by Daniel Burstein | via MarketingSherpa |
This Chart of the Week is unique. Often in this space, we bring you discoveries, or “ahas” — new ways to see your customers through data.
This week, we’re sharing data that you probably already know deep down. Or perhaps you just hoped it to be true.
It’s more focused on the big picture — not an individual marketing technique or tactic — and your opportunity to serve as the customer advocate, leading the organization from the marketing department in the most profitable direction.
To start, let me tell you how I discovered this data. I had just gotten back from Email Summit 2015, an event that highlighted the successes of companies engaged in customer-first marketing.
During this time, “fiduciary standard” was in the news because President Barack Obama endorsed this standard for financial professionals who handle retirement accounts instead of the lower “suitability standard” they are now held to. In layman’s terms, it means these advisors would have to put their client’s interests above their own.
The financial industry was loudly protesting. Knowing more about marketing than finance, I was shocked. It seemed absurd for an industry to very publicly proclaim that they did not want to have to put their customers’ interests first.
In all fairness, I’m a financial industry outsider. Maybe I didn’t understand the complexities of the industry.
Putting the customers’ interests first
I was again surprised (pleasantly, this time) when noted financial newspaper Barron’s also took the financial industry to task for protesting about this fiduciary standard.
In the Barron’s piece, Jon Picoult wrote, “What will matter to consumers is whether the companies they patronize put the customers’ interests first.”
I reached out to Picoult, who is the Founder and Principal of Watermark Consulting, a customer experience advisory firm, to discover what we marketers can learn from the financial services industry.
Picoult shared the following data for this Chart of the Week from The 2014 Customer Experience ROI Study …
Customer-first marketers are more successful when you look at the big picture
It’s understandable why some companies and marketers don’t practice customer-first marketing: “We need just a few more leads to meet this month’s target. Have to squeeze out just a little more revenue to meet Wall Street’s expectations on the next earnings call.”
We are human, after all. We sometimes prioritize short-term gain even if it will hurt us and our brands in the long run.
However, this week’s chart clearly shows the benefits of putting the customer at the center of your organization.
When looking at the top 10 and bottom 10 companies, according to Forrester Research’s 2007-2014 Customer Experience Index studies, Watermark Consulting showed companies that were customer experience leaders generated a cumulative total return over this seven-year period of 77.7%. To benchmark that return, the S&P 500 Index generated a 51.5% cumulative total return during the same time period.
Even more surprising, customer experience laggards generated a -2.5% return. That’s not a small difference. Don’t compare this number to zero. Again, during this time, the S&P 500 Index had a more than 50% return — a whopping difference for companies that don’t prioritize the customer.
What a customer-first business looks like
As marketers, you are at the forefront of understanding what customers want and how to serve them.
When you use A/B testing, data analysis, user experience testing, social media listening, pre- and post-purchase surveys, customer service inquiry tracking, marketing automation and other quantitative and qualitative data-driven approaches, you have the tools necessary to make the business case for prioritizing the customer.
What does that look like in an organization? This will vary by industry and product type. For example …
“We avoid something retailers dread — customer ‘out of stock’ disappointment. This also helps us to further showcase the in-depth knowledge we have of the wines we sell by providing the right product to the right customer at the right time online,” said Richard Weaver, eCommerce Director, Majestic Wine.
In Picoult’s Barron’s article, he gave the following examples:
- Costco proactively notifies its members of product recalls.
- Amazon alerts customers when they’re about to make a duplicate purchase.
- L.L. Bean exercises its no-questions-asked return policy for duck boots that aren’t holding up a year after purchase.
The similar thread through all of these examples?
Living up to the company’s value proposition
For Majestic Wine, it’s knowledge. For Costco, membership value. Amazon — tech-enabled shopping experience. L.L. Bean — quality.
The value proposition for each is different, but the approach is the same — showing the value proposition promised through marketing in the actions of the company.
This is where we, as marketers, must protect the brands we build.
A good copywriter wrote “Built to Last” and “Wicked Good Slippers” for L.L. Bean. However, it took a great company to deliver on it.
“You can’t market your way to a great customer experience,” Picoult said. “While marketing plays a critical role in the customer experience, people’s impressions about a business will ultimately be forged by the personal interactions they have with that business.”
“For this reason, it’s important that marketers think broadly about their role — seeking to influence not just the articulation of a company’s brand promise, but also the fulfillment of that promise,” Picoult concluded.