I went to the TechBoise event last night to say thanks and best wishes to Tac Anderson, our EIR and widely recognized social media expert. He is leaving Hewlett Packard, Highway 12 Ventures and Boise for an exciting opportunity in Seattle. He has had a very big impact on the local entrepreneurial community, but his influence and insights extend well beyond the Boise city limits. Tac opened my eyes to the power of social media, as well as, the perils of it. Companies that don’t understand how to effectively participate in it, are in for a rough ride. At the TechBoise event last night someone mentioned that the first case of swine flu in the U.S. was reported via twitter. An hour or two later, CNN reported on it. News travels fast now a days, and the people that think they own it, or can control it, are kidding themselves.
The conversation got me thinking about one of my big pet peeves – the customer support crisis in this country – and the impact social media is having on companies that don’t support their customers properly. I remember reading a report years ago about how a customer’s experience impacts repeat business. The report referred to research that said ‘the average customer with an unresolved problem, eventually tells 9 other people’. Based on much of the customer support experiences that I have had, it doesn’t appear that many companies really understood this impact. The majority of customer support strategies are still very focused on cost containment. With Twitter, Blogs, Facebook, etc., those 9 people, potentially become 9 million people. The impact of a bad customer experience can be devastating for any size company.
The last time I called for support regarding my phone bill, I accidentally coughed into the phone and found myself talking to someone in India about how to change vacuum cleaner belts. Whoa. I am tired of phone trees that take forever, or go no where. I am tired of being directed to the web where none of my questions are answered. I believe that a company that figures out how to really support their customers and ensure that they have a great experience, has built an impenetrable competitive barrier. Think about the fact that:
- Acquiring a customer costs 5-7 times more than retaining one.
- An increase in customer retention of just 5% can boost profit 25-85%.
- A “very satisfied” customer is 6 times more likely to repurchase than a customer that is just “satisfied”.
- Loyal customers tend to be less price sensitive.
Those companies that under invest in customer support run a high risk. Surprisingly, research has also shown that a customer that has had a problem resolved quickly and painlessly, is actually more loyal than a customer that has never had a problem at all.
How do companies take advantage of social media to improve their customer support and customer loyalty? I would love to know your thoughts.