Customer Service Training Video Screenshot

Customer Service Training Video: Every Customer Has a Story

In April, I had the distinct pleasure of seeing John DiJulius, one of my favorite customer experience thought leaders, speak at the Multi-Unit Franchise conference. To begin, if you ever have the opportunity to see John DiJulius speak — do it! He has a great message, and his presentation is simply amazing.

During the presentation, DiJulius showed an incredible video that perfectly summed up one of the key messages I have always used in customer service training:

You never know what is going on with your customer or what path they took to get to you.

The person standing in front of you has a story. They have joys and stresses, successes and disappointments, triumphs and tragedies. They want you to solve a problem, to make their life a little easier and a little more enjoyable.

Ever since seeing DiJulius speak, we had been hoping to find the video to use for training; however, we had been unsuccesful until last week when I stumbled across a post from Kyle Lacey which discussed the video. It should come as no surprise; the video is a training video at Chik-Fil-A. Check it out:

 

In his post on the video, Understanding The Personal Story of the Customer, Kyle takes away a great message that our customers do want us to know about them — they want to be heard. This type of customer intelligence can be crucial in helping to shape a customer experience that resonates with each individual customer. But as laudable a goal as customer intelligence is, it is not an overnight process. (See John DiJulius’ excellent book, Secret Service, for an in-depth look at this concept.)

I would like to focus on another message in the video — one that can be utilized for immediate results.

Empathy

When an upset customer stands before you, it is rarely personal. They came to you to make their life easier, and for some reason, they feel you made it worse. Helping team members understand that they do not know what is going with the customer — how rushed, or stressed or sick they might be — and that they should approach each interaction with that fact in mind is a crucial message to instill throughout any organization.

It might be tautological to say so, but service is about serving. Customer experience reps should seek first to understand, and then to embrace the idea that even when they can’t understand, they can still be understanding.

After all, we all have a story.

What were your reactions to the video? Were you ever the customer that needed to be understood, who got upset out of proportion to the offense because of what was going on elsewhere?

Steve Jobs Holding Mac

Steve Jobs’ Greatest Legacy: The Customer Experience

I am a recent Apple convert. I made the painful though glorious switch to Mac in May and moved from Android to iPhone at about the same time. I own an iPad, simultaneously the coolest piece of technology I own and the most expensive paper weight in my house, and I still use my iPod Nano, the only piece of Apple technology I own that is more than a year old.

Steve Jobs Holding MacThroughout the last few months of my foray into the Cult of Mac, I have learned something about Steve Jobs.

Yes, Jobs was an extraordinary innovator. Yes, Jobs was a marketing genius. But, more than anything, Jobs was a leader obsessed with the customer experience.

Community member Leon Noone emailed me an excellent Harvard Business Review piece a few weeks ago entitled The Hidden (in Plain Sight) Legacy of Steve Jobs by Bill Lee. Lee discusses some great points about Jobs’ customer focus (also a few I think would be dangerous to extrapolate to non-tech industries) but most telling was this point:

Don’t be obsessed with technical details, but do be obsessed with the details of customer experience

Jobs is supposedly obsessed with every detail that goes into Apple devices. Not so. He focuses on the details relevant to the customer’s experience. When one of Apple’s design teams was tasked with developing a DVD-burning software program for high-end Macs, developers spent weeks putting together a plan. On the appointed day to present it to Jobs, they brought pages filled with prototype information, pictures of the new program’s various windows and menu options, along with documentation showing how the application would work. When Jobs walked into the meeting, he didn’t so much as look at any of the plans. He picked up a marker, went to a whiteboard and drew a rectangle, representing the application. He then told them what he wanted the new application to do. The user would drag the video into the window, a button would appear that said “burn,” and the user would click it. “That’s it, that’s what we’re going to make,” he said.

Steve Jobs never lost site of the end user. Despite his products being fawned over by tech types across the spectrum, Jobs did not design his products for the Robert Scobles of the world; he designed them for the entire world.

Jobs knew that in a technology-based industry, a great customer experience involved a product people wanted to use, that accomplished its tasks reliably, and which confronted them with the underlying technology as little as possible. He understood that the workings behind a great customer experience should be invisible.

