TakeAway: Social media has increased the speed at which customers hear from their friends about good and bad experiences with companies. In times of recession, low prices AND good customer experience are what’s needed to succeed. People-centric industries, like retail and hotel, where there is more competition tend to spend more to create a good customer experience and find success in doing so.
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Excerpted from AdAge, “The Marketing Value of Customer Experience,” by Josh Bernoff, January 12, 2011
Customer experience is marketing. That is, in a world drenched in social word-of-mouth, the way you treat your customers — and the way they perceive you — makes all the difference in what they say to their friends.
…results from Customer Experience Index survey.
- Only six percent of the brands were ranked as excellent… two-thirds were rated “okay” to “poor.” Eighteen percent were ranked as poor. …
- Retail and hotel companies did the best; health insurance and TV service providers ranked worst. … The cost of great experience in the retail and hotel business is very high, they are people intensive businesses where it’s easy to fail. And yet the companies that succeed here succeed in part based on great service — because they compete. In health insurance and TV service, there is far less competition.
The best performers overall were Borders, Barnes & Noble, Kohl’s, Costco, Amazon, JCPenney, Walgreens, Target, BJ’s Wholesale Club, and USAA (credit cards). …a great experience by itself doesn’t make up for an industry facing digital disruption. It’s also fascinating how many low-price providers are in the top ten,… . In a recession, providing low prices and an experience that’s better than people expect is a prescription for success.
… advertising is a lot cheaper and easier than changing… to focus on customer experience. … sure, you can keep hammering the message of how great you are, even if your customers think differently. … But in the end, people will find out the truth — and with social technology, that happens more easily every day.
Or, you could put your money and effort into improving the experience. That’s an effort that will take a couple of years, but with buyers coming back and seeking value as the recession lifts, you’ll attract the leaders. They’ll talk. You could end up like Zappos, where the customer word-of-mouth is most of the marketing. Or, you could just develop a customer experience that resonates with consumers, which is a whole lot easier to advertise.
Edit by HH
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