Relationship Building

13 Customer Service Facts

By Michael A. Aun, Speaker and Founder, Aun Insurance Agency

Over the years, our firm has had extensive dealings with all aspects of industry. Two big questions always surface when industry huddles to make decisions on marketing their products.

First, why do people do business with a particular firm? In today’s highly competitive industrial environment, customers have literally dozens of choices in most cases. Why choose you?

The second question that arises is why do they keep coming back? In the course of our research to try to answer these questions, we uncovered at least 13 customer service facts.

First, our research shows that you can’t motivate anyone. People have to be motivated on their own, or they won’t do what you wish them to do. Motivation is an internal thing, not an external thing. We concluded that rarely could a particular company in a particular industry truly motivate anyone to do business with them.

The second thing our research tells us is that all people are motivated. Hold it… one minute you say people can’t be motivated and then you say all people are motivated. Which is it? People are motivated – many times negatively, but nonetheless, they are motivated.

The third thing we’ve learned about the business of motivating people to buy from you is that they will do business with you for their reasons not yours.
To that end, our research indicates a number of key ‘Customer Service Facts’ about why clients buy and why they do or don’t remain loyal to the people with whom they initially do business. Here are the thirteen facts.

Fact #1
Dissatisfied customers tell an average of ten other people about their bad experience. Twelve percent tell up to twenty people.
In very simple terms, bad news spreads rather quickly. Don’t think for a moment that your poor performance in servicing your client goes unnoticed. Not only does it go noticed, but you also pay a very dear price for that kind of publicity.

Fact #2
Satisfied customers will tell an average of five people about their positive experience. Conversely, the good news, unfortunately, doesn’t spread so quickly. To the contrary, the bad news moves twice as quickly as the good. While customers do appreciate good service, they either don’t reward it quite as soon or they don’t reward it at all.

In most cases, customers have come to expect good service as ‘part of the deal’. While they do expect it, rarely do they get it. The ‘bum rap’ here is that the bad apples are causing problems for the whole bushel.

Fact #3
It costs five times more money to attract a new customer than to keep an existing one. Before you go out investing hundreds or even thousands of dollars chasing after new clients, think about the acres of diamonds in your own backyard.

The people that you’ve done business with previously thought enough of you at some point to buy from you. Why not go back and re-cultivate that relationship? It will cost you one-fifth of the cost of finding a new client.

Fact #4
If 20 customers are dissatisfied with your service, 19 won’t bother to tell you. 14 of the 20 will simply take their business elsewhere.

Most customers just don’t want the hassle of having to straighten a problem out. They know that, in many situations, it’s their word against the word of the company. Who needs the aggravation? They simply take their business somewhere else.

Unfortunately for the salesperson, they will end up losing the business and may not even know the reason why. That’s why it’s critical to do follow up surveys to check on your performance. Ask questions like:

  • Were you satisfied with our service?
  • If not, what can we do to improve?
  • Had you been the sales/service person, what would you have done differently in this transaction?
  • Why did you choose to do business with us?
  • Is there any other way we can be of service to you?

Many will say, “By asking these questions, you are just opening yourself up for criticism”. Perhaps you are, but that is the intent of the questions… to find out what’s going wrong.

Always remember to separate the criticism of the performer and the performance. When the performance is under attack, there’s room for growth. When one attacks the performer, many times that criticism is ‘value judging’ in nature. We should listen to those remarks, but not support them. Usually they are not constructive in nature.

Fact #5
Up to 90% of dissatisfied customers will not buy from you again, and they won’t bother to tell you why.

Statistically speaking, you would be lucky if 10% of your unhappy customers would come back and do business with you again. Most customers become dissatisfied when the salesperson violates their trust.

Trust, in any relationship, once violated, negates the relationship. It takes a mighty forgiving customer to let you stick him or her twice. Honesty in any relationship is not conditional. Lincoln said you are either unconditionally honest or you are not honest at all.