From the iPad to the Apple store, Jobs’ obsession was not technology for technology’s sake but technology for the sake of optimizing the customer experience. Jobs understood that a great customer experience should involve both function and form, striving to achieve an almost Zen-like symbiosis between the two.

An Apple product should just do, and be — and, in some sense, should help bring a sense quietude, nay peace, to the user.

Steve Jobs helped bring that feeling to millions of people across the world. I can only hope that he is experiencing it now.

requiescat in pace

Paper Smile Face, Business Concept

National Customer Service Week 2011: What’s Your Plan?

This week, October 3-9, marks National Customer Service Week (NCSW). NCSW was established by proclamation of President Bush (#41) in 1992. The beginning of the proclamation reads:

In a thriving free enterprise system such as ours, which provides consumers with a wide range of goods and services from which to choose, the most successful businesses are those that display a strong commitment to customer satisfaction. Today foreign competition as well as consumer demands are requiring greater corporate efficiency and productivity. If the United States is to remain a leader in the changing global economy, highest quality customer service must be a personal goal of every employee in business and industry. (Read the full proclamation.)

Of course, if your organization is committed to the customer experience, every week should be customer service week; however, “official” weeks like this are a great opportunity to generate discussions with customers and team members and to take the time to do a little extra.

 

National Customer Service Week: A Roundup of Ideas

Paper Smile Face, Business Concept

Sometimes, it’s as simple as a smile.

Thinking of doing something special for National Customer Service Week? Take a look at the ideas listed below from some great customer service minds. Included is my favorite idea from the author’s list and a link to the author’s full post.

Shep Hyken: Ten Customer and Employee Focused Ideas for NCSW
  • Once a day throughout the week, distribute an article about customer service to all of your employees. 

(Shep has some great tips on his blog you can use.)

Richard Shapiro: National Customer Service Week, Ten Tips for Repeat Business
  • Say hello and smile. In this era of technology, people are more stressed than ever. Getting a big, warm hello can go a long way in giving a customer the feeling of “Hey, this company is really happy to see me.”

(Perhaps turn this into a contest — which CSR can get the most “you are so friendly” compliments this week.)

The Official Customer Service Week Website: Tips for a Successful Celebration
  • Distribute Certificates of Appreciation, Service Awards and small gifts… to those unsung heroes in other departments who make a great effort to meet customers’ needs.

(This website does sell commercial items for NCSW but also has some good information on the event.)

Kate Nasser: National Customer Service Week – Celebrate People Skills
  • Celebrate People-Skills. As your customer service teams celebrate with contests, parties, and picture taking, celebrate people skills (aka soft skills) with a thought for each day!

(Kate’s post was from last year’s NCSW, but I’ve been becoming a big fan of hers lately and loved her daily ideas).

 

One More Idea for National Customer Service Week

In addition to the ideas above, set aside a day or a morning/afternoon for an “Open Line to Management.” Have a manager and/or owner available to take calls from customers. Send out an email to your clients mentioning that, in honor of National Customer Service Week, we are setting aside a time to listen to our customers one on one. Encourage them to share any feedback they have, positive and negative. Possibly offer an incentive for anyone who calls.

 

So, had you heard of National Customer Service Week before? What was your favorite idea? Are you going to celebrate it in your business.

Customer Service Stories: Snorkeling Guide Truck

Customer Service Stories: Stop Subcontractors From Killing Your Customers

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One of the trickier parts of delivering an exceptional customer experience is when you cede control of the experience to subcontractors. Maintaining service standards with the company’s team is challenging enough; maintaining those same levels of service through a subcontractor can border on the impossible. The experience we had when vacationing on the island of Curacao last fall provides an stark lesson in how quickly a subcontractor can put an ugly mask on the face of a business.

Note: Names have been changed to protect the guilty

 

Let’s See Some Fish…

We scheduled an off property snorkel tour through our hotel which was subcontracted through a company called Curacao Underwater Outfitters. A twenty something Curacoan picked us up at the hotel with an elderly Dutch couple from another hotel already in tow. The vehicle was of the sort that makes one appreciate modern safety features like shoulder restraints, seat belts, and air bags. The first thing that came to my mind was that we were going snorkeling in a German troop truck from World War II. Judge for yourself.

