While a lot of effort goes into marketing and advertising to get new customers to buy a product or service, companies somehow do not share the same enthusiasm when it comes to providing a good experience.
However, in a world where traditional monopolies are being broken by new age innovations, retaining customers is increasingly rising in importance. Companies, both startups and established ones, have realized that preventing customer churn is the key to their survival.
So, why is customer satisfaction such a big deal, and how do you go about it?
The importance of customer satisfaction:
For Camilla Ley Valentin, the CCO and co-founder of Queue-it, customer satisfaction is business. Queue-it has developed an online queuing system for managing website overload during extreme user peaks in relation to popular events and activities online. “This means the company keeps websites running during the most critical moments, for example a Black Friday sale. If Queue-it were to fail due to an incorrect implementation (poor customer service) this would impact its client’s business significantly, reduce revenue, and cause end-user frustration,” says Camilla.
Jakob Soderberg of ARPEDIO, a sales and customer relationship platform for complex sales, likes to keep it simple. “No customers mean no business. Customers pay bills. Satisfied customers continue to pay bills. Especially in this fast-paced SaaS world where sustainable growth heavily relies on low customer churn. For us it is extremely important to ensure that customer satisfaction is high,” says Jakob.
Christian Brøndum of Planday, a software-as-a-service product company, says that the great part of a SaaS subscription based business model is that if he manage to keep a customer satisfied, he will, on an ongoing basis, continue to receive revenue from that customer for years. However, if the customer experience turns negative, he will lose the future revenue – comparable to losing a sale.
“As a consequence, we invest a lot of time, money, and focus on keeping our customers satisfied. We do that through Customer Experience Management (CEM). We have taken the time to identify all the touch points we have with our customers from the first moment they hear or read about Planday, through the onboarding of new customers and onwards to an established business relationship,” says Christian.
Christian believes that the sum of good and bad customer experiences defines the strength of the brand – in essence, how fast a company is able to scale its business.
Morten Korch-Haahr, the Co-founder & CEO of Opeepl, says that the focus on customer satisfaction is probably the single most important factor in getting returning revenue and constitutes the easiest way to grow your total revenue continuously. “Furthermore, satisfied customers are much more likely to recommend your business to peers, hence, becoming a free and high value marketing channel,” he says.
When to prioritize customer satisfaction
So when does a company start taking customer satisfaction seriously – the day the company starts operations, or at a later stage? Giving priority to customer satisfaction is never optional Camilla says. “We take pride in providing the best possible service to our customers at all times, and this has been our focus from day one. Without customers, who love and recommend Queue-it, there would be no company,” says Camilla.
She goes on to add that while starting up, an entrepreneur may have a lot on his plate, but customer satisfaction should be a top priority from the very beginning. “The processes and tools to handle customer inquiries will change as the company matures, but the core attitude should remain focused on customer satisfaction.”
Jakob says not giving attention to customer satisfaction at any point in a startup is a guaranteed recipe for disaster. “Having your first customers is an important step for a start up. Listening carefully to those first movers can provide valuable insight to your product and service. At any stage you should pay attention to customers and take their input very seriously,” says Jakob.
Christian has similar beliefs, as he feels customer satisfaction should be a core part of a company’s DNA. “It can be quite complicated to manage the customer experience throughout the customer lifetime. If a company does not build in Customer Experience Management from the beginning, it can be difficult, even impossible, to succeed with this at a later stage,” says Christian.
He elaborates that a new sale is concomitant on marketing, sales, and setup functions. “If a company invests in all these stages just to lose the customer to a poor experience later in the funnel, it will prevent the company from future scale. You need to manage both sales stages – new sales and renewal. My advice would therefore be the think Customer Satisfaction from day one and make it a core part of the company’s DNA.”
Morten says as soon as you involve customers, you should prioritize customer satisfaction. “Naturally, initial customers will often be involved in some kind of beta testing and hence not expect 100% product or service. But you still have to keep them satisfied as a no response attitude etc. would reduce the chance of them becoming long term profitable customers,” says Morten.
He says that even the earliest customers have impact on scaling the business. “This is both because they can be used as cases and references, but maybe more importantly because they, if happy with your product or service, will work as ambassadors.”
While it is clear that customer satisfaction is important, how does a company go about achieving it? Technology has made life easier, and providing customer satisfaction can now to a large extent be automated. Jakob says with software, you can track the customers’ use of your product. “Add surveys within the software to track the perception of changes in functionality or user interface. One can also monitor where usage falls short and needs improvement,” says Jakob.
An advocate of technology, Christian says tech can and should play a key part. “We use a mix between event tracking systems and customer service systems to ensure the best possible customer experience every time. As a concrete example, we use Totango to track customer events in Planday. This way we can monitor how a given customer uses Planday,” says Christian.
Morten adds that today there is a ton of software to help you get feedback and interact with your customers. “Technology can help gather, structure, and quantify customer satisfaction. But it all comes down to how you handle customers and customer feedback (whether directly or through technology),” says Morten.
Listen to feedback:
For Camilla listening and reacting to customers’ feedback is an integrated part of its delivery mechanism and the team culture is very strong in sharing findings – positive and negative – to make sure it constantly learns and adapt to the market requirements.
According to Jakob, not everything can be left to technology. “Using software to carefully monitor user experiences is one thing. Another thing is the good old-fashioned conversation. Our Customer Success Team focuses on actual conversations with users. And of course, net promoter scores are important. The answer to the question: How likely are you to recommend XYZ service to a friend or a colleague is a vital element,” says Jakob.
For Christian, technology and KPI measurements play a key part in listening to his customers. “However, our sales and support team is also in daily contact with customers and channel important input into product development. Further, our UX/UI department frequently meets with customers to learn how they use Planday in practice, what they don’t understand and what they are missing. We also test future product releases on test customers before going live to ensure good customer experiences,” he says .
Drawing from his personal experience, Morten says in the beginning, as a CEO, you are normally involved with the customers, so you get feedback from meetings and other direct interactions. This obviously becomes impossible when having hundreds or thousands of customers.
“Depending on the nature of your business, B2C, B2B, B2B enterprise, etc. you have to rely on either reviews, feedback from sales reps or customer advisory boards. At Opeepl we do a bit of everything gathering feedback. But the main feedback still comes from direct interaction with the customers using our system,” says Morten.
Need for CRM
In such a scenario, what is the importance of actionable data on customers, and can startups afford to generate such data through expensive CRM solutions? Camilla says the complexity of data analysis and reporting for a company through, for example, CRM solutions, should grow with the number of customers serviced.
Jakob says contrary to popular belief that CRMs can be costly, although there are ways to find lower-priced options. “It depends heavily on your business and your ability to define, especially, what it is you want to accomplish and monitor through the use of CRM. Also, many CRM solutions and other SaaS solutions offer an entry-level package with basic functionality and when your business grows the service grows with you. (Hubspot is a great example of this strategy),” says Jakob.
Christian says actionable data are the key to guide a company with scarce resources on what to prioritize and in what order. “In reality, building a company is not about following a grand business plan. It is about taking thousands of small steps in the right order every single day.”
He also believes that CRM solutions are double edge swords. “It can be very time consuming and expensive to set up the right CRM solution – and the setup process can take a lot of focus away from the actual customers. However, once implemented correctly, a CRM system can be immensely powerful. It can link all available data sources related to a customer in a single overview to optimize customer dialog, conversion and retention,” he says.
He thinks that as with CEM (customer experience management), any startup should tackle CRM from day one. CRM can be built in very simple formats that a company can extend as they grow bigger, and it is as much a way of thinking as it is about IT systems.
The costs of acquiring customers are going up
The idea of preventing customer churn has grown in popularity as the cost of acquiring customers becomes costlier, especially in segments like mobile apps.
According to Jakob, competition is definitely increasing in this segment. “The fight for share-of-wallet is fierce and intense. An increase in customer acquisition cost is likely, but if it is the case throughout the entire segment, I’m not sure,” says Jakob. Morten agrees that as more and more industries are moving online and fighting for the attention of the same user groups, prices are driven upwards. Thus, the traditional paid acquisition cost is on the rise.
Christian says if he splits his Customer Acquisition Cost (CAC), the marketing campaign costs are going up in a number of channels. More and more companies are beginning to focus on the traditional paid search channels such as Google and Facebook, pressing the price-per-lead upwards.
Digging into the details, Christian says mobile paid search in particular is becoming more expensive. However, mobile is in most cases still the assisting media. “Where people, mainly search on their mobile, the actual conversion to trial and paying customer still happens most frequently from a desktop, where the cost per conversion is dropping. Thus, mobile search costs are going up, but desktop conversion costs are going down, balancing the two to some extent,” says Christian.
He adds that there are new marketing channels becoming available, which can create similar or even better results at a lower price, but it demands an advanced marketing setup, which maybe a challenge for an average startup.
Christian says the other element in the cost of CAC is the salary element of your team, where a lot can be done to bring down costs. “A well designed customer on-boarding and support process can make a huge difference in relation to the salary spent. The more customer self-management and sales/marketing automation a company can enable, the higher the productivity per employee, and hence, the lower the CAC.”
Queue-it, on the other hand, has seen its costs decrease due to a novel feature built into its system. “End- users, who see a queue page while waiting, will see the Queue-it logo and a link to our website alongside the customer’s own branding of the page. This means that the journey from being an end-user in a queue somewhere to becoming a Queue-it customer is simple and cost-efficient. This mechanism means that the customer acquisition cost will decrease as we increase our customer base,” says Camilla.
Promises to keep
One of the key elements of customer satisfaction is a company being able to keep up with the promises it makes. Many advocate that it is better to under promise and over deliver, and Camilla agrees this is a rational approach.
Conversely, Jakob believes that delivering exactly what you promise is the key. “Nothing more, nothing less. However, should I chose one over the other, I would much rather ‘over deliver’,” says Jakob.
Christian agrees that it is never a bad strategy to over deliver. “It will certainly push the balance between good and bad experiences in the right direction, thereby strengthening the brand,” says Christian.
Morten says that under promising and over delivering, in an ideal world, would create superb customer satisfaction right from the start. “However, this can be a challenge for a startup, as you often start out with something far away from the ideal product. Hence, you sell a vision of the product that is often not fully developed nor implemented yet. Furthermore, if you operate in a competitive market, you might be forced to push your promise to edge of what you can deliver,” says Morten.
According to Christian it is getting harder and harder to under promise. The internet is increasing both reach and transparency for companies around the globe. “If you under promise you might not get passed the competitors that over promise to begin with. However, if you under deliver and provide bad customer experience, it will quickly go public,” says Christian.
The best option, Christian says, is to be genuine.” If you want to win you need to be able to tell the market a story of both promise and actual change. However, you must also be prepared to deliver as promised,” he says.
The truth, as Christian puts it, is that in reality, no company manages to deliver only good customer experiences. “There will be bad experiences. But with the right mindset, focus, and technology a company can decide to heavily over deliver good customer experiences in all significant customer touch points,” he says.