Below is a guest post I wrote for the The American CEO, a blog that Joel Trammell writes for current and aspiring CEOs.
Each interaction with a customer is an opportunity to either earn loyalty or alienate. This conclusion is true whether your company provides products to mass markets like McDonald’s, or for specialized use, like those provided by GE. Companies have only limited amounts of time to demonstrate value but unfortunately, many have yet to realize this.
One area where customer experience initiatives have undergone a renaissance of sorts over the past few years is in computer software, specifically in the software-as-a-service (SaaS) model.
SaaS companies have made a fair amount of noise in the business world about their customer experience programs. They have hired people to help customers correctly configure their software service, learn how to use it, successfully adopt it, expand its use throughout the organization, and leverage it in new ways. This experience, which I might characterize sarcastically as “getting what you paid for,” is the renaissance.
What’s Interesting for CEOs
Here’s what interests me most and what should interest CEOs: The reason SaaS companies seem to be focused on the customer experience is because their customers buy monthly, quarterly or even yearly subscriptions to use the software. If users derive no benefit from the service, they don’t renew and switch providers fairly easily. (In the old model, you’d buy the software and pay a nominal “maintenance fee” annually to receive upgrades and support. If you didn’t get value from the product, you couldn’t recover your expenses.)
SaaS providers realize that time is critical. The difference between acting now and acting later is the difference between loyalty and a renewal or alienation and increased customer churn. As more companies move to a SaaS model or create services from scratch via SaaS, customer care becomes more of an issue across many types of businesses, especially if you haven’t already made it a priority.
What’s Puzzling for CEOs
What’s puzzling is why other industries don’t feel the need to act with the same sense of customer-focused urgency. If a bad experience causes me to defect from McDonald’s and go to Wendy’s, the impact is barely felt on the bottom line. So why should McDonald’s expend energy now to keep me as a customer?
The answer is simple: If they invest no energy or focus, they run the risk of establishing poor customer experience as a cultural norm. Pretty soon “billions served” would become “billions (of relationships) severed.”
What about another extreme like GE? They sell a few (relative to hamburgers) aircraft engines for large amounts of money. Why should they expend energy now on the customer experience? While the switching costs are high, the impacts of such a switch are significant. Unlike the McDonald’s example, losing just one customer impacts margins, growth, reputation, and market capitalization. Replacing a single customer could take years!
The Bottom Line
I believe the answer to the puzzle is that SaaS companies, because of their pricing model, understand on a visceral level that time is of the essence. They realize they must work intentionally towards helping customers achieve their goals.
Unfortunately, most companies (mistakenly) believe they have plenty of time to improve the experience, so they defer the activity. After all, the logic goes, the buying cycle is long, switching to a competitor is too hard, and the impact of losing a single customer is low and unimportant. The reality is much different. Companies that persist in such shortsighted treatment of their customers are out of time already…they just don’t know it yet.
So onward with the renaissance! If SaaS companies have put customer experiences back on the map, it’s time for others to follow suit.
Read the post at The American CEO.