Customer Service Stories: Snorkeling Guide Truck

The Truck, with guide and Dutch couple minutes before the chase. License and faces obscured.

Janz the tour guide was nice enough. He showed us a scenic overlook on the way to the snorkeling site. He did inform us that, depending on the parking, he might not be able to go in the water with us. The truck had been broken into a few weeks before, and he might have to stay with the gear if we could not park inside the private lot. Works for me, I thought. I don’t like leaving my stuff anyway.

Unfortunately, this discussion prompted Janz to begin talking about the break-in, an event which he had clearly not come to terms with. His “two hundred dollar sunglasses had been stolen,” he stated more than once. He seemed quite raw on the topic.

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Pride Creates Bad Customer Service

How Your Pride Is Losing You Customers

In customer service, pride is a double-edged sword. Pride in your organization can cause team members to go the extra mile. However, pride of the don’t-disprespect-me variety can cause team members to respond unfavorably to upset customers. When the personal reaction to an unhappy customer trumps the professional reaction, pride has won, and your organization has lost.

Pride Creates Bad Customer Service

Upset with our service? Sounds like personal problem.

As much was we strive to setup customer service systems that proactively create great customer experiences, we will fail our customers on occasion. Sometimes it happens because we failed to deliver, sometimes it happens because of circumstances beyond our control, and sometimes it happens because even flawlessly executed our performance was not to the satisfaction of the customer.

We can be as proactive as we want; there will always be times when we need to react to a dissatisfied customer.

And it is in the reaction to dissatisfied customers that pride becomes a problem.

 

Way Too Proud to Beg

In many years working with employees and management on customer service, one of the biggest impediments I have seen to giving great reactive service has been the professional’s pride. From a psychological standpoint, most of us have been programmed to take the reactions that are typical of upset customers as disrespect or rudeness. Raised voices, sharp comments, angry ultimatums — all of these reactions are part and parcel of servicing customers, but they are also actions that can provoke a undesirable subconscious response.

Upset customers will push people’s buttons (if you don’t agree, then you’re not in retail). And it is your job as a customer experience professional to un-press those buttons, to react as a person whose job it is to delight the customer and not as a person who needs to buoy their self-esteem by “winning” the argument. If you want to create a world-class experience for your customers, then always remember…

Unless you are the company’s legal counsel, taking crap from customers is your job.

And therein lies the challenge. Personal reactions are natural reactions. However, part of what separates humans from animals is the ability to supplant instinctual reaction with conscious decision making.  As a group, we are able to overcome our reactions, and act within the context of a larger framework. As individuals, some of us are better at it than others.

 

Why Everyone Is Not Right for Customer Service

The inability of some to depersonalize conflict behaviors is one reason I disagree with the assertion that anyone can be trained to be great at customer service. While I do believe that anyone who has the ability to be a good employee has the ability to deliver a create proactive customer experience (in other words anyone who cares enough to go beyond the bare minimum), when you get into reactive service, particularly into problem management, the subset gets smaller.

Some people just aren’t constituted to handle it well. They cannot detach themselves, and they take the customers’ criticisms personally. They get their back up and being right becomes more important that winning the customer over.

If you win the argument, you almost always lose the customer.

I think the issue of pride in customer service is rarely talked about because it is difficult to address. It’s easy to drop platitudes like always be professional (I do it too), but in my experience, platitudes are not enough to over come basic human emotions and reflexive reactions. You need something stronger than professionalism — you need a mission. A mission to make sure that every customer has a great experience, and a mission to try to right the wrong when that does not occur. To succeed at that mission, team members need the self-awareness to not sabotage their own dedication to the mission with reflexive responses and subconscious defense mechanisms.

 

Attempting to eliminate pride from the service experience is a challenge. Each individual is different and trying to suss out these traits in the interview process will not always be easy. Like any organizational position, success comes from hiring people with the right temperament for the position and giving them the tools to be successful.

I will discuss techniques for helping customer experience professionals overcome prideful reactions in a future post. For now, when training for customer service, discuss pride openly. Help your team become more self-aware. And then, most importantly, heed your own advice.

