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Wednesday, January 20, 2010

They Should Have Known - Even Without Twitter
It’s great that GM has recognized the power of social media and invited David Meerman Scott to Detroit for an inside look a few months ago. We all appreciate that American Airlines is learning and posting information about delays on the website and distributing information via Twitter. Hopefully what corporations are hearing will lead to not only a better image, but also better service. 

But negative word of mouth should have been a concern long before we had Tweets, blogs, and YouTube videos.  We’ve known for years that an unhappy customer tell 8-11 other people or more about their experience while happy customer tells only 3-4 (if they bother to tell anyone).  All the electronic media that is now part of all our lives has simply amplified the voices of those unhappy customers while all the attention paid to social media has given them greater visibility.   Even as corporations tune in and respond to what is being written online, for every prominent blogger reaching a thousand followers, there are likely 100 regular customers reaching out through text messages, emails, phone calls, and even face-to-face conversations to share their experiences with 8-10 friends, co-workers, relatives, and neighbors.  When you do the math, the impact is the same.   

Attention is needed is needed both online and offline if corporations are going to succeed in shifting the balance between the negative communications that poisons the well for new customers, and the positive word of mouth that builds awareness, consideration, trial, purchase and retention.
10:22 am est          Comments

Thursday, January 7, 2010

High Service Levels Always the Best Answer?
In its recently released "2009 Customer Experience Consumer Study", Strativity reports that “unhappy customers are 10 times more likely to cease doing business with companies within the next 12 months than loyal ones” and that “happy customers are three times as likely to continue doing business with a company for 10 years.”  While I personally question any piece of marketing research that asks consumers to envision what they will be doing in 10 years, the basic tone of their findings is not surprising.  But what makes a customer “happy”? Based upon their survey data Strativity explains that: "Customers are seeking value -- it can come either from a great experience at a fair price or a discount if they're not getting that experience”.   Again we have no disagreement with that position. Where we do differ is with their conclusion.  We agree that companies must choose how they want to play the Value Equation, but according to Strativity, "Smart companies are getting it -- they realize that the experience must be exceptional."  That sounds great, but it contradicts the earlier discussion of VALUE. The fact is that different things are more or less IMPORTANT to different individuals.  It assumes that there aren’t consumers who are in fact most “happy” when they buy at a low price (even when that means low service).  Further their conclusion ignores the fact that we all simply can’t afford to have the very best total customer experience with each and every product and service we buy.

We are talking about business strategy here, and in virtually every category there is likely a place for some brand to succeed at high price/high service, while another is equally profitable as a low price/low service option (with most others in between the extremes).  The issues for corporate managers is in understanding the competition and finding the appropriate VALUE position space in which they can run a profitable business for the long term or for the short term.

Our work at Customer Experience Partners is about helping clients manage the customer experience to achieve greater retention and more positive word of mouth. It isn’t well matched for those taking the low price/low service position, however that does not at all mean that low price/low service is not a valid business strategy for some brands.
10:10 am est          Comments

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