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Customer Satisfaction v/s Customer Delight

Customer Satisfaction v/s Customer Delight

The business of dealing with and serving customers is tricky and unpredictable. What works for one segment of customers may not be the most suitable option for any other customer segment. To complicate matters even more, customer experience is often manifested over several “layers”, depending on how much the service delivery matches their service expectations.

In an age where businesses are competing tooth and nail for every incoming customer, merely satisfying customer may no longer suffice for retaining old customers, much less acquiring new ones. Sample the following scenario:

Imagine you walk into a hotel upon entering a new town, with the expectation of a clean lodging and food, and a decent ambience. Any hotel or inn meeting these expectations will provide you with satisfaction. Delight will result when a hotel exceeds your expectations of these basic necessities and possibly even surprising you – for example, arranging for your transfer when you leave, or replacing the linen in your room without your asking for it.

Meeting customer expectations of service are crucial to customer satisfaction and running a business successfully, but true customer loyalty can be gained only when the service exceeds customer expectations.

 

 

“Customer delight is that phase of customer experience when the service offered exceeds the service expected.”

 

 

While satisfied customers may leave the business feeling happy, they may not return. They may well be swayed by swanky advertisements or deep discounts offered by competitors the next time around. On the other hand, a customer who is delighted by a service exceeding his expectations will become a loyal patron of the brand forever, since the brand will always evoke a positive memory of association for him.

There are four reasons to invest in additional effort in delighting customers, as it can pay rich dividends in a very direct way:

 

Increased customer retention through loyalty

A delighted customer will develop strong loyalty for the brand that provided him with the delight, and will be far less likely to “experiment” with a new brand. Studies have shown that it may be 4 to 9 times more costly to attract a new client than retain an existing one.

 

More profitable customers

In addition to retaining existing customers, customer delight can also induce customers to spend more on their dealings with the business. Research has shown that, on an average, delighted customers end up spending more than merely satisfied customers.

 

Network externalities

Delighted customers turn into brand evangelists for the company. They will spread word of their positive experience around, shooting up the NPS score© of the company. 92% of customers consider word-of-mouth as the most reliable source of information, so delighted customers may well become a strong asset for the company by bringing in more and more customers, leading to a virtuous circle.

 

Industry leadership

The enhanced network of customers developed over time may turn the business into an industry leader on the basis of service differentiation. This will enhance the brand recall of the company. It is common knowledge today that brands such as Xerox, Google and Jacuzzi have become synonymous with the product or service they are offering. That is the power of brand recall – when potential and existing customers will think of your company first and then consider what they need to purchase from it!

 

While it is established that concentrated efforts by businesses to delight their customers with enhanced levels of service will produce results in terms of increased customer loyalty and a much stronger brand, prudence is advised as this strategy comes bundled with two pitfalls:

  1. It may be a conundrum for businesses as to what lengths they need to go to delight their customers. After all, budgets are shrinking, and the profit gained from incremental investments begins to decrease after awhile – the iron law of diminishing returns.
  2. Add to that the burden of raising the bars of your service level forever in your customer’s eyes. Delighting a customer once might alter their opinion of what constitutes a fair level of service for the price they are paying.

As with any other conundrum, the solution lies in the middle – identifying when and how to delight customers. Certainly, in today’s business environment it is not advisable to delight every customer, every time; it would be unwise to even attempt that. In fact, in most business dealings, it would make sound commercial sense to just suffice customer’s expectations. Exceeding customer’s expectations will produce the best results if offered when the situation demands it.

In our example of the hotel cited earlier, arranging for the guest’s next travel plan would make sense when the guest is checking out at an odd time, such as late at night, or has to catch an early morning train or flight.

Building brands and NPS © takes time and can be perfected with judicious experimentation. Delighting customers by surprising them with unexpected service may turn out to be a unique way to create value and build a strong brand legacy. And the right start would be to implement instant customer feedback systems telling you what your customer’s opinions are about your service at present.

Customer Service – The New Differentiator

Customer Service – The New Differentiator

customer service-zonkafeedback

The creation of a new business in any industry is followed by closely analyzing what the competitors are doing and then doing it better – typically by cost-cutting, or building superior products. This is what has now come to be known as the “Red Ocean Strategy”. Market share can be captured only at the expense of another business, as the size of the industry is limited and known.

As the industry matures however, businesses need to move beyond traditional competition strategies, because the industry becomes far too crowded to sustain existing competition. Once existing growth opportunities have been exhausted, new ones must be created by exploring “blue oceans”, or hitherto unknown market spaces. A “Blue Ocean Strategy” involves shifting the focus from competitors to customers. It entails unlocking value by expanding the current boundaries of the industry, achieved through innovation of product (or service) offerings. The strategy inherently assumes that industry size and scope is not known and value can actually be created, rather than simply be distributed as in a “Red Ocean”. This essentially renders the competition irrelevant with respect to capturing the market.

A classic example from the restaurant industry would be that of Starbucks. For too long successful restaurants were synonymous with low prices and a wide variety of menu items. But this particular company started on the idea of providing the best possible experience to customers, even if this meant charging a premium above the market prices. The brand Starbucks is a promise of exceptional service and experience to the customers. No wonder, customers are willing to await their turn in a long queue and pay double the price at the Starbucks outlet rather than just grabbing a cup of coffee from the café across the street. Over the years the rapid success and growth of Starbucks bears testimony to the successful execution of the “Blue Ocean Strategy”. By entering into the arena of “customer service management”, Starbucks shifted the focus from traditional competitive areas (low prices and broader menu offerings) to the customer, and in the process expanded the restaurant industry to include customers who come to restaurants for enjoyment of the overall experience, rather than simply quenching their thirst.

With the dissemination of free knowledge over the Internet, restaurants can no longer claim the title of market leader by simply cutting down their prices or expanding their menu options, as everyone in the industry would already be doing that. The focus will now to shift on the customers, with customer experience management becoming more prominent in the service and hospitality industry, now more than ever, as customer expectations of what constitutes good service are increasing by the day, thanks to the rapid advent of social media. The rise in loyalty programs over the past few years just goes to show that customers are increasingly expecting their vendors to capture all relevant information about them and offer them personalized service whenever they visit their premises. This trend is only projected to grow over time as customers are becoming more aware than ever of their service experience. Immediate addressal of customer complaints will no longer be sufficient as customers expect a more proactive approach by the businesses, thus rendering the traditional restaurant feedback system meaningless. The mantra for success in the harsh new F&B world will be stronger and more versatile guest feedback management that can resolve customer’s complaints even before they arise!

The following facts indicate these changing trends:

  • In 2013, 62% of consumers around the globe switched brands due to poor customer service experiences.

  • Coming to hard numbers, positive customer experiences can also impact business revenue directly – a study by Forrester Research shows that an improvement of 10 percentage points on a customer’s experience score can translate into an increase of over $1 billion in revenues, which is probably why an estimated 84% of companies expect to increase their focus on customer experience measurements and metrics.

  • Business intelligence firm Walker Info has even suggested that by 2020, customer experience may well overtake price and product to become the key brand differentiator.

Going by these research reports, logic implies that the next “Blue Ocean” in service based industries (restaurant and hospitality) is going to be customer service management. It is a reasonable assumption that all value and growth possible from price cutting and huge ranging product offering has been (or will have been by 2020) captured and further value may be unlocked on the back of superior customer feedback capturing and real-time feedback management.

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