 

So, does pride goeth before a bad customer experience? Have you ever had someone give you bad service because they wanted to be right not helpful? Have you ever delivered service below your own standards because your pride got in the way?

What is Excellent Customer Service Survey

What Is Excellent Customer Service?

Customer service is one of those topics where it is easy to speak in broad generalities. Sayings such as the customer is always right and service begins with a smile easily convey basic, unqualified principles that mask the fact that what defines excellent customer service will always be incredibly individual in nature.

However, while superior service is inevitably in the eye of the beholder, a focus on universal principles can provide organizations a worthwhile starting point to providing a customer experience that surpasses expectation. In evaluating what constitutes superior service, two basic ideas apply to almost any business.

 

What is Excellent Customer Service SurveyWhat is Excellent Customer Service?

Excellent customer service is a level of service delivery that manages to be both unnoticeable and remarkable at the same time.

 While these two conceptions might seem diametrically opposed, they are both part of a customer experience that defies the expected by delivering the expected — and then some.

Excellent Customer Service Is Unnoticeable

Awhile back I was discussing some challenges with a key vendor when I commented to her, “If you are doing your job right, you’ll be invisible to me. I shouldn’t think of you unless I am paying your invoices or there is an emergency.” You see, the regular problems were making the service erratic — sometimes great and sometimes terrible — and the regularity of the problems was enough to make the stand out moments unimportant.

The fundamental building block of excellence in customer experience is consistent performance of the basics in a way that meets expectations. And while meeting expectations is not an end goal, it is the base upon which superior service must be built. The product should work as expected, and the service should be provided as expected. Without this consistency of met expectations, stand out moments of above-and-beyond service will have little resonance. It is important to remember that…

Remarkable experiences will not save inconsistent performance.

Before you can truly provide excellent customer service, the basic expectations communicated by your brand promise must be met regularly and seamlessly.

Excellent Customer Service Is Remarkable

What takes customer service to the level of excellent or superior? Moments or processes that stand out in the customer’s mind. It is the extra touch at the end of a service, the same day turnaround for the need-it-now product, or the extra follow up at the end of a sales call.

Excellent customer service is created by layering moments of differentiation on top of consistent performance.

 How do you know if you are achieving these levels of service? You start receiving comments like these…

“I can’t believe you had that waiting on me, I am blown away”

“Jane really makes every visit a pleasure; make sure you keep her.”

“I’ve been getting this type of service for twenty years; this is the first time anyone has ever listened to what I was saying.”

 

In the end, each business must chart its own path to excellence by knowing its customers and its model. And while the details will vary by industry and application, the above basics are a sound starting point for all businesses. Create systems and training to produce your product or deliver your service consistently, and then look for ways to stand out in your customers’ minds.

 

When was the last time you had excellent customer service? What made it excellent? What steps do you take in your business to provide customer experiences that are consistent and/or memorable?

Definition of Customer Loyalty: Dog Waiting on Dock

The Definition of Customer Loyalty

Definition of Customer Loyalty: Dog Waiting on DockI have been trying to find a good definition of customer loyalty in this wide world of the Internet, and I have come to the conclusion that 1) no one has figured out how to define customer loyalty or 2) I am really bad at finding information on the Internet.

Do some searches yourself; you’ll find a lot of general discussion of what customer loyalty is or concepts that are important in evaluating it — but few definitions, and no good ones.

I believe customer loyalty is one of the most important aspects of the customer service experience, and if I am going to talk about it frequently, I ought to know exactly what it is. So, I decided to take a stab at a definition:

My Definition of Customer Loyalty

Customer loyalty is the continued and regular patronage of a business in the face of alternative economic activities and competitive attempts to disrupt the relationship.

Customer loyalty often results in other secondary benefits to the firm such as brand advocacy, direct referrals, and price insensitivity.

While certainly sounding a bit wonkish (sorry, the academic inclinations slip through on occasion), the definition above is admittedly a theoretical approach. It succeeds as a theoretical construct in that it is comprehensive, but it fails in practical application because it is not easily measurable. The two qualifiers in the definition demonstrate this well.

