Despite the current economic turmoil, consumers are not focused entirely on price and instead reward businesses that provide them a strong customer experience, a recent survey has found.
The Parsippany, N.J.-based Strativity Group surveyed nearly 2,000 consumers in North America and found that 40% of loyal customers said they are willing to pay an extra 10% or more with businesses that exceed their expectations.
"Consumers have not shifted en masse to a price strategy," said Lior Arussy, CEO of Strativity. "We do see a difference in those businesses that deliver exceptional experience and those that do not."
Strativity created the customer experience survey in response to a growing perception that the recession would force companies to scale back on spending across the board and that, even after the economy recovered, the effects on customer loyalty would linger, Arussy said.
"In a tough economy, what is the right approach?" he asked. "The knee-jerk reaction is to cut costs across the board. We said you have to identify your differentiating touch points. Those are the ones you need to increase instead of decrease. The smart companies are actually taking the position [that they] will invest in the right things the right way and invest in differentiating factors."
The survey also showed that loyal customers are almost three times as likely to continue doing business with companies for another 10 years as dissatisfied customers, and dissatisfied customers are 10 times more likely to attrite in the next 12 months.
One area that is not seen as a differentiating factor is self-service, according to the survey's findings.
"Consumers perceive self-service as a way for vendors to outsource their service – 'You're asking me to do your job,'" Arussy said.
Businesses that spend time and effort to serve their customers emerge with a larger wallet share and a willingness on the part of their customers to pay a higher purchase price. For example, 40% of loyal customers said they are willing to pay an additional 10% or more to continue purchasing from companies delivering great experiences, and 52% of dissatisfied consumers expect discounts of 5% or more to continue doing business with a company.
And this does not necessarily require a significant investment. Organizations simply need to show their employees what works.
"Companies don't know how to instruct employees on how to deliver differentiated experiences," Arussy said. "If you get it right, this is how you differentiate. Emotional engagement should not be costing you money it."
One of the most important lessons from the results is to determine which customer touch points are differentiators for the business. This can come through surveys, focus groups, calls into key customers.
"The important thing is they bring to the conversation the complete journey, not just focusing on sales, marketing and customer service," Arussy said. "The assumption that the customer wants everything to be perfect is absolutely false. Customers know the reasons they are joining a company versus those they are not, and they'll be able to tell you."