Your customers want more than “satisfying” transactions — they want engaging relationships.

It wasn’t too long ago that we believed that customers were satisfied and would continue to buy our products and services if we met their functional needs. Our knowledge of psychology and behavioural economics has since matured and we now recognise that a rational or functional view of human decision making is incomplete. This would explain why customers who appear to be satisfied, defect to our competitors. It might also explain why organic growth often remains elusive.

Customer satisfaction may not be good enough

Customer satisfaction is a necessary foundation for building strong customer relationships, yet in itself, it is a relatively poor indicator of future customer behaviour.

Empirical results from a large and growing number of case studies suggest that customers who are extremely satisfied, those who provide the highest rating of overall satisfaction with a company’s products or services, can be classified into two distinct groups: those who are emotionally satisfied and those who are rationally satisfied.

• Emotionally satisfied customers are extremely satisfied with the products and services the company provides and have a strong emotional attachment to the company.
• Rationally satisfied customers in contrast, are also extremely satisfied with thecompany but lack the strong emotional connection of customers who are emotionally satisfied.

Emotionally satisfied customers deliver greater value to a company, for example they buy more products, may be prepared to pay more for those products and remain enthusiastic and loyal to the business. Rationally satisfied customers on the other hand, behave no differently from customers who are dissatisfied.

Consider the following case study from a large U.S. retail bank. Over a six-month period, customers were assessed using an 11 item metric of customer engagement. It was found that

emotionally satisfied customers ended their relationships with the bank by completely closing their accounts at rates that were 37% lower than rationally satisfied customers’ rates. Dissatisfied customers, on the other hand, scarcely differed from rationally satisfied customers in their attrition levels.

Similar results emerged for an international credit card provider. Over a six-month period, emotionally satisfied cardholders spent on average $251 per month and used their cards an average of 3.1 times per month. Rationally satisfied cardholders by comparison, spent on average $136 per month and used their cards an average 2.5 times per month. The same study showed that emotionally satisfied cardholders increased their spending by 67% over a 12-month period compared to an increase of just 8% among rationally satisfied customers.

Once again, dissatisfied customers were not significantly different from rationally satisfied customers in terms of spending increases; and this pattern has been shown to be consistent across industries.

Customer satisfaction with our product offering is therefore not enough.

Simply satisfying customers by delivering on their rational requirements represents a minimum point of entry for today’s businesses; managing to satisfy customers because we have the product they want will not automatically translate into repeat business and improved sales.

To build the strong customer connections that produce enhanced financial benefits, a more complete view of customer requirements is needed, which incorporates an understanding of the emotional dimensions of customer commitment.

Customers want more than transactions — they want relationships.

So what is the learning?

One of the toughest challenges facing business today is how to drive success by effectively managing the moments where employees interact with customers.

We need to constantly monitor and manage our employee-customer encounters to ensure that we bring excellence to the way employees engage and interact with customers.

There is an important principle that is often overlooked when business decisions are made:
“The world is built on relationships between human beings.”

Consider the following five rules:

RULE #1:

E Pluribus Unum. Employee and customer experiences must be managed together not as separate entities.

RULE #2:

Feelings Are Facts. Emotions drive and shape the employee-customer encounter.

RULE #3:

Think Globally, Measure and Act Locally. The employee-customer encounter must be measured and managed at the local level.

RULE #4:

There Is One Number You Need to Know. Employee and customer engagement interact to drive enhanced financial performance. Increase this number and increase your bottom line.

RULE #5:

If You Pray for Rain Best you have Prepared the Soil. Good intentions do not constitute a plan of action. Continuous improvements in the employee-customer encounter requires disciplined action coupled with a companywide commitment to changing how employees are recruited, positioned in suitable roles, rewarded and recognised and importantly how they are managed.

Referenced: Managing the Employee-Customer Encounter (Gallup)