Your Customer Could Have Gone to Olive Garden
I have always been grateful for business, but since the crash, that gratitude has been taken to another level. For the most part, people’s dollars are more precious now. The $50 someone spends at my place could have been used to take their family to dinner or to pay down their mortgage. Understanding the opportunity costs, the alternative economic activities, of your customers is a great mindset with which to approach their business, but it is not measurable and is ultimately useless as a way to measure customer loyalty.

When the Customer’s Away, The Competitor Will Play
As the saying goes, you don’t know what you don’t know. You really don’t know when, where or how often your competitors are interacting with your clients. Sure, you will have a sense of some things. You might see a competitor’s major marketing campaign or a friendly receptionist at your client’s company might tip you off that the competitor was in for a meeting. But you will never really know how often competitive interests are attempting to interdict the relationship between you and your customer. And you almost certainly cannot use this concept to definitively measure customer loyalty.

In the end, your customer’s loyalty can be difficult to define and difficult to measure. On a theoretical level, they either did something else with the money or they spent it with a competitor. That simple. However finding the measurements that allow a business to accurately define and gauge the loyalty of their customers is much more challenging, varying by industry and even niche.

Is loyalty the same for a restaurant and a PR firm, for a day spa and maintenance company? Once you begin to drill down to measurable metrics, probably not.

I will leave methods for measuring customer loyalty and techniques for how to increase customer loyalty for future posts. For now, we can find value in the theoretical and simply consider what the concept means in our own businesses. We can look at the people we consider to be our most loyal customers and see what they have in common. What, in our mind, makes them loyal, and what did we do to make them that way? So let me know…

How would you define a loyal customer in your business? What behaviors does that person exhibit that make her loyal? Have you ever tried to measure loyalty or at least think about the differences between your most loyal and your least loyal clients? How can we improve my definition?

PS. If you find a good definition of customer loyalty elsewhere, please share it in the comment section, along with the source.

Customer Service at Dental Office

Customer Service Stories: Getting to the Root of Customer Service

Customer Service Stories Header

 

Business and Life Coach Kaarina DillaboughGuest Poster: Kaarina Dillabough

It is my pleasure to introduce Kaarina Dillabough, former Olympic coach and current make-your-life-and-business-better coach, as our first guest poster. Kaarina is the perfect person to launch the Customer Service Stories series, because she has an engaging way of telling a story while still being able to analyze the systems and actions behind a customer experience. Kaarina brings an incredible energy to everything she does, and you owe it to yourself to check out her website and blog when you are done here.

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Getting to the Root of Customer Service

I recently had the pleasure (cough) of being referred to an endodontist in the “big city”, for the even more extreme pleasure of having a root canal done.

Ever heard the expression, “That was as much fun as a root canal”…yeah, that’s how much I was looking forward to it.

I figured that, since this endodontist’s practice was in a swanky metropolitan section of a big city, I was in for not only a painful procedure, but a hoity toity reception. After all, preconceived notions are often how we, as consumers, first judge a business.

I did the math in my head…8 years of training, post-graduate work, high rent district…yikes! Will I have to mortgage the house and give up my first-born to afford this? And surely they won’t give a sweet rat’s patootie about me.

Here’s what actually happened:

My driver and I (I’d already been given all the applicable instructions for the day, including having a driver for post-op) pulled into the parking lot and were pleasantly surprised to discover that the first 2 hours of parking were free. Good start.

A friendly janitor and clear signage continued the positive experience. But when I reached the huge double oak doors with gleaming brass doorknobs I thought: “Oh oh, here comes the money pit and the hoity toity.

Boy was I wrong!

From the moment I opened that door, the customer service and customer experience were unsurpassed.

I entered the office and absorbed the ambiance and physical space. Pale green walls. Softly hued artwork. Comfortable seating in the waiting room. A flat screen TV (volume on low), a specialty coffee maker and current magazines were all perfectly positioned…hey, I could move in here!

The staff took the experience to another level. Each one contributed to an atmosphere that was serene and controlled. From the receptionist who greeted me, to the professional demeanor of each and every staff person, the atmosphere was one of quiet competence. Smiles were abundant. Good manners prevalent.

