You may not think of customers complaining as a reason to celebrate. But today’s most successful brands like Buffer and Wistia understand the power of engaging with every type of customer – especially the most unhappy ones.
Naturally, happy customers may currently be more loyal to your company. Unhappy customers have the potential to become more loyal if you win them over with a memorable service experience. Reaching out to unhappy customers might just earn you more customers for life.
Customers ranked service as second only to price when it came to determining their loyalty to a brand. While loyal customers are worth up to 10 times as much as their first purchase, customers who have their complaints handled in less than 5 minutes go on to spend more on future purchases.
“We have entered the era of the customer. Today, providing customers with outstanding customer service is essential to building loyal customers and a long-lasting brand,” says Jerry Gregoire, founder and Chairman of Redbird Flight Simulations, Inc.
Improving Customer Retention
Handling negative support situations correctly enables you to retain more customers.
SaaS companies know full-well the value of their existing customer base. That’s why they carefully monitor their Customer Retention Rate (CRR), which is their ability to retain customers over a period of time. It’s affected by the number of new customers you acquire within this period, as well as the number of existing customers who churn.
The general aim is to hold onto more customers than you lose.
And there are good reasons for this. Increasing customer retention by just 5% can result in profit increase of between 25–95%. Not to mention, you have a 60-70% likelihood of selling to an existing customer, compared to just 5-20% to a new customer.
Naturally, building loyalty in your customer base has a positive effect on retention rates – loyal customers stick around for longer, and they spend more. As we mentioned earlier, the way to influence customer loyalty is through providing satisfying and memorable support experiences.
The Mechanics of Customer Loyalty
Customers are loyal when they feel a real emotional bond with your business – specifically with your company’s people. These people are typically your frontline agents.
When a customer is loyal, it means they will choose your products and services reliably over your competitors. They aren’t easily lured away by price or product availability.
Loyalty is closely correlated with trust – through experience, customers trust your company to both meet and exceed their expectations. As a result, your business retains those customers in the long-term.
The Six Stages of Loyalty:
Awareness – the customer knows the company exists and what products it offers
Researcher – the customer is thinking about buying, has visited the company website, downloaded resources, etc.
First-time Buyer – the customer has already bought the company’s product or service
Current User – the customer actively uses the company’s service that they bought
Repeat Purchaser – the customer buys from the company again
Referral – the customer is recommending the company’s services to friends, family, and business associates
Your company should aim to move as many customers as possible from stage 1 right through to stage 6, as feelings of loyalty increase through each stage.
Specifically, we can focus on moving someone from First-time Buyer >> Current User >> to Repeat Purchaser. We can do this using customer support interactions which solve problems customers are encountering with your products.
Naturally, though, not all satisfied customers are loyal. We need to check whether customers are more loyal as a result of our efforts.
How to Measure Customer Loyalty (NPS®)
Net Promoter Score® is the industry standard way to measure customer loyalty. Data is collected by distributing a 2-minute survey, typically using specialised survey software such as GetFeedback or Nicereply.
The question included in the survey is usually: “On a scale of 0-10, how likely are you to recommend [company name] to your friends, family or business associates?”
The customers are then categorised by the score they give you, into either detractors, passives, or promoters.
Detractors give you a score of 6 or less.
Passives score you 7-8.
Promoters score you 9-10.
Calculate your NPS score by subtracting the percentage of your detractors from your percentage of promoters. For example, if 30% of customers were promoters while 10% were detractors, then your NPS score is 20. NPS scores range from -100 to 100.
The formula is:
% Promoters – % Detractors = NPS
Higher NPS scores for customers tend to correlate with stronger feelings of loyalty towards your company. To gain more insight into the scoring customers give you, you can include follow-up questions in the same survey. For example, “What was the main reason for the score you gave?”
It’s harder to get passives to improve their opinion of you, as they don’t have strong feelings either way. While promoters are already loyal to your business, detractors represent an opportunity for you to turn their attitude around.
How Customer Support Impacts Loyalty
Customer support is incredibly important for building loyalty. Studies show that customers consistently choose to do business with companies who offer them a superior standard of service. For example, 17% of customers will pay more for great customer service.