Fact #6
96% of dissatisfied customers do not complain of poor service. They figure, “What’s the use? Nobody’s listening!” Maybe they’re not used to getting service after the sale. Many feel they are victims of a crime. The sales person has their commission. Now he or she will simply ignore the pleas of the client.

As a sales or service person, your responsibility is to return calls the same day when a complaint comes in.

So when a sale is made, make it clear to the client that you welcome their input and that you would be disappointed if a problem exists that you were unaware of. This permits the client to let you know that they are experiencing a problem.

Fact #7
In many service industries (yours included), quality of service is one of the few variables that can distinguish a business from its competition.

In many cases, there’s not a nickel’s worth of difference between the vast majority of products and services that you and your competition offer.

The only appreciable difference is in the service rendered by the sales and service people. For 99.9% of your clients, the SALES AND SERVICE PEOPLE are the company. Most of the time, they are the only people with whom the client will ever be in contact.

Fact #8
The first 30 seconds of a call or meeting sets the tone for the remainder of the contact. The last 30 seconds are critical to establishing a lasting rapport.

You only get one opportunity to make a first impression… don’t screw it up! If you want to be accepted as a professional, you must look and act the part. If you look and act shabby, you will be perceived as shabby. If you plant peas you get peas, not corn. People will expect of you what you expect of yourself. What you’ve invested in yourself.

Fact #9
Providing high-quality service can save your business money. The same skills that lead to increased customer satisfaction also lead to increased employee productivity. You can kill two birds with one stone. The same things that make customers happy make your employees happy.

Have your employees put a big smile on their faces. People want to do business with winners. They want to do business with happy people. People don’t smile because they’re happy, they’re happy because they smile.

Fact #10
Customers are willing to pay more to receive better service. You remember ‘Marketing 101’. What do you get when you have a high demand for something and an extremely low supply? The price goes up, of course. The price (in case of service) is the loyalty the client has to you and your firm. If you provide good service, they pay you loyalty.

Loyalty means they will do business with you again. And remember, it only costs one-fifth as much to do business with an existing customer as it does to find a new one.

Fact #11
95% of dissatisfied customers will become loyal customers again if their complaints are handled well and quickly.

Let’s face it; people don’t want to admit they made a mistake initially when they decided to do business with you.

80% of the decision to purchase is generally made on emotion. Only 20% is made on logic. But they use logic to justify their reason to do business with you.

They want to say to themselves that their decision was a right one, a logical one. They are more willing to forgive, if for no other reason than to ratify their initial decision to do business with you.

Fact #12
A good sale is GOOD SERVICE.

Part of every sale should be an extensive overview of the service you intend to render as part of the sale.

You should promise and do a periodic review of the client’s situation. You should deliver periodic reports on the progress of the contract. You should stay in touch with periodic ‘non-sales’ visits designed to build goodwill with the customer.

In telling the client this in advance, you prepare them for your eventual follow up contact. But you must follow up. Promise them a lot, but deliver a little more!

Fact #13
Good service leads to increased sales.

People love to talk about rare experiences, like actually receiving good service from their sales representative. Work hard to earn their respect and they will repay you royally by telling their friends and associates.

It starts with good customer service. After all, our customers are the lifeblood of our business.


Gain More Credibility Through Questions… Not Stories

By Jeff Thull, CEO and President, Prime Resource Group

I’m sure you’ll agree that establishing credibility is one of the most critical elements in securing a new customer. The customer must see you as a credible and trustworthy resource. When we ask our program participants to describe the elements of credibility, they often will suggest things like: a proven track record, a list of satisfied customers, number of years in business, financial strength, business size, etc., all items that contribute to credibility. Our next question is: “How do you establish that credibility or convey that credibility to a prospective customer?” Invariably, the response is, “We tell them.”

Now the sobering question, “How different are your two best competitors’ credibility stories from your own company’s credibility story?” Unfortunately, other than a few minor elements, they are likely to sound quite similar. Therefore, telling the credibility story suggests you and your competitors are more equal than you are different. This type of credibility is what we refer to as “expected credibility.” In other words, people expect you wouldn’t be in business if you couldn’t provide the above credibility story. They really see it as table stakes. It’s expected and they’d be surprised and quite skeptical if you didn’t have it.