It was the perfect tone to set apprehensive clients’ minds at ease.

Customer Service at Dental OfficeI filled out paperwork (with a beautiful pen they told me to keep: bonus) and sat down. I felt like I was in someone’s welcoming home.

When the Dr’s assistant came to get me, I’d just tucked into the most recent issue of the Harvard Business Review (OK…I confess…it was People magazine), and thought…OK, the party’s over.

But it wasn’t. It just kept getting better. And imagine: I’m in for a root canal!

I was provided a cozy blanket to ward off any chill; the Dr. came in, outlined the procedure in a calm, comforting voice, and in 10…9…8…

When I awoke, I still had my cozy blanket and, when asked by the smiling assistant if I was ready to leave, I was tempted to say I’d like to stay and nap a bit more (I’m sure they would have let me), but I nodded and we proceeded to the reception area, where I received my post-op instructions.

The next day the receptionist called to check in and see how I was feeling. I was beginning to wonder if they could adopt me.

 

The Impact of Great Customer Service

Why did this customer service experience have such an impact on me?

First, I’d already had a preconceived notion as to what I’d encounter, and that preconception wasn’t a positive one. They say a first impression is made in the first 10 seconds, 90% of it visual. And a first impression is very hard to change.

My first 10 seconds were excellent. Ease of parking: check. 2 hours free parking: bonus. Prompt and clean elevator: check. Kind and friendly janitor: bonus. Great way finding signage: check. Oh, and I almost forgot: a clean and accessible washroom, with flowers and luxurious hand soap, conveniently located just beyond the elevator doors.

The ambiance and physical office space were clearly planned to give a sense of calm. Within 10 seconds inside the door, all fears and apprehension were abated.

The staff: The facial expressions, body language, tone of voice, appearance and movements of everyone in the office didn’t happen by accident. It was evident that specific training had been provided, and each person was contributing to a vision, mission and culture that had been clearly articulated and conveyed. There was a behavior and performance expectation, and every staff person lived up to it.

The systems: From the sign-in sheet (and complimentary pen) to the paperwork to the “processing” of patients, it was like clockwork…an almost lyrical dance of people moving effortlessly through their tasks. This had an obvious impact on those in the waiting room. People spoke in hushed tones. People smiled at one another. There was no sense of urgency, apprehension, fear or agitation in the room.

The procedure: I have no idea. I just know that when I woke up I had a cozy blanket and a smiling assistant at my side.

The follow-up: Superb. How nice to get an unexpected call to see how I was doing, with genuine interest in the receptionist’s voice, and an open invitation to call back (on a toll free number, I might add) should I have any questions.

When we talk about “Customer Service”, part of what we remember is the service part (how well/efficiently/effectively a product or service is delivered and followed up upon). But perhaps more important is the experience: what we felt…the sounds, sights, smells, tastes we encountered…the first impressions, both in ambiance and physical space… the emotions and feelings it created…the mental picture we form and maintain. ..the lasting impression that sticks with us.

 

So… How do you think the ambiance and feel of a business affects your experience? How much does it set the stage, either positively or negatively, for what comes next? What are the most important factors in creating a great first and lasting impression?

 

Kaarina is a business consultant, coach and strategist who helps you set and attain your goals, to be the best you can be, in business and in life.  If you want to create more success in your life, grow your business and become an even more extraordinary entrepreneur join her at kaarinadillabough.com and subscribe to her content here.
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Guest Post Disclaimer: Guest Posts on the Customers That Stick blog are submitted by individual guest posters and in no way represent the opinions or endorsement of CTS Service Solutions, its owners or employees. CTS Service Solutions does not represent or guarantee the truthfulness, accuracy, or reliability of statements or facts posted by Guest Posters on this blog.

Customer Service Stories Header

Customer Service Stories: Introducing The New Series

Customer Service Stories Header

Last Saturday, I wrote that this blog would be changing tack and focusing on the customer service experience. One of the most exciting aspects of this conversion is the launch of the Customer Service Stories series.

The idea behind Customer Service Stories is to discuss the principles of superior customer service through the lens of anecdote. While content posts like 5 Ways to Make a First Impression with a Customer are important (and I am sure we will have many of them), sometimes nothing teaches like analogy.

