Customer Experience Strongly Impacts Customer Lifetime Value
Customer Experience Strongly Impacts Customer Lifetime Value
Every buyer is a non-buyer
According to a recent Salesforce report, only 21% of marketing leads (potential buyers) actually end up buying. That’s a huge gap of 79% – a gap that most successful organisations are focused on. Converting a non-buyer requires time and effort, involves sales pitches, services, et al, which is something any business worth its salt does.
What’s important to note however, is that the reverse can happen in the blink of an eye. Taking a buyer for granted is the biggest mistake a company can make, the price for which will have to be paid long after that particular buyer exits the relationship. A single bad experience can turn the most loyal customer into a lifetime adversary, and that’s something we all need to avoid.
Hence the concept of customer lifetime value and the impact of customer service on it!
Predicting and placing a monetary figure on the share of revenues/profit which can be ascribed to the future relationship with a buyer is essential for long-term business plans. Optimizing the cost of customer acquisition and retention while ensuring the maximum value is the balance all enterprises strive for, and a handful achieve.
A recent report from Walkerinfo shows the reason we need to focus on customer experience more than on any other branding activity.
Walkerinfo is not alone; and the finding is not new. Research on customer service and customer experience has been consistent through the years, showing that customer service – good, bad or indifferent – affects revenue drastically. As far back as 2013, Zendesk reported similar findings. The report stated:
- Customer service is the #1 factor influencing buying decisions.
- Over 60% of customers purchased more after a good experience, and over 65% stopped buying after a bad one.
- Online reviews influenced buying decisions in nearly 90% cases.
- Along with quality of service, what mattered most was the pace of service; the quicker the service, the better the impression and the longer the effect.
Source: Walkerinfo.com
So, what happens if you dissatisfy your customer?
People talk, and they talk more about bad experiences. The Zendesk report stated 95% customers share bad experiences with others, compared to the 87% who share good experiences. Walkerinfo has similar statistics. And in these days of social media and internet memes, even the tiniest bad interaction snowballs into a global issue.
Every prospect is a reluctant buyer. Converting that reluctance into a definite yes is what good customer service is all about. The best way to transform non-buyers to buyers, and also retain existing buyers, is to ensure that the service is prompt, effective and memorable for the right reasons. The emotional impact a person has while interacting with the company/product/people is directly reflected in the amount of money spent and the degree of loyalty. Customer service determines what is remembered, with memories of poor service lasting a lifetime. So, if you want your customers to stay loyal, you have to invest in the entire customer experience journey. Gartner predicts that in 2018 more than 50% of organizations will redirect their investments to customer experience. Don’t be left behind!
