriorated.
The company’s response consisted mainly of imitating Burger King’s “Have it your way” approach. Specifically, McDonald’s created the “Made for You” system, which let customers place customized orders.
The retooling cost McDonald’s and its franchisees hundreds of millions of dollars. The result was food that
was fresher and hotter. Unfortunately, it took twice as long to deliver.
McDonald’s made two huge mistakes. First, it responded to what a competitor was doing,
instead of solidifying its own sweet spot in the market.
Second and most important, they didn’t have a clear understanding of what their customers’ rules were. They assumed the problem could be solved by making the food fresh,
even if it took more time. What their customers really wanted was fast service
with acceptable-tasting food. What they ended up with was the same old food,
delivered more slowly.
Another CEO came in, followed customer rules, and gave customers what they
really wanted and expected. Instead of giving customers fresher versions of the
same old food, McDonald’s introduced new items like chicken strips, instead of chicken parts, crisper
greens, and “Newman’s Own” salad dressings.
As a result, McDonald’s began achieving same-store growth and greater profits.
While your company is building loyalty among your core customers, stay focused
on your sweet spot. As you do your customer research, only make changes that
will strengthen your sweet spot, not weaken it.
For example, as big as it is, Wal-Mart doesn’t want to keep growing at the expense of its sweet spot, which is offering basic
merchandise at the lowest price. It doesn’t want to play by every customer’s rules, such as offering better selection and higher quality.
Be aware, however, of changes in customer rules that offer you opportunities.
Southwest Airlines built its business by appealing to leisure customers who
wanted cheap airfares and didn’t mind flying out of secondary airports.
At the time, bigger airlines catered to business travelers whose primary rule
was, “We need to get there right away, and we don’t care what it costs.”
After 9/11, corporate restrictions meant business travelers couldn’t afford expensive tickets, so their rule changed to, “We want cheaper prices for eleventh-hour tickets, without a Saturday stay-over.”
The bigger airlines didn’t see the rule change, but Southwest did, and it won the business of many people
who were satisfied customers, but not loyal customers, of United, American and
other airlines.
An important thing to remember about customer loyalty is that customers’ rules are constantly evolving.
Your research should tell you:
1. Who your most important customers are and what they value most.
2. Where these customers have positioned you in the marketplace.
3. Who your real competitors are.
4. What your sweet spot should be.
5. How to turn your satisfied customers into loyal ones.
So it’s critical to do ongoing research to make certain you’re always on target. By using this information to improve your services, you
will greatly enhance your chances for longer lasting customer loyalty.
Obviously, there’s a big difference between satisfied customers and loyal ones. While
satisfaction is temporary, loyalty can last forever if you recognize that
keeping a customer loyal is a never-ending process. It has to become a part of
the fabric of your company.
