This guest post is brought to you by the team at BathroomRenovationsPerth.NET, a company that strives to make its customers happy for many years to come!
Do you want to know how to create a world class business full of loyal and evangelizing customers? How to create a business that is very profitable and a pure joy to run? Make people happy! It sounds so simple and in many ways the concept is almost embarrassingly basic, but the importance of aiming for this goal has never been greater. Here are a few reasons why happy customers are becoming more and more valuable.
Happiness Is Broadcast
Like never before, the structure of society, of economics, and of media is geared towards rewarding businesses that make people happy. Happy people tell their friends about their happy experiences. Happy people tell their friends about businesses that made them happy. They do this both verbally and through mass communications on the web. We now have access to real-time reviews through the internet that can give us shockingly detailed accounts of whether or not a business is making people happy. Not only that, but reviewing these accounts is now considered to be an essential part of the buying process. Take the fantastically delicious review site Urbanspoon for example. I know that for me personally, I ALWAYS check a restaurant on Urbanspoon before deciding to eat there. I do this without fail. In fact, the reviews on Urbanspoon are the single most important metric that I use to decide where I’m going to eat. Another example would be IMDb.com. Again, I consider this to be the most important metric for my purchasing decisions. In fact, I don’t want to know about plot, genre, cast, crew, or anything else (I used to be a film and television director and I have a particular dislike of watching trailers that spoil the ending), all I want to know is how is the film rated on IMDB.com. That’s it. That’s everything to me. If it’s rated an 8 or above, then I’m there!
Happiness Is Repeat
There’s an old business adage that says something like “It costs a lot less to keep an existing customer than it does to find a new one.” This saying is now ringing louder and stronger in our ears than in previous years. The plurality of choice we have afforded to us through our purchasing channels means that if our experience with a particular supplier or service provider doesn’t make us happy, then there is no way that we will ever use that service provider again. Period. The mediums of commerce afford us this choice. It doesn’t matter how brash or loud this business is with its advertising, the customers won’t come back. From a negative perspective and one that’s probably pretty easy to visualise at the moment, let’s take a really simple example of someone visiting a website. A visitor may arrive at a website through a number of different paths, probably through a search engine. The webmaster may have done a bunch of advertising to get the visitor there in the first place. Now the next thing that happens is the single most important success factor for the website. If the visitor loves the website, then they will return, over and over and over again. They’ll probably also tell their friends, might post about it on Facebook, or blog about it on their own site. All of a sudden this single visitor turns into and exponential number of referred visitors. Great! Conversely though, if the visitor arrives at a different website, and they hate the website, then they’ll leave, they might block it the search results, and they’ll make sure to never visit again. The intense part of this equation is that both websites have probably invested the same amount of money in advertising or similar to attract people to the website in the first place. Website A has turned that advertising spend into a repeat customer + referral. Website B has turned that advertising spend into negativity. It’s a pretty stark contrast. Let’s take another example. Someone wants to get their bathroom renovated. So they do some research and find some bathroom renovation providers. They get a couple of quotes and decide to go with the renovator who seems like they will add the most value. Then the bathroom gets renovated. Now if the renovator did a great job, then the customer will tell their friends about the success of their project, and may even look to engage the renovator on additional bathroom renovations, kitchen renovations, or even home extensions. That first initial customer contact can turn into a total customer lifetime value (CLV) that may be many multiples of the initial engagement. Imagine the bathroom renovation cost $15,000, and imagine that the renovator got 2 additional bathroom renovation referrals at a total of $30k, plus a kitchen renovation project at $20k. That’s a total CLV of $65,000. At a net profit of 15% that’s $9,750 of profit. To look at the opposite scenario, imagine the customer engages a dodgy renovator by mistake. This renovator comes in and tries to cut some corners to make some extra money. They figure that they can turn their $2,250 of profit on the bathroom project (net profit of 12% again) into a $2,750 profit by saving on the water proofing materials. After all, the customer won’t be able to tell at the completion of the job So they do the bathroom with their stingy attitude, they get paid, and 1 month later the customer notices the bathroom is leaking. They call up the renovator, but the renovator declares that he’s not liable for “old leaking pipes”, as per the terms of the contract! It feels like a win to the dodgy renovator, but in reality he’s lost out on an additional $7,500 worth of profit from lost referrals by trying to make an additional $500 on a job. Now that’s a hollow victory if ever there was one.
So Make Customers Happy!
It’s not rocket science, but it’s vitally important. Make customers happy to succeed at business