SaaS companies are in the unique position of being able to frequently connect with customers through customer support – whether through live chat, email, phone support, or a self-service knowledge base. Support agents are purely tasked with helping your customers, rather than selling, so they are in the business of building relationships.
Your business misses a trick if you treat your customers like numbers.
Make your support interactions into human, personable, and memorable experiences. It’s your opportunity to make a connection with customers who might be about to churn.
While offering support is a natural part of your operations, most customers typically don’t want to contact support. If they need to contact you, you’re already falling below expected standards in their eyes. They are about to become – or already are – detractors of your brand.
The speed and manner with which you respond to them is crucial to turning a customer support incident into gold. Empowering your support agents to effectively help unhappy customers shows that you are invested in the customer experience, and have built a customer-centric culture.
Remember – even just acknowledging unhappy customers tends to improve their perception of your brand.
Handling Your Unhappy Customers
Proactively answering common questions and troubleshooting problems is a keystone of customer support. “Customers don’t expect you to be perfect. But they do expect you to fix things when they go wrong,” says Donald Porter, Managing Director of MSB Consultancy.
There are many guides out there covering how to deal with dissatisfied customers. Broadly speaking, you can follow these steps:
- Immediately acknowledge the problem (pick up the phone if you can)
- Apologise for the problem that has been caused (even if it wasn’t your fault)
- Fix the problem – do whatever it takes to make it right (or explain why if you can’t)
- Record the problem and check whether it affects more customers (track bugs)
- Thank the customer for taking the time to contact you (and for giving you a problem to solve)
In this way, you stand a good chance of turning potential detractors into promoters. You can increase customer loyalty with every positive service experience. But don’t force your customers to contact you if their problems are easy to solve.
More customers now prefer to help themselves (self-service has grown by 103% in the past four years). Resolving the simpler queries with help content makes helping those seriously unhappy customers more sustainable. Your support staff have more time to spend on the more thorny and complex cases.
Use a customer knowledge base to provide customers with self-service content. Consider knowledge base software like Document360.
Tighten the Feedback Loop
We don’t know whether our customers are unhappy unless we hear from them, but most customers will churn without ever letting you know why. Remember, for every customer who complains to your business there are 26 who remain silent and leave. Do everything you can to influence customers to communicate with you.
It’s crucial to encourage regular feedback through methods that suit your customers best:
- Comments on a help article
- In-app contact form
- Support phone number
- Live chat widget
- Feedback surveys
- Social media
- Community forums
Once you solicit feedback from your customers, you must always follow up as promptly as possible. Thank your customer profusely for taking the time to share their feedback, and let them know how you are going to/have taken action on their concerns.
Finally, let’s look at the sixth stage of loyalty in a bit more detail – when customers feel so positively about you they are willing to refer your business to others and become advocates. This is a secondary benefit of increasing customer loyalty.
Humans like to save time. We also like to make sure we stay in step with our peers – people who are most like us. That’s partly why recommendations are so powerful, and is very good news for business.
“Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you,” says Chip Bell, authority on customer loyalty.
Customers who have a good service experience are five times more likely to tell their friends than those who had a bad experience, which is good news for your bottom line. For example, DropBox grew by 3500% in 15 months by employing a referral strategy.
Research also shows that referred customers are more valuable than customers you have attracted through other means. Lifetime Value for customers who have been referred is 16% higher than for non-referrals, because they already have a good opinion of your brand. They will be more loyal, and refer more loyal customers in the future.
If you invest in customer loyalty and referrals, you set in motion a positive cycle that sustains itself.
The bottom line: customers just want to be heard. Customers who have positive support interactions are more likely to stick around for the long haul.
It’s all about people over profits. If upset customers feel like you value them and you are focused on building human connections, you’re already wildly exceeding your competition. And then these rescued customers go on to give you secondary benefits.
“Customers who love you will market for you more powerfully than you can possibly market yourself,” says Jeanne Bliss, founder and President of CustomerBliss.
To tap these opportunities, you must do everything you can to solicit feedback regularly from customers. This will help you spot the opportunities to turn the detractors into promoters with positive support experiences.
Ultimately, loyalty cannot just be the responsibility of support: it has to be part of the customer journey from beginning to end. Valuing customers must be institutionalised from the c-suite down throughout the entire company.