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40 facts explain customer loyalty worth and how to make it work 0

Posted on March 24, 2019 by Rob Petersen

Customer Loyalty

Customer loyalty is the result of consistently positive emotional experiences that includes the product or services where both work together to deliver superior value.

How much value does a loyal customer represent to a company? How does a company secure loyal customers?

Here are 40 facts that explain customer loyalty worth and how to make it work for your company.

What’s a loyal customer worth

  1. Loyal customers are worth up to 10 times as much as their first purchase.
  2. The probability of selling to a new customer is 5-20 percent, while selling to an existing customer is 60-70 percent.
  3. 1 in 3 customers will pay more to receive a higher level of service. 
  4. After the original purchase, the likelihood of a customer making a second purchase is close to 30%, and after they make a second purchase the likelihood of a third jumps past 50%.
  5. Increasing customer retention by 2% can have the same impact as reducing costs by 10%.
  6. Majority of a customer’s 365-day CLV is realized within the first 30 days as a customer. 65% is realized on day 1, and that grows to 79% by the three-month mark
  7. The cost of bringing a new customer to the same level of profitability as an existing one is up to 16 times more.
  8. Consumers spend up to 17% more with companies with excellent service.
  9. Millennials are willing to spend up to 21% more with companies for great service.

How to make it work – Give special status, surprise them, offer something exclusive with an experience that exceeds their expectations

  1. 92% of loyal customers rank price and value as the top driver for loyalty to specific retailers, followed by product/quality at 79% and variety/selection at 71%.
  2. 91% of consumers would reward a brand for its authenticity, and 62% say they would either purchase a product from a brand they deem to be authentic or express greater interest in buying from that brand in the future.
  3. 86% of Gen Xers and 85% of Baby Boomers would switch retailers immediately if customer service is poor.
  4. 81% of consumers agree that loyalty programs make them more likely to continue doing business with a brand.
  5. 81% of U.S. consumers feel loyal to brands that are there when they need them, but otherwise, respect their time and leave them alone.
  6. 80% of companies spend less than 30% of their time and budget on customer retention-focused messaging.
  7. 75% of companies see a return on investment from their customer loyalty program.
  8. 74% of Millennials would switch to a different retailer if they had poor customer service.
  9. 73% of customer loyalty club members are more likely to recommend and say good things about brands with good loyalty programs.
  10. 71% of shoppers say they would be more likely to use their loyalty cards if they could access these cards and rewards from their mobile phone.
  11. 66% of Millennials indicate that they are more likely to shop from stores where they are part of a loyalty program.
  12. 63% of U.S. consumers say they’d share more personal information with a company that offers a great experience.
  13. 62% don’t believe that the brands they’re most loyal to are doing enough to reward them.
  14. 61% of online shoppers chose receiving surprise perks and discounts as their preferred personalized experience
  15. 59% of US online adults who are members of a customer loyalty program say that getting special offers that aren’t available to other customers is important to them.
  16. 58% of adults don’t trust a brand until they have seen real world proof
  17. 58% of customers join loyalty programs to save money and 38% to receive rewards.
  18. 57% spend more on brands or providers to which they are loyal.
  19. 56% of high-income consumers feel less loyal to brands now than they previously did.
  20. 54% say they would consider increasing the amount of business they do with a company for a loyalty reward.
  21. 51% of U.S. consumers are loyal to brands that interact with them through their preferred channels of communication.
  22. 50% of consumers said they were willing to give a retailer a second and third chance, with 50% abandoning brand loyalty only after the same mistake was made more than twice.
  23. 50% of U.S. consumers said they switched companies they buy from this year because of poor customer experience.
  24. 48% say that the most critical time for a company to gain their loyalty was when they make their first purchase or begin service.
  25. 42% of consumers distrust brands.
  26. 41% of U.S. consumers say they ditched a company because of poor personalization and lack of trust. 
  27. 39% higher basket size of a customer in company’s loyalty program than a customer that isn’t.
  28. 37% of consumers trust brands less than they used to, compared to only 7% who trust brands more than they used to.
  29. 29% of customers shop around, but ultimately repurchase from the same brand.
  30. 13% of customers are loyalists, who don’t shop around.
  31. The average U.S. household has enrolled in more than 18 customer loyalty programs, but is only active in 8.4.

Do these facts explain what customer loyalty is worth to you? Do they give you an idea of what your company should do? Are you ready to get started?

30 fascinating facts on chatbots and customer service 0

Posted on July 09, 2018 by Rob Petersen

Chatbots are robots programmed to respond like humans through a computer program and artificial intelligence.

