If you ask any chief marketing officer about the importance of “positive word of mouth” for their product or company, they’ll inevitably say “It’s absolutely critical, word of mouth is definitely a top priority for our business.” But, when you follow up with the question “What specifically are you doing to create it, measure it and monitor it?” you’ll get a mixed bag of reactions. Some will have legitimate answers, some will fall back onto vague buzzwords in lieu of a more concrete response, and some will try to convince you that it’s not really something you can measure, study or track at all.
Whether or not your local marketing guru agrees, positive word of mouth is most definitely something you can achieve, measure, study and grow. John Goodman, co-founder of TARP Worldwide and author of Strategic Customer Service has been doing exactly that for over 35 years. If you’ve ever heard such concepts as “winning a new customer is several times more expensive than keeping an existing one,” or “bad customer experiences are shared twice as often as good ones,” TARP Worldwide is the research firm doing the controlled studies behind those rules of thumb. They also coined the term “word of mouse,” which describes how today a company’s good or bad reputation is spread even faster and wider on the internet.
It doesn’t take any marketing expertise to understand that praise of a product coming from a friend or colleague is vastly more powerful than the same praise in the form of a paid advertisement. The value of positive word of mouth is obvious; how to actually attain it is not.
Book Overview: Strategic Customer Service
John A. Goodman’s new book, Strategic Customer Service: Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty and Maximize Profits, is essentially a detailed guide on how to catalyze customer loyalty and achieve positive word of mouth for your business. Instead of being based on untested ‘tips and tricks,’ it contains fact-based principles that are derived from rigorous studies in a wide variety of markets.
The book contains insight on the most cost-effective ways to “go the extra mile” and delight your customer, the best ways to employ technology in your customer service, and ways in which your customer service can provide cheaper, more effective marketing by carefully managing the customer experience on both an individual and company-wide basis. Having studied all facets of the customer relationship, Goodman and TARP Worldwide are truly experts on the management, execution and impact of “good service.”
The book also illustrates case studies of companies who have mastered the customer experience and established a higher level of quality for their services. If you’ve ever wondered exactly how American Express can be one of the only companies to charge an annual fee to their credit card holders, or how Harley Davidson has somehow gotten customers so loyal that they are literally tattooing the brand onto their bodies, Strategic Customer Service will explain it in great detail. Because of the customer loyalty attained, neither of these companies has to compete on price. They get to focus on making better products instead of cheaper ones. It’s clearly a great place to be for both company and customer.
Interview with John A. Goodman
WA: Many of the examples used in Strategic Customer Service involve very large companies with a similarly large customer service staff for each. How would a smaller company, a start-up, or even an individual freelancer apply the same principles to create the same customer loyalty and positive word-of-mouth?
JG: We have actually applied the same strategies in individual tire stores, doctor’s offices, train stations and car dealerships; it applies in any retail, small professional service or on-line environment. The key is to do six things well:
- Make it clear that you want to hear and solve customer’s problems.
- Ensure that your customer service staff can handle the most common issues effectively.
- Get fast, informal feedback. Ask “Were we flawless and if not what could have been better?”
- Work with a cross section of your staff to figure out how to eliminate some of the most prevalent problems with your product or service.
- Brainstorm how you can deliver service before the customer knows they need it.
- Be sure your marketing and sales materials set proper expectations about your products. Even limitations can be “spun” positively and customers love honesty.
WA: One of the many concepts discussed in the book is “apologizing without accepting blame” for a product or service gone wrong. How exactly does one strike the balance of empathizing without accepting fault for things outside their control?
JG: The best approach is to apologize that the customer has had the problem and say that you would have been upset if it had happened to you – you are validating their emotions and self-righteousness. For example, “I’m sorry this failed three months beyond the warranty period, I’d be upset if that happened to me. While you are beyond the warranty, let me see what we can do to help.” You are not saying you’re going to pay for it, but offering to help and are reminding them that there was a warranty period.
WA: Some businesses consider complaint-free customers to be the best kind, but you don’t. How is it that customers who complain are ultimately more valuable than ones who just quietly buy and use your products?
JG: Complaining customers help in three ways:
- If satisfied, they come back and continue to spend – almost always much more than you spent to handle the complaint.
- They spread lots of positive word of mouth which is free, highly-effective advertising.
- They tell you where your processes are failing and probably alienating ten times as many customers who are simply not telling you, costing you a huge amount of revenue – it is the lost repeat business you don’t even know you lost.
WA: You describe how customers have a love-hate relationship with technology, and how it can either be a marvelous time-saving convenience or a sign that the company doesn’t care enough to respond to customer needs with actual human beings. Under what circumstances do customers love technology, and when exactly do they hate it?
JG: People hate technology when it wastes their time and is bureaucratic. For example, the airline phone system that doesn’t recognize that you are a gold customer or the website that makes you log in just to find out what kind of oil you need, to order a product or to sign up for an event.
On the other hand, technology that anticipates your next question (like “Has my Amazon.com order shipped?) or provides the next step in service (like “Here is your boarding pass for tomorrow’s flight.”) can be a very cost-effective way to delight the customer.
WA: You describe the advantages of “inviting” customers to complain, and using the responses to improve products and services. Often, this is a point of contention with colleagues in marketing who don’t want to display or discuss a list of potential product weaknesses so prominently. How do you convince marketing that the value of “inviting customers to complain” is worth hinting at a few product weaknesses?
JG: Promising perfection is very old school. Customers tend not to believe such advertising but they do respond to messages that highlight standard drawbacks and then help them avoid the issues. This is actually educating and expanding the value given plus it makes you look credible. Also, you become more approachable and service oriented by saying, “You have questions or problems – we have answers and solutions.”
If you can get three customers to complain, and satisfy all three of them, you’ve essentially saved and retained the revenue and loyalty equivalent to winning at least one brand new customer. This is where the wisdom (originally TARP’s) came from that it costs five times as much to win a new customer as to retain a current one.
WA: One common problem across all industries is having sales or marketing staff making promises or troubleshooting issues as part of their salesmanship, telling customers and prospects to “call me directly if you have any problems.” What is the best way to get sales out of problem solving, and separate customer service from marketing and sales?
JG: Executives can shift the incentives by charging back to marketing the cost of satisfying customers who felt they had been misled. Another approach is the performance guarantee that Marriott uses for room service breakfast – it is on time or it’s on us! While very few customers ever invoke the guarantee, it focuses marketing and operations on avoiding disappointment.
John A. Goodman was also featured in the AMA Edgwise Podcast, and has two sessions on YouTube, Riding the Wave of Customer Experience: Move from Firefighting to Control, and Treating Employees as Customers to Reduce Frustration & Increase Success.
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Great interview on such an important part of business that often gets lost or muddled.
I agree. There is definitely something powerful about customer complaints. If they’re resolved in a positive manner, they have the potential of creating much more memorable experiences for the customer than if everything goes smoothly.