The Business Case for Loving Customers

CHAPTER 3

What Matters to Customers

Now we know the why. Next is the what; what matters to customers in this relationship? What principles should guide your customer service strategy?


Although the business-customer relationship is largely based on emotion, we can still look to scientific research for answers that reveal 3 powerful, emotional triggers. Leveraging these triggers in your day-to-day interactions is what customer love is all about.

Trigger #1: A Personal Touch

“In an era when companies see online support as a way to shield themselves from ‘costly’ interactions with their customers, it’s time to consider an entirely different approach: building human-centric customer service through great people and clever technology. So get to know your customers. Humanize them. Humanize yourself. It’s worth it."

- Kristin Smaby, “Being Human is Good Business"

The formal definition for a personal touch includes "any contribution someone gives to make something more personal." It's a moment that makes your customer feel uniquely valued and appreciated. It could be greeting the person by name when they walk in, sending them a card on their birthday, or, as one study shows, a gesture as subtle as bringing mints to the table after a meal.

Case in point: In a study published by the Journal of Applied Social Psychology1, researchers tested the effect of mints given by the wait staff in a restaurant. For the experiment, the control group was given no mints at all. There were three other groups:

The first group gave mints along with the check, making no mention of the mints. This increased tips by around 3 percent versus the control group.

The second group brought out two mints (separate from the check), and the wait staff mentioned them to the table (i.e., "Would anyone like some mints before they leave?"). They saw tips increase by about 14 percent versus the control group.

The last group brought out the check first along with a few mints. A short time afterward, the waiter came back with another set of mints, and let the customers know that they had brought out more mints in case they wanted more.

In the last group, wait staff saw a 21 percent increase in tips versus the control group. The level of service did not change at all—the only difference was the approach with mints. Could you have imagined such a small personal touch at the end of a meal making such a huge impact?

As this study reveals, the smallest calculated personal touch can have a measurable impact on how the customer feels about your company. It's worth carefully considering what opportunities you have to implement a personal touch. In most cases, these touches turn out to be memorable (and often worth sharing) for the customer.

Trigger #2: Reciprocity

The social construct of reciprocity has been studied since Aristotle, with scholars continually asking why the human brain feels the need to keep transactions of all sorts "fair." When someone gives you something or does something nice for you, you feel an innate obligation to return the favor.

Reciprocity has fascinating effects in the context of customer service. By going out of your way to love a customer, it creates a subconscious desire for them to return the favor. Reciprocity is something we all feel, and it's the reason loyalty is so very valuable to a business.

Two kinds of reciprocity matter when it comes to loving customers: trumpeted reciprocity and surprise reciprocity. Above-and-beyond customer service like what we saw earlier with the Rackspace pizza story would be considered trumpeted reciprocity, meaning it happens through deliberate and often unique efforts to "WOW" the customer.

Surprise reciprocity is a little more subtle. It's part of the experience when you do business with certain companies, but comes as a surprise to the customer. When a customer orders something from Zappos, they "surprise upgrade" the shipping to overnight for almost all their customers.

If you have ever opened a brand new Apple product (such as an iPhone or iPad), you know that the packaging is an experience in itself. Before you even touch the device, you feel the care and precision that went into creating the product for you. This unexpected sense of excitement is another example of surprise reciprocity.

Both types of reciprocity create an emotional connection with the customer, such that they feel a subconscious need to reciprocate the gesture.

Reciprocity is what motivates customers to send a tweet, share their experience with a friend or continue doing business with you over time as a loyal customer.

Trigger #3: Being a VIP

There are few things more valuable to your company than loyal customers. Not only will they continue spending money with you over time, but 78 percent of customers say they show loyalty to a brand by telling others about it. 2 That's a pretty compelling case for an investment in building customer loyalty.

Since we know that loyal customers are extremely valuable, are there ways to further strengthen these relationships? Are there tangible ways of motivating customers to keep coming back? The data says yes. Depending on your business, there are a few different ways to execute these tactics.

A fascinating study by researchers from Stanford and Harvard Universities examined the power of labeling people.3 Half of the group was randomly selected and told they were deemed "politically active." The other half, the control group, was not told anything at all. Sure enough, the ones labeled as "politically active" ended up being 15 percent more likely to vote. The bottom line: People respond positively when a label gives them a feeling of importance.

This same concept has been applied with great success by companies such as American Express. They are the only credit card company to refer to their customers as "members." American Express further labels certain groups via fancy card names such as Gold cardholder, Platinum cardholder and the highly-prized Black cardholder.

An equally-effective alternative to labeling is creating some form of customer loyalty program. This one is pretty clear: Incentivize customers to keep coming back while also giving them that prized VIP feeling through rewards.

A study done by Joseph Nunes & Xavier Dreze4 revealed a fascinating insight about how to make loyalty programs work. They gave out 300 loyalty cards to customers of a local car wash. Customers would be given a stamp on the card each time they came back for a car wash. Once the card was full of stamps, they get a free wash.

As part of the experiment, two kinds of cards were given out. The first group got a loyalty card with eight slots to be stamped. The second group got a card with 10 slots, but two of the stamps were already filled in. So both groups needed eight washes to get a free one, but one group perceived that they got a head start of two stamps.

The result: Customers with a two-stamp “head start” completed all the stamps on their card 34 percent of the time. The other group (that started with no stamps) only completed all the stamps on their card 19 percent of the time. That's a 44% improvement based on a perceived head start!

The researchers in this study affirmed their belief that the closer people get to completing a goal, the more effort they are willing to put into achieving it.

Takeaways

  1. A Personal Touch - Creating a memorable moment for customers often takes shape through some form of personal touch.
  2. Reciprocity - Understanding a social norm that is built in to every human being is a key to earning more loyal customers.
  3. Being a VIP - People are willing to spend more with your business if you give them a feeling of importance and reward their repeat business.

Chapter 4: Whole Company Support

Footnotes

1. Source: "Sweetening the Till: The Use of Candy to Increase Restaurant Tipping" 2. Source: Clickfox Brand Loyalty survey 3. Source: "Motivating voter turnout by invoking the self" 4. Source: "The Endowed Progress Effect"