It is an assistant that communicates through text messages, a virtual companion that integrates into websites, applications or instant messengers to help businesses give better customers service. The video above explains how.

If you’ve interacted with Apple’s Siri, Amazon’s Alexa, Microsoft’s Cortana, and Google Assistant, among others, you’ve used a chatbot.

And, if your business is on Facebook, Facebook Chatbots are a free feature show to improve marketing, sales and customer service results.

Do they improve customer service for businesses? Are they here to stay?

Here are 30 fascinating facts on chatbots and customer service.

  1. 75% say they want to know whether they are chatting with a chatbot or a human.
  2. 74% of consumers say they used voice search in the past month, and daily use is up 27% compared to last year
  3. 73% of Americans said they wouldn’t use a company’s chatbot after a bad experience.
  4. 69% of consumers say they interact with a virtual assistant or chatbot at least once a month.
  5. 63% of people would consider messaging an online chatbot to communicate with a business or brand.
  6. 61% of consumers believe chatbots are “here to stay” in customer service.
  7. 60% of US online adults already use online messaging, voice, or video chat services
  8. 55% of consumers would like to select their media by curating a list that draws heavily on AI recommendations or simply have it completely selected by a bot
  9. 49% of consumers would rather conduct all their customer service interactions via text, chat, or messaging.
  10. 48% of respondents prefer a chatbot solve their issue over a chatbot have a personality.
  11. 45% of end users prefer chatbots as the main means of communication for customer service inquiries.
  12. 42% of consumers already use digital assistants, while 72% of business execs and 53% of millennials are using them.
  13. 40% of people claim they don’t care who or what is helping them.
  14. 38% of consumers view chatbots positively, 11% have a negative perception of chatbots. The remaining 51% are neutral about chatbots.
  15. 37% of all consumers–and 48 percent of millennials–are open to receiving recommendations or advice from chatbots,
  16. 34% of business executives say that the time freed up from using digital assistants allows them to focus on deep thinking and creating
  17.  only 1/3 of customer service interactions require human support. 45% of end users prefer chatbots as the main means of communication for customer service inquiries.
  18. 31% of business executives say their businesses get the most impact from virtual personal assistants, more than from any other AI-enabled solution.
  19. 29% of people prefer to contact retailers by online apps and messaging chat when making a purchase decision. That’s equal to phone and greater than email at 27%
  20. 27% of the world population is estimate to be using messaging apps and conversing with chatbots by next year.
  21. 27% of consumers weren’t sure if their last customer service interaction was with a human or a chatbot
  22. Global chatbot market is projected to account for $1.23 billion by 2025, with a compounded annual growth rate (CAGR) of 24%.
  23. 23% growth in the number of users of virtual assistants this year.
  24.  The use of chatbots will result in cost savings of more than $8 billion annually by 2022, up from $20 million in 2017.
  25. Approximately 1.4 billion people use messaging apps and are willing to talk to chatbots.
  26. More than 30,000 chatbots on Facebook used in 200 countries by millions of people
  27. Customers prefer it 29 times over the traditional method.
  28. Google predicted that chatbots will have a near human-level lingual ability by 2029.
  29. “Hi” and “hello” are the two most popular ways to start a conversation with a chatbot. Other popular messages included a question mark, “hey,” “help,” “yes,” and a thumbs up icon.
  30. Xiaoice is a ridiculously popular chatbot in China, The average conversation length is 23 conversations per session (CPS). The average CPS for pretty much every other chatbot: 1.5 to 2.5.

Here is an infographic that provides more information why businesses should consider chatbots. Would your business benefit?

chatbots

55 customer experience facts not worth ignoring 0

Posted on January 29, 2017 by Rob Petersen

customer experience

Customer Experience (CX) is the interaction between an organization and a customer over the duration of their relationship.

The quality of the interaction is determined by:

  • Journey the customers has to take
  • Touchpoints of the company with the customer along the way
  • Environment (e.g. in person, digital, phone) in which the customer and the company interact

Customer Experience is measured by the individual’s experience during all the points of contact versus the individual’s expectations.

Much research has been done on signs companies should pay attention to help create awesome customer experiences.

Here are 55 customer experience facts not worth ignoring.

  1. 12 positive experiences are necessary to make up for one unresolved negative experience. (Rudy Newall-Legner)
  2. 6-7 times more expensive to acquire a new customer than it is to keep a current one. (Bain & Co.)
  3. A customer is 4 times more likely to buy from a competitor if the problem is service related vs. price or product related. (Bain & Co.)
  4. Consumers are 2 times more likely to share their bad customer service experiences than they are to talk about positive experiences.  (Global Customer Service Barometer)
  5. Only 1 out of 26 unhappy customers complain. The rest churn. Indifference is the enemy. (Huffington Post)
  6. A one-star increase in Yelp rating leads to a 5-9 percent increase in revenue. (Harvard Business Review)
  7. 91% of customer who had a bad customer experience won’t willing do business with your company again. (Glance)
  8. 89% of consumers who experience poor service with your brand will leave for your competition. (Forrester)
  9. 88% have been influenced by an online customer service review when making a buying decision. (Zendesk)
  10. 85% of customer churn due to poor service was preventable. (Huffington Post)
  11. 83% of consumers require some degree of customer support while making an online purchase. (eConsultancy)
  12. 82% say that getting their issue resolved quickly is the number 1 factor to a great customer experience. (LivePerson)
  13. 81% of companies motivate employees to treat customers fairly, and 65% provide effective tools and training to gain trust with their customers. (Peppers and Rogers Group)
  14. of companies with strong capabilities and competencies for delivering customer experience excellence are outperforming their competition. (Pepper and Rogers Group)
  15. 80% of companies say they deliver “superior” customer service; 8% of people think these same companies deliver “superior” customer service. (Bain & Co.)
  16. 80% of Americans agree that smaller companies place a greater emphasis on customer service than large businesses. (American Express)
  17. 78% of consumers have bailed on a transaction or not made an intended purchase because of a poor service experience. (American Express)
  18. 75% of customers believe it takes too long to reach a live agent. (Harris Interactive)
  19. 75% of brands do not know what engagement means – but are measuring “it.” (Huffington Post)
  20. 72% of consumers share a positive experience with 6 or more people; 13% of consumers who had a negative experience tell 15 or more people if they’re unhappy. (Huffington Post)
  21. 72% blamed their bad customer service interaction on having to explain their problem to multiple people. (Zendesk)
  22. 71% of visitors expect help within five minutes when purchasing product online. (LivePerson)
  23. 70% of customers whose issues were resolved in their favor say they would return to purchase from that company again (Glance)
  24. 70% of buying experiences are based on how the customer feels they are being treated.  (McKinsey)
  25. 69% attributed their good customer service experience to quick resolution of their problem. (Zendesk)
  26. 67% of consumers site bad experiences as reason for churn. (Huffington Post)
  27. 67% of customer churn is preventable if the customer issue was resolved at the first engagement. (Huffington Post)
  28. 67% of of customers reported hanging up on an automated system out of frustration at not being able to reach a live person. (Glance)
  29. 66% of consumers who switched brands did so because of poor service. (Huffington Post)
  30. 66% of B2B and 52% of B2C customers stopped buying after a bad customer service interaction. (Zendesk)
  31. 62% of organizations view customer experience provided through contact centers as a competitive differentiator. (Deloitte)
  32. 62% of B2B and 42% of B2C customers purchased more after a good customer service experience. (Zendesk)
  33. 61% of consumers age 30-49 are the most frequently angered. (American Express)
  34. 59% would try a new brand or company for a better service experience. (American Express)
  35. 58% of Americans perform online research about the products and services that they are considering purchasing. (Pew Research)
  36. 56% admit to having lost their temper with a customer service professional. (American Express)
  37. 55% of consumers would pay more for a better customer experience. (Salesforce)
  38. 55% of customer requests for service on social media are not acknowledged. (Huffington Post)
  39. 54% of those age 18-29 say they’ve never lost their temper with a service professional. (American Express)
  40. 50% of the time, customer service agents failed to answer their questions according to customers (Harris Interactive)
  41. 45% of US consumers will abandon an online transaction if their questions or concerns are not addressed quickly. (Forrester)
  42. 45% of companies offering web or mobile self-service reported an increase in site traffic and reduced phone inquiries. (CRM Magazine)
  43. 42% of service agents are unable to efficiently resolve customer issues due to disconnected systems, archaic user interfaces, and multiple applications. (Forrester)
  44. 42% of online shoppers said they had contacted a retailer about an online purchase in the last 6 months. (Forrester)
  45. 42% say companies are helpful but don’t do anything extra to keep their business. (American Express)
  46. 41% of consumers expect an e-mail response within six hours. Only 36% of retailers responded that quickly. (Forrester)
  47. 36% of customer service organizations deployed communities in the past 12 months. (Huffington Post)
  48. 33% of consumers would recommend a brand that provides a quick but ineffective response. (Nielsen-McKinsey)
  49. 26% of consumers have experienced being transferred from agent to agent without any resolution of their problem. (Global Customer Service Barometer)
  50. 24% of American adults have posted comments or reviews online about the product or services they buy. (Pew Research)
  51. 22% think companies take their business for granted. (American Express)
  52. 17% of consumers would recommend a brand that provides a slow but effective solution. (Nielsen-McKinsey)
  53. 11% of customer churn good be prevented by simple company outreach. (Huffington Post)
  54. 10% increase in customer retention levels result in a 30% increase in the value of the company. (Bain & Co)
  55. Consumers prefer assistance over the following channels: Phone (61%), email (60%), Live Chat (57%), online knowledge base (51%), “click-to-call” support automation (34%). (eConsultancy)

In addition to these facts in print, below is an infographic with many of these key Customer Experience facts in pictures.

Is an awesome experience worth creating for your customers? Does your business need help improving customer experience?

customer experience infographic

20 consumer-centric KPIs track outstanding customer service 0

Posted on October 04, 2015 by Rob Petersen

 

 

Customer Service

  • 89% of consumers have stopped doing business with a company after experiencing poor customer service. (RightNow Customer Experience Impact Report)
  • 70% of buying experiences are based on how the customer feels they are being treated.  (McKinsey)
  • 6-7X more costly to attract a new customer than it is to retain an existing customer.  (SalesForce)

Is customer service a top priority at your company? These statistics indicate it should be.

Being consumer-centric is a business strategy; one that places top priorities on having a relationship, earning trust, rewarding good customers and forgetting about marketing.

It’s also an investment. How do you prove it’s worth it? And measure it?

Key Performance Indicators (KPIs) are business metrics tied to a target. They are used to evaluate factors that are critical to success. KPIs are the actionable scorecard that keep business strategy on track.

What are KPIs to track outstanding customer service? Here are 20 consumer-centric KPIs to consider.

HAVING A RELATIONSHIP

  • CUSTOMER RETENTION RATE: The number of customers who renew their services or make additional purchases from the company during a defined period of time divided by number of active customers.
  • CUSTOMER CHURN: The number of customers who opt to not renew at the end of their subscription in a given time period divided by the number of customers whose subscriptions end.
  • CUSTOMER SATISFACTION SCORE (CSAT): Outstanding customer service organizations keep a constant pulse of their customer satisfaction (CSAT) score. By giving a simple survey after a customer has completed their experience with customer service, managers gain insights to build and develop their business.
  • NET PROMOTER SCORE (NPS): The number of customers who would recommend your brand to their associates (e.g., friends, family, acquaintances) divided by the total number of customers.
  • CONVERSION RATE: After someone from your customer service team interacts with a customer, how likely are they to make a purchase or take some other kind of action? If your customer service is good, this number should be fairly high.

EARNING TRUST

  • AVERAGE RESOLUTION TIME:  If you’re able to keep that resolution time relatively low, that could be an indication of good customer service and another way to measure customer service.
  • FIRST CONTACT RESOLUTION RATE: The number of inbound calls that are resolved on the first contact without the need for transfer or subsequent contacts divided by the total number of inbound calls.
  • AVERAGE WAIT TIME: Even if you do respond quickly to an issue, how long does it take for you to get back to that customer? Measured both by if a customer calls or writes an email.
  • CALL ABANDONMENT RATE: The percentage of inbound phone calls made to a call center or service desk that are abandoned by the customer before speaking to an agent.
  • NUMBER OF COMPLAINTS PER DAY: Number of complaints received from clients by the customer representative staff.
  • ESCALATION RATE: Number of technical or product complaint calls that are escalated from customer service representatives to supervisors/managers for resolution divided by the total number of complaint calls, as a percentage.
  • COST PER COMPLAINT: The total expense (labor, materials, shipping, etc.) for the incident management group divided by the total number of incidents processed.
  • DAILY RETURN RATE: The average daily number of returned products received and processed.

REWARDING CUSTOMERS

  • ENROLLMENT CONVERSION RATE: The number of customers who choose to enroll in the customer incentive program during a defined period of time (e.g., quarterly, yearly) divided by the total number of customers.
  • REWARDS ATTAINABILITY: The number of reward program participants who redeem accrued reward points/credits during a defined period of time divided by the number of participants who have reward points/credits to redeem.
  • REWARDS ACCRUAL RATE: The value of rewards accrued by the average customer divided by the total purchase amount of the average customer during the same period of time.
  • REWARDS BREAK RATE: The number of accrued rewards that are not be redeemed by members of the customer incentive program divided by the number of accrued rewards available.

PROVING REVENUE

  • ANNUAL CUSTOMER VALUE (ACV): The average dollar value of a customer over one year.
  • LIFETIME CUSTOMER VALUE (LCV): The net profit gained from a single customer over the ‘lifetime’ relationship with the good/service/company. This is generally generated by predictive analysis and forecasting because it is used to make longer term revenue projections.
  • CASH FLOW:  If your service is bad, it could drive customers away, decrease referrals and cause potential customers not to complete purchases. But if it’s good, customers are likely to come back, tell their friends and have a big impact on your company’s overall profits.

Do these KPIs help you measure customer service? How do you think your business does on these metrics? Do you need help with the metrics to keep the business strategy on track?

12 experts measure the ROI of customer service 3

Posted on March 30, 2014 by Rob Petersen

 

 

ROI of customer service

  • It costs 4-6X as much to acquire a new customer as keep a current customer (source: The Times)
  • 80% of a company’s future revenue will come from 20% of its existing customers (source: Gartner)
  • 5% increase in customer retention can increase a company’s profitability by 75% (source: Bain and Co.)

You get the idea. You can’t be in business without putting the customer first.

Customer service is the series of activities that enhance customer satisfaction to keep customers coming back.

Some have argued the quality of customer service has decreased in recent years. That it’s due to lack of understanding and planning at the executive levels on the Return on Investment (ROI) of customer service or, more specifically, Return on Service (ROS).

Do you think so? Here’s how 12 experts measure the ROI of customer service.

  1. “Customer service is not being completely about services, but also as the delivery tools to create company image and customer feelings. And customer feelings are the cornerstone of any successful business.” – Aida Alakbar, TeliaSonera
  2. “It is no longer good enough to simply satisfy your customers or to have a product that works. What will really make the difference is when the customer asks: when I went through that experience, did the provider really engage with me, did they understand my needs, did they think logically about what was best for me? – Jo Causon, CEO of the Institute of Customer Service
  3. “Global companies spend the equivalent of 2% of their marketing budget on actively maintaining relationships with existing customers, while 86% of us have stopped working with a company due to bad customer service – it suddenly all seems to add up.” – Tom Eggemeier, EVP of Global Sales, Genesys
  4. “The overriding factor for consumers will be trust. – a high level of trust will result in a good customer service ROI. Consumers have to trust a supplier to deliver against its promise. Whether that is providing the best price, being available when needed, or getting a response to an inquiry,” – Customer Champions
  5. Once you make an emotional connection with a person, the trust and respect you gain far outweighs the benefit that you get from any form of marketing or advertising efforts. The bottom line is, customer service banks on the long-term ROI. – Evergage
  6. “The rank that consumers assign to a brand relative to the other brands they use predicts share of wallet according to a simple, previously unknown formula, which we’ve named the Wallet Allocation Rule. The essential distinction of the Wallet Allocation Rule is that it takes into account both rank—Is your brand a customer’s first choice? Second?—and the number of brands in the set the consumer uses.” – Timothy L. Keiningham et al, Harvard Business Review
  7. “A simple, practical and intuitive approach  is if a company asks itself, ‘What, specifically, do we want customers to do more of or less of?’ Attitudes (such as satisfaction) and feelings (such as delight) aren’t included – only observable behaviors, such as ‘use our service more often,’ ‘purchase more items on an average visit,’ and ‘return merchandise less frequently.'” – Kinesis
  8. “It’s best to start by understanding the value proposition of your company. For example, do you compete on customer experience, where satisfaction measures are of primary importance, or do you compete on cost, where efficiency and productivity measures are most important?” – Kate Legget, Gardner
  9. “The problem is that there is an inherent conflict – a tradeoff – between a customer’s current-period purchases and her lifetime value.  Businesses are obsessed with short-term results. In sales and marketing terms, it means they are simply eating their own customers, a little at a time.” – Don Peppers, Pepper & Rodgers Group
  10. An organization must be able to make a direct connection to a performance metric. Many times organizations just give the customer what they want. But there is a big difference between what a customer says they want and what drives value ($). To get ROI, you need to focus on value. – Colin Shaw, CEO, Beyond Philosophy
  11. “Stop telling consumers about something they don’t want and will never buy, because eliminating that waste through data to focus on consumers who really care about certain products gives brands a 60% improvement in return on investment.” – Laurie Sullivan, MediaPost
  12. “The payoff of any project can either be a profit increase or cost saving. For most cases and especially customer service improvement initiatives, the payoff is likely to be cost saving, such as reducing staff time spent on a task, improving the quality and driving towards first contact resolution, and avoiding cost associated with errors.” – Etta AuYeung – Customer Service Advantage

For more facts on the value of existing customers, check out the infographic below

Do you think customer service has decreased in recent years? Do you agree with the way these experts measure Customer Service ROI?

Value of Existing Customers

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