An added benefit of the series will be to broaden the perspectives given on real life customer experiences through the wonders of guest posting.

Accordingly, we are extremely pleased to launch the series tomorrow with a story from business consultant, coach and strategist Kaarina Dillabough, who is not only launching the series but being kind enough to fill in while I am away.

We look forward to seeing you tomorrow for the first installment in Customer Service Stories.

 

Have your own customer service story? Interested in guest posting? Feel free to email me at adam <at> intensefence.com. Comments are disabled on this post.

 

Woman Holding Refer a Friend Card

Does Your Business Need a Customer Referral Program?

Woman Holding Refer a Friend CardCustomer referral programs are nothing new. As consumers, we have been inundated with offers for referral perks by everyone from our dentists to our auto mechanics. The reason is simple: customer referral programs work.

Customer referral programs (CRPs) come in as many variations as there are businesses to create them. While a CRP is not an appropriate solution for all businesses, a huge portion of business can benefit from them.

What Are the Advantages of a Customer Referral Program?

To begin, we should clarify what we mean by a customer referral program. A CRP refers to referrals generated from existing customers who are familiar with and endorsers of your product or service. This is a different animal from affiliate or commission type referral programs.

 

Four significant advantages of Customer Referral Programs…
  1. Immediate Targeting – As existing customers, referrers know your business and who in their social network might stand to benefit from your product of service. Forget detailed psychographic analyses to segment your target market, your clients do so innately.
  2. Social Proof – When a customer refers your business, an implied endorsement accompanies the recommendation. The referrer is telling the prospective customer that they have used your product and liked it.
  3. Pay for Results – A beautiful aspect of customer referral programs is that you only pay for the business you get. Assuming you structure it well, in most cases the reward to the referrer should be triggered by some sort of revenue generating action from the prospect, not just an introduction.
  4. Defined CPA – A referral program enables you to define your cost per acquisition. You can specify exactly how much you are willing to pay – whether dollars, services, points, etc. – for a specific action. If the client signs up for your silver service, that is worth X; if they sign up for the platinum package, that is worth Y.

 

A Customer Referral Program Won’t Work for Us Because…

Despite the popularity and ubiquity of CRPs in certain industries, many small businesses seem reluctant to implement refer a friend programs in their businesses. A few objections are worth noting:

 

I can’t afford it…

>>   Affordability is a great concern, particularly for small businesses and solopreneurs. However, as mentioned above, risk can be managed by pegging the reward to revenue. As long as the program administration is not cost prohibitive, you can make sure you only pay if a referral generates income. Be creative, and setup a program that minimizes financial risk and out-of-pocket costs?

My customers refer us because they love us, we don’t need to pay them…

>>   We love that you live in a world with fuchsia clouds and magical unicorns; for the rest of us, we live in a hyper-competitive, recessionary economic environment. If 1 of 10 clients recommends us because they love us, we want to incentivize the 3 more out of 10 who love us but need some cajoling to take action on our behalf.

It is also important not to confuse your customers with your network, even if they overlap. Customers/clients can often have a transactional outlook. They have paid you for your services; as far as they are concerned, the relationship is limited to the bounds of that transaction. (Harsh, I know, but also very true.) Sometimes they need a reason to reengage on your behalf.

A formal referral program won’t work in my business because of X, Y, and Z…

>>   This might very well be true. A formal referral program is not a good match for every business. Your business might be new and not have enough customers to justify putting energy into a formal program or your service might be so specialized and infrequent that natural referrals based on quality of work and relationships are the only kind that work. If you feel that a CRP is not a good fit for your business, it is important to differentiate between excuses and valid reasons.

 

Customer referral programs can be powerful tools. In a competitive economic environment, referral marketing eliminates much of the risk associated with other advertising and marketing channels. The benefits are high, and unless you invest heavily is the administration of a program, the risks are fairly low.

Not every business will benefit from a CRP, but the upsides are such that every business should take a serious look at whether or not a program can enhance its business.

 Do you have a customer or client referral program? Have you entertained implementing one? Have you ever participated in one as a customer or client that was effective?