To truly set you and your company apart, what needs to be developed with your customer is what we refer to as “exceptional credibility.” Expected credibility is what you know about your business and your solution. Exceptional credibility is what you know about your customer, their individual job responsibilities, their business objectives, performance and their challenges. The best way to develop exceptional credibility is through diligent preparation and thought provoking questions. Unfortunately most salespeople prepare very little, ask too few questions, and seldom reach the level of asking thought provoking questions that is required.

Let’s look at the traditional approach which finds the majority of salespeople starting with the needs analysis, which is a fine concept. The trouble is, most of the questions are rarely taken beyond the most superficial level. The following is a worst-case example in a scenario of selling software to control compressors.

  • Qualification: “Are you using compressors to support your manufacturing process?” If yes, they are qualified, go on to Needs Analysis.
  • Needs Analysis: “Are you currently using software to coordinate the output of the compressors?” If no, they have a need, go on to Presentation.
  • Presentation: “Let me show you the advanced control systems we have built into our software and how they will increase the productivity of your refinery and reduce your energy costs.” If customer seems interested, go on to the Close.
  • Close: “Let’s set a date for the pilot installation.”

The emphasis on presenting the solution as fast as possible leaves little time to understand the unique nature of the customer’s situation. In fact, the standard approach assumes the customer has completed some sort of self-diagnosis and therefore they will be able to connect our solution to their problem.

We all ask many questions during our sales processes, but what type of questions are we asking, and are we establishing exceptional credibility? Let’s consider three levels of questions.

  1. Level one consists of the personal questions about the demographics of the customer. So often salespeople ask questions to discover personal facts about customers, and use those facts to tell stories and “relate.” Nothing is wrong with level one questions, unless that’s as far as the conversation goes and the engagement doesn’t proceed.
  2. The second level of questions is the “opinion” type questions. These questions are designed to collect information from the customer. In other words, information the customer already knows. Questions like: “What are your concerns regarding . . .? What’s keeping you awake at night? How would you like to measure the solution success?” These are the standard questions to gather the customer’s view, the customer’s opinion about their problem, what they think the solution should be, how and when they will be making their decision and, of course, how much money they are planning to invest.

    These are questions about what the customer already knows and do not expand the customer’s knowledge of the problem, their view of the solution, or our credibility. Again, these are good questions, far better than level one, but very limiting if we stop there and even more limiting if we assume the customer’s opinions represent a complete understanding of their own situation and the optimum solution.

  3. Level 3 questions expand the customer’s understanding of the problem to be solved and the optimal way to solve it.These questions are required to build exceptional credibility. We expect no less from other professionals and here’s an example.

Anyone with a healthy net worth knows that it is foolish to write his or her own will. While you may be able to enumerate the goals you want to reach, you would be doing yourself a great disservice to dictate every clause of the will to a lawyer. Rather, you retain an expert in estate law, let him know your objectives and financial situation, and trust that this professional will ask additional important questions you haven’t considered and the end result will be a well crafted and well thought out plan. You would be comfortable that you are being served by a highly credible resource.

Surprisingly, what is clearly unprofessional conduct, and in some cases malpractice in medicine and law, is all-to-often standard operating procedure for sales professionals. We not only let customers diagnose their own problems, we actually encourage them to do it by asking them to report it through these “opinion level” questions.

To move the diagnostic process toward revealing and clarifying the problem affecting the customer, we need to drill deeper with third level questions, questions about observations.

To illustrate the difference, let us again consider a chemical plant where an inefficient compressor and the lack of proper controls are resulting in three or four all-day shutdowns per year. If you ask, “Are you happy with your production numbers?” an opinion question, the answer will be “Yes. We’re hitting our production goals and we’re under budget.” The question “Are you happy with … ?” asks the customer to draw a conclusion based on an implicit self-diagnosis and render their opinion.

Instead, ask a question that calls for an empirical observation. For example, “How many unscheduled shutdowns have you experienced during the past two years?”

“We’ve had around half a dozen.”

“So you’re shutting down two or three times per year?”

“Yes, that’s about right.”

Ask another observation. “Have you noticed compressor surges prior to any of the shut downs?”

“Why yes, now that I think about it, we have.”

“We’ve been able to develop control algorithms that have worked in other plants. Would it make sense to look a little closer at these shutdowns and see if there would be a possible application in your plant?”

“Well it sure would, but you will have a ways to go to make a believer out of me.”

A key takeaway here is the opinion question generates an answer that more often than not provides a “we’re satisfied” type answer. The observation question allows you, the professional, to access the facts that are relevant to a complete diagnosis. And you’ll notice, as in the above example, that these questions will take the conversation in a totally different direction.

The goal is to let your questions help you establish exceptional credibility and become a problem solver for your customers. This level of engagement guides customers through making quality business decisions and, as a result, you will win more sales!

Empowered Partners Lead to Satisfied Customers, Part II

By Diane Krakora, Principal, Amazon Consulting

Developing a strong partner program is critical to improving customer satisfaction. Creating these targeted and productive partnerships can enhance a company’s sales leverage and offer its customers both expanded services and more avenues to purchase. These relationships also enable the delivery of a full solution that customers can immediately utilize to meet their business needs.

The Six Stages of Partner Development provides practical steps for attracting, engaging, and motivating effective indirect partners. It also helps maintain healthier relationships by providing the education, support, and management needed to empower partners to better recommend and sell products.

In the first part of this series, we described how you can attract and engage partners by segmenting your target partners, simplifying engagement processes and documenting your expectations or “principles of engagement”. In this second part, we examine how to educate, motivate, support and manage partners so they increase not only your reach and revenues, but also your customer satisfaction.

It is important to allocate resources to educate partners on how to position products and services effectively to a target market, helping to ensure successful sales and happy customers. If partners are poorly educated on product capabilities, then customer expectations will be set incorrectly, which could lead to one of two outcomes:
1) a missed sales opportunity, the result of a partner underselling a value proposition; or
2) a dissatisfied customer, the result of a purchase decision based on incorrect information.

The first case results in a missed sale. While that is a problem, it is not as worrisome as the second case: creating a disappointed customer. Unfortunately, the dissatisfaction is directed at the company’s product or service, not at the partner. Educating partners to accurately represent products and the company as a whole is a critical stage in partner development.

Many companies are good at delivering initial partner training but have trouble keeping the training fresh, whether this involves updating the training for new products or ensuring that new personnel within the partner organization are trained in a timely fashion. “Delta training” is just as important as the initial training, because it ensures that new people who join the partner organization will have the opportunity to receive the original company training presentations. Oracle’s delta training program, for example, guarantees that partner organizations receive updated training when new products or services are introduced or product positioning is refreshed.

Another particularly difficult area of partner education is ensuring that the partner’s technical staff is trained. Technical support staff will look at the training as a loss of billable time unless the company can convince them otherwise. Consider innovative e-learning techniques that lower the barriers to training by bringing it to individual desktops. After an e-learning introduction to the new technology or product, the partner’s technical staff should be enticed enough to invest in more in-depth training.

A final way to educate channel partners is by circulating partner success stories. Within Accenture, for example, lines of business on the East Coast are always interested in learning best practices from other parts of the country or world. Internally published success stories are a natural way to highlight product benefits and give real-world credibility to a product or solution without the lengthy approval cycles associated with externally published materials.

Once a company has successfully attracted, engaged, and educated its channel partners, it will have an army full of highly trained, smart people. So how does it turn them into a dynamic sales force, motivated to pick up the phone, pound the pavement, and promote its product?

One of the best ways to motivate channel partners is to provide them with an opportunity they can’t resist. In addition to promoting the company’s product or service, partners will be further motivated if they can attach or add-on their own services. Adobe is designing an enterprise partner program to empower partners to incorporate their services—whether it is consulting or integration offerings—into the package so they will be more inclined to work hard to close the deal and create happy customers.

A second way to motivate partners is to align rewards with the partnership goals, both at the corporate and individual levels. It is common to find high-level corporate rewards included in partnering agreements. Typically, if a consulting firm recommends a specific software vendor, the software vendor agrees to provide a finder’s fee—perhaps 10 percent of the deal’s value—to the consulting firm. These rebate checks are a large source of revenue for the consulting firm. But rarely does the individual manager who made the recommendation and influenced the decision receive a reward. Ensuring that rewards are available and aligned at the individual contributor level can create highly motivated individuals within the partner organization.

Minimizing conflict is the best way to motivate channel partners. Good conflict—or competition—occurs when channel partners compete against each other on a level playing field. Bad conflict occurs when unfair or unintentional competition arises within different parts of the channel. This most often results from conflict between the direct sales force or OEM relationships and channel partners. Microsoft is working hard to notify partners of which customers it intends to sell to directly by publishing their key accounts list. And the software giant is taking new strides at minimizing partner-to-partner conflict with the restructuring of their program categories, tiers, and rewards. Minimizing unhealthy forms of conflict for partnerships will keep partners motivated and focused on promoting the company’s product rather than on competing in destructive ways.

The next stage of The Six Stages of Partner Development is to adequately support partners throughout the collaborative relationship. Support begins with providing the marketing and sales support needed for a partner to recommend a product or service and continues with complete partner and customer support after the sale.

Online purchase capabilities can give partners an easy, hassle-free way to find, price, and order products from the company’s web site. At Cisco, partners access the partner web site to find the products they need using needs analysis and product configurator tools. Then, with the click of the mouse, partners are able to check distributor pricing and availability, and can order immediately—all through Cisco’s partner web site.

A priority technical support program is another valuable way to support channel partners. While the technical support does not automatically have to provide a dedicated help line, Intel built a system smart enough to recognize inquiries from channel partners and direct them to third- or fourth-level technical support, bypassing the standard, repetitive support questions. Using a priority support program, partners can be recognized as valuable contributors to the overall channel strategy.

A final way to support channel partners is through a mentor program. Vitria’s mentor program provides extremely valuable, real-world, over-the-shoulder training. This concept starts with the partner shadowing the direct technical team on an implementation. The next time, the partner leads the implementation, with assistance as needed from the professional services team. On the third implementation, the partner visits the customer alone with a hotline to support. This allows the partner to ease into the lead role with a mentor available through the first several implementations.

Effective management of a partner program is key to success. Without proper measurement, neither performance nor productivity can be tracked or modified. Objective measurements can ensure that the most productive partners receive the appropriate amount of company resources.

Partner business plans are an important part of a company’s ability to manage its channel and alliance partners. Gone are the days of sixteen-page CHAMP plans. Microsoft relies on a four-page fill-in-the-blank business plan that covers the basics: target market, solutions, and actionable goals. These quick and easy business plans are reviewed on a quarterly basis and serve as a foundation for frank discussion about progress against performance targets. Expectations regarding training, sales, and marketing support are confirmed and reviewed on a regular basis.

Microsoft partner managers also evaluate their portfolio of partners on relative performance to help identify which new partners to groom for go-to-market initiatives. A simple evaluation of return on investment (ROI) can help identify which partners are providing the greatest ROI, and which are falling behind. By considering the elasticity of the ROI—how responsive partners are to additional investment—a company can determine the best place to invest any additional funds.

The ability to implement systems and processes for evaluating the ROI of the partner program is essential for maximum program performance. Few companies have any objective means for evaluating the success of their partner programs. While some companies track revenue per partner, complete partner performance management must involve more sophisticated analysis. Comparing the ROI of different channels—it is not uncommon to see 1,200 to 3,000 percent ROI from indirect partner programs—can highlight the significant leverage potential of partners in reaching sales targets. Systematically tracking the cost of the channel and the return from the investment is critical to properly